Frequently Asked Questions: Current NGOs
Q: What are the yearly reporting requirements of an NGO?
(1) Annual report, (2) GIS/General Information Sheet, and (3) Financial statement; BIR, quarterly income statement, monthly withholding taxes for rental, yearly withholding taxes summary for rental, yearly registration, financial statement; city hall, yearly registration.
Q: What yearly reports should an NGO file with the SEC?
a. General Information Sheet (GIS) as of Date of Annual Meeting (6 copies), within 30 days from date of annual meeting as specified in the bylaws
b. Audited Financial Statement (AFS) duly stamped “Received” by the BIR, within 120 days from end of the fiscal year as specified in the bylaws (5 copies)
c. Issuer of securities registered under the Revised Securities Act (RSA) or SRC, within 105 days after the end of the fiscal year (5 copies)
d. Issuer of securities not registered under the RSA or SRC, within 120 days (5)
e. Securities Brokers, within 110 days after the end of the fiscal year as specified (5)
Q: What is an annual report?
An annual report is an in-depth outline of the activities and/or accomplishments made by the organization in the previous year. The report includes audited annual accounts and gives an overview of the NGO’s progress.
Recent annual reports tend to be more concise and show information through brief text and graphics/infographics. Some annual reports are printed as brochures, booklets, etc. (See samples here.)
Q: Can an NGO form a for-profit business?
The idea may be unusual for some NGOs that are firmly nonprofit, but yes, there are a few cases of NGOs with a development program that turn into an independent, for-profit enterprise.
Q: I only have volunteer workers for now and I’m thinking of giving them compensation for their hard work. Is there a borderline between a daily compensation and a salary?
“Hiring staff/employees might require your organization to register with SSS (Social Security System), PhilHealth, and Pag-ibig Fund to ensure that your staff receives the benefits the government mandates to employers. Update also your BIR registration for including additional filing of BIR return – withholding taxes on compensation income. Employers with more than 5 employees are also encouraged to register with DOLE (Department of Labor and Employment).
Q: Can an NGO own/partner with a business?
Yes, although most NGOs that join forces with businesses are usually experienced organizations. Examples include Greenpeace and McDonald’s, CARE and Unilever.
“Some NGOs do not approve of the idea of NGOs working with commercial corporations, while some are open to partnering with them to create shared value. Partnerships between an NGO and a business can be risky for both; but if everything goes well, the risks can be worth it. For businesses, for example, working with an NGO can bring credibility and reputational gains.”
An NGO and a business can also form a conventional project alliance – a business donates to fund a project run by an NGO, for example. These are often more short-term than true partnerships.
Q: How can an NGO change its bylaws (e.g. number of Directors)?
There is no fixed way to amend or revise bylaws. The NGO can decide for itself how changes can be made by stating it down formally in the original version of the bylaws.
According to Robert’s Rules for Amending Bylaws, you should at least require a two-thirds vote and previous notice to make any changes in your bylaws. Each member must be given a chance to voice his/her opinion.
Who will revise and review the bylaws
Draft the new version of bylaws.
Give notice to those authorized to vote on the amendments
Decide how the voting will be done: show of hands, ballots, etc.
Propose the revisions and vote
Direct the secretary to fully record the sequence of events in the meeting minutes, including the text of the original bylaw, the proposed version, who proposed the new version, the final version, and who seconded/motioned for the vote, and the result of the vote.
Q: How can I close/shut down my NGO?
Shutting down / Dissolution of an NGO can either be Voluntary (induced by the organization) and Involuntary (revoking of an organization’s certificate by the Board).
Voluntary dissolution; upon application for registration, NGOs are required under the law to submit a prescribed
form accompanied by an authenticated constitution by the subscribers of the organization. Every constitution must
have a dissolution clause. Thus the manner in which an organization is voluntarily dissolved is laid out in its
constitution. It is general practice however, for voluntary dissolution to be carried out by a resolution at the annual
general meeting through a ¾ majority vote by the members of the organization. The members must be given
written notice 30 days in advance specifying the proposal to dissolve.
Involuntary Dissolution- would be possible if there are compelling public interest in so doing, the NGO may have gone bankrupt, has not been active for an extensive period over several years , there should be at least two failures to file annual reports on their accounts, and/or has engaged in serious misconduct in the sense of willfully engaging in an activities that are inconsistent with the objectives for which an NGO can be founded.