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NGOs have one year to comply with tough new rules
Vehicles parked at Liverpool and Path offices in Homa Bay Town on February 4, 2025. Staff from the two non-governmental organisations which get support from USAID were asked not to report to work after the American government withdrew its support.
What you need to know:
- The PBO Act also offers clear incentives for compliance. Registered PBOs enjoy tax exemptions, streamlined work permit procedures for expatriate staff, and access to government training and capacity-building programs.
- The Act also permits the creation of income-generating activities as long as profits are reinvested into the organisation’s mission, unlike the previous NGO Coordination Act, which did not allow income-generating activities for NGOs.
All Non-Governmental Organisations (NGOs) have one year to comply with a new law that requires full disclosure of their sources and spending of funds, among others.
The government has extended the compliance period for new regulations under the Public Benefits (PBO) Act from May 14, 2025, to May 13, 2026.
This move provides thousands of organisations time to align their operations with the updated legal framework, which replaces the outdated Non-Governmental Organisations Coordination Act of 1990.
The extension comes as the PBO Regulatory Authority finalises regulations to support the Act. Two separate drafts, one developed by the government and the other by civil society stakeholders, are currently being harmonised through a comprehensive public participation process set to happen between June 19 and July 18, 2025.
The report from the public participation will be incorporated into the draft in regulations, which will undergo validation and later on, in August submitted to Parliament. It will then be taken to the Office of the Attorney General before being gazetted by the Interior Cabinet Secretary, effectively operationalising the PBO Act fully.
Speaking during a meeting with the media in Nairobi Thursday, PBORA Director General, Dr Laxmana Kiptoo, said he has spent his last three months in office to engage various stakeholders who expressed their commitment towards meaningful implementation of the PBO Act.
“This Act ushers in a new regulatory framework that supports a dynamic civil society ecosystem while reinforcing mechanisms for accountability, sustainability, and transparency…This spirit of collaboration is both encouraging and essential as we move forward,” he said.
The regulations are expected to guide registration, reporting, and governance requirements for all qualifying entities.
However, actual compliance depends on the finalisation and gazettement of the supporting regulations.
Other than the scheduled public engagement forums, online submissions, webinars, and local outreach efforts are currently underway across Kenya’s 47 counties to ensure inclusive stakeholder input.
The operationalisation of the PBO Act will mark the culmination of nearly two decades of policy development and legal advocacy.
First introduced in 2013, the Act was delayed for over ten years due to legal ambiguities and administrative standoffs.
The breakthrough came in May 2024, when President William Ruto announced the commencement of the Act at the UN Civil Society Conference in Nairobi.
Initially, the government had formed a task force in 2014 to propose amendments to the Act following extensive stakeholder engagement. However, the courts later ruled that any amendments could only be made after the Act was operationalised, freezing reform efforts for years.
Unlike the rigid and centralised NGO Coordination Act of 1990, the new legislation adopts a more inclusive approach to regulation.
It broadens the definition of eligible organisations, allowing entities such as faith-based institutions, community-based groups, and trusts to apply for public benefit status while maintaining their original legal identities, Mercy Soy, Assistant Legal Affairs Manager, PBORA, explained.
The Act also establishes the PBO Regulatory Authority as an independent oversight body with specific functions, including registration, compliance monitoring, policy interpretation, and advising government on matters affecting the sector, replacing the largely unaccountable NGO Coordination Board under the previous regime.
The regulatory authority also has the mandate to investigate and deregister organisations that violate provisions of the Act or engage in fraudulent conduct. These safeguards aim to uphold the integrity of the sector while restoring public trust.
Reporting requirements have also evolved. The deadline for submitting audited financial reports has been extended from three to six months after the close of a financial year.
More importantly, all PBOs, regardless of their size or funding, must now comply with reporting and governance standards. This uniformity aims to promote transparency and reduce the risk of abuse.
“In the previous Act, PBOs receiving funding of less than Sh1 million only filed a general report and not the audited reports, but with the PBO Act, all PBOs will henceforth file both reports,” Ms Soy said.
Under the new dispensation, organisations may register via three pathways: new incorporation as a PBO; application for public benefit status for existing legal entities (such as companies limited by guarantee), and permits for international NGOs funding local initiatives.
Also, NGOs previously registered under the repealed Coordination Act will transition automatically into the new regime and receive certificates of recognition under the PBO framework.
The Authority is also incorporating sign language interpretation, local translations, and digital access tools to ensure broad participation.
Beyond their humanitarian and development missions, PBOs are vital contributors to Kenya’s economy. In the 2022/23 financial year alone, the sector employed 79,350 individuals - 41,128 of whom were salaried, including 36,037 Kenyans and 5,091 expatriates.
A further 38,222 volunteers were engaged, with 95 per cent being local citizens, highlighting the sector’s role in social impact and job creation.
Data from the Kenya National Bureau of Statistics (KNBS) indicates that nonprofit institutions serving households contributed between 0.8 and one percent of Kenya’s Gross Domestic Product (GDP) over the 2018–2022 period.
The PBO Act also offers clear incentives for compliance. Registered PBOs enjoy tax exemptions, streamlined work permit procedures for expatriate staff, and access to government training and capacity-building programs.
The Act also permits the creation of income-generating activities as long as profits are reinvested into the organisation’s mission, unlike the previous NGO Coordination Act, which did not allow income-generating activities for NGOs.
