ANOTHER CHALLANGE TO SOUTH AFRICAN NGOS:
THE CONSUMER PROTECTION ACT 68 OF 2008
Written by: Peter SA Hendricks
25 January 2011
The Consumer Protection Act 68 of 2008 (The Act) will come into operation in April 2011. A question that needs speedy answering is, whether the non-profit sector in South Africa are aware of and ready for the broader implications of the Act? Many leaders in the non-profit sector are seemingly oblivious to what the Act will mean to the financial sustainability of non-profit entities. After all, it is enacted “to promote and advance the social economic welfare of consumers in South Africa…”, and, certainly the term “consumer” has to do with business relationships between parties that are involved in trading of some sorts.
What very few realise is that the Act, very deliberately, do not distinguish between commercial business and social interventions. A slight analysis will soon reveal that the Act in fact also regulates the relationship between non-profit entities, it’s members, beneficiaries and potential donors. Insofar as it concerns applicability to non-profit entities, the Act imposes itself on the non-profit sector by:
1. Setting the ambit of the term transactions (the Act applies to) very wide.
The relationship between a member and an organisation that it belongs to, is deemed a transaction for purposes of the Act. Membership-based organisations are typified by trade unions, umbrella bodies, medical aid schemes, churches, sports club, etc. In this regard, section 1 is very clear in its definition of the term transaction by asserting that it includes an interaction that section 5(6)(a) describes as “The supply of any goods or services in the ordinary course of business to any of its members by a club, trade union, association, society or other collectivity, whether corporate or unincorporated, of persons voluntarily associated and organised for a common purpose or purposes, whether for fair value consideration or otherwise, irrespective of whether there is a charge or economic contribution demanded or expected in order to become or remain a member of that entity” The only time the Act would not apply to the transaction is if that transaction would be excluded, by falling within a list exempted in terms of section 5(2)(a)-(g).
2. Defining who is deemed a consumer.
According to section 1 a consumer not only means a person to whom goods and services were marketed or supplied, but could in certain circumstances also include “...a recipient or beneficiary of those particular services, irrespective of whether that user, recipient or beneficiary was a party to a transaction concerning the supply of those particular goods or services...” In other words, although a non-profit organisation contracts with an institution such as a government department, a CSI foundation or other funder, it is important to be aware that the beneficiaries could be deemed a consumer for purposes of the Act. This is so unless the transaction has been exempted from the application of the Act as mentioned above.
This definition alone should put any responsible leader of a non-profit entity on alert as to the potential implications that the Consumer Protection Act 68 of 2008 hold to the organisation that they steward.
3. Strictly regulating promotional communications.
Considering this aspect of the Act, it will undoubtedly have serious implications to non-profit entities that rely on funding to fuel its mission and operations. More so, when one considers the impact that the proposed regulations will have, unless it is changed.
Section 11(1) provides that:
“The right of every person to privacy includes the right to—
(a) refuse to accept;
(b) require another person to discontinue; or
(c) in the case of an approach other than in person, to pre-emptively block, any approach or communication to that person, if the approach or communication is primarily for the purpose of direct marketing.”
The definition of the term “direct marketing” is pivotal to the implications of section 11(1)(c) on non-profit entities. This is so, as section 1 define the term to include “requesting the person to make a donation of any kind for any reason.” The consequence is that non-profit entities, communicating request for funding can be blocked from sending out such requests. Further, given the wide construction of this definition, they could arguably also be blocked from requesting support in its efforts to advocate or lobby for social and/or legislative change.
According to sub-section 11(3), therefore a consumer (which could include a juristic person such as another non-profit entity, close-corporation, company and trust) can prohibit unwanted communications and approaches (deemed to be direct marketing) of non-profit organisations by registering a pre-emptive block, on a registry. The consequence to non-profit organisations are, that they will be prohibited from communicating their fundraising request to such a person.
PUBLISHED BY:
PSA HENDRICKS & ASSOCIATES - Attorneys & Administrators of Estates
122 Frankfort Street, Churchill Estate, Parow West, 7500, Cape Town, South Africa
PO Box 12459, N1 City Goodwood, 7463, Cape Town, South Africa
Tel. No.: 021 911 3497
Fax No.: 086 6544322
Cell: 084 559 9920
Website: www.PSAHENDRICKS.yolasite.com
APPRECIATING FREEDOM: GET INVOLVED
Written by: Peter SA Hendricks
02 February 2010
Not every nation in the world embrace freedom of association.
Yes it is 2010, and can you believe that certain states still find ways to suppress civil movements and associations. Libya is only now allowing the formation of civic associations. Following this trend closely, it is nevertheless heart warming to know that there is movement toward liberty. This move comes despite Gaddafi’s expressed sentiment that civil society "is a bourgeois culture and an imitation of the West that has no place here.” So it is reported on the 29th January 2010 by News 24. Until recently forming such an association was punishable by death in Libya.
Often time we take for granted the importance of the right to freedom of association. A corner stone of civil society. Without this fundamental right we are reduced to the will and whim of state agenda. It is this freedom of association that gives us the muscle to participate in governance. Without it, holding government accountable to good governance, blowing the whistle on abuse of state power and ensuring the crafting and implementation of just laws may be a near impossible task. Let alone serving the needs of the destitute and marginalised, where government and market failures rear its head.
Let's appreciate and also steward our precious freedom of association and its twin freedom of expression. Use it to its utmost and don’t abuse it. Get involved in community projects, social movements neighbourhood associations. Volunteer yourself and support good causes.
PUBLISHED BY:
PSA HENDRICKS & ASSOCIATES - Attorneys & Administrators of Estates
122 Frankfort Street, Churchill Estate, Parow West, 7500, Cape Town, South Africa
PO Box 12459, N1 City Goodwood, 7463, Cape Town, South Africa
Tel. No.: 021 911 3497
Fax No.: 086 6544322
Cell: 084 559 9920
Website: www.PSAHENDRICKS.yolasite.com
