How to Register and Operate an NGO in Nigeria: Legal Requirements and Compliance Guide

Introduction

Non-governmental organisations play an important role in addressing humanitarian, educational, religious, social, cultural, developmental and charitable needs in Nigeria. However, establishing an organisation with a good cause is only the beginning. An NGO must also have an appropriate legal structure, comply with applicable registration requirements, maintain proper records and operate in accordance with relevant regulatory obligations.

In Nigeria, the expression “NGO” does not by itself describe a separate legal form created by the Companies and Allied Matters Act 2020. Many non-profit organisations are registered with the Corporate Affairs Commission (CAC) as Incorporated Trustees under Part F of the Companies and Allied Matters Act 2020.

This guide explains how an NGO may be registered and operated in Nigeria, together with important governance, financial, tax and regulatory considerations.

1. Understand the Appropriate Legal Structure

Before beginning the registration process, it is important to determine the legal structure that is appropriate for the organisation’s purpose.

Under Part F of the Companies and Allied Matters Act 2020 (CAMA 2020), trustees appointed by certain communities, bodies and associations may apply to the CAC for registration as a corporate body. This structure is commonly used by charitable organisations, development organisations, associations, religious organisations, educational organisations and other non-profit bodies.

Accordingly, many organisations commonly described as NGOs are registered as Incorporated Trustees.

Depending on the nature and purpose of an organisation, another legal structure may sometimes be appropriate. It is therefore advisable to consider the organisation’s objectives, funding model, governance arrangements and intended activities before selecting a legal structure.

2. Clearly Define the Organisation’s Aims and Objectives

An organisation should have clearly defined aims and objectives before registration. These objectives should explain the purpose for which the organisation is being established and should guide its future activities.

For example, an organisation may be established for purposes relating to:

Charitable or humanitarian activities;
Education and community development;
Religious activities;
Social welfare;
Health and public welfare initiatives;
Environmental protection;
Youth development;
Women and children’s welfare;
Cultural or sporting activities; or
Other lawful non-profit purposes.

The organisation’s objectives should be carefully drafted because they form an important part of its governing documents and may affect the scope of activities the organisation is authorised to undertake.

3. Choose Suitable Trustees and Establish a Governance Structure

An Incorporated Trustee operates through trustees appointed in accordance with the organisation’s constitution and the applicable provisions of CAMA 2020.

The CAC currently states that at least two trustees are required for the registration of Incorporated Trustees, subject to the legal qualifications applicable to trustees.

The trustees should be individuals who understand the organisation’s objectives and are capable of carrying out their responsibilities responsibly.

A well-organised NGO should also establish a clear governance structure. Depending on the size and activities of the organisation, this may include:

Trustees;
Executive officers;
A governing board or management committee;
A secretary;
A finance officer or treasurer;
Programme or project officers; and
Other officers required by the organisation’s constitution.

The precise structure should be consistent with the organisation’s constitution and the nature of its activities.

4. Prepare a Constitution for the Organisation

The constitution is one of the most important documents of an NGO. It provides the internal legal and governance framework for the organisation.

A properly drafted constitution should ordinarily address matters such as:

The name of the organisation;
The aims and objectives of the organisation;
Membership and membership rights, where applicable;
The appointment, powers and removal of trustees;
The powers and duties of officers;
Meetings and decision-making procedures;
Financial management and banking arrangements;
Record keeping;
Amendment of the constitution; and
The procedure for dissolution or winding up of the organisation.

The constitution should reflect the actual governance arrangements of the organisation rather than being treated merely as a document required for registration.

5. Reserve the Organisation’s Name with the CAC

Before registration, the proposed name of the organisation must be checked and reserved through the Corporate Affairs Commission’s Company Registration Portal.

The proposed name should be consistent with the organisation’s purpose and should not conflict with an existing registered name or contain words requiring consent without obtaining the necessary approval.

The CAC currently operates an electronic registration system through its Company Registration Portal.

6. Complete the CAC Registration Process

The registration of Incorporated Trustees is carried out through the CAC registration system. The CAC currently identifies the following as part of the registration process:

Reservation of the proposed name;
Completion of the prescribed pre-registration process;
Submission of the organisation’s constitution;
Provision of the details of the trustees;
Submission of minutes showing the appointment of trustees and authorisation of the registration process;
Submission of trustee declarations and other documents required by the CAC; and
Payment of applicable filing fees.

The exact documents and procedures required may be updated by the CAC from time to time. Applicants should therefore confirm the current requirements on the CAC portal before filing an application.

Upon successful registration, the CAC issues registration documentation electronically through its system.

7. Open an Organisational Bank Account and Establish Financial Controls

After registration, the organisation should establish proper banking and financial management arrangements.

Funds belonging to the organisation should generally be managed through an account held in the name of the organisation rather than through the personal accounts of trustees or officers.

The organisation should also establish internal financial controls. These may include:

A written financial policy;
Clear approval procedures for expenditure;
Defined bank signatories;
Proper accounting records;
Supporting documentation for expenditure;
Budgets for projects and programmes; and
Periodic financial reporting.

Strong financial controls are particularly important for organisations that receive donations, grants or project funding.

8. Understand Tax Registration and Tax Compliance Requirements

Registration as an Incorporated Trustee does not automatically mean that an organisation has no tax or tax administration obligations.

The organisation should obtain or confirm its applicable Tax Identification Number (Tax ID) and comply with relevant tax administration requirements.

The Nigerian Tax ID Portal provides a system through which organisations may retrieve or verify tax identification information.

Whether a particular NGO qualifies for a tax exemption, concession or other tax treatment depends on the applicable law and the nature of the organisation’s activities and income. Organisations should therefore avoid assuming that all income received by an NGO is automatically exempt from every form of taxation.

Professional tax advice may be necessary where the organisation receives grants, donations, foreign funding, investment income or income from commercial activities.

9. Maintain Proper Records and Meet CAC Compliance Obligations

Registration is not the final stage of legal compliance. An Incorporated Trustee has continuing obligations under CAMA 2020 and applicable CAC regulations.

An organisation should maintain appropriate records, including:

Its constitution and registration documents;
Minutes of meetings;
Records relating to trustees and officers;
Membership records, where applicable;
Accounting records;
Financial statements; and
Other statutory or regulatory records applicable to the organisation.

The organisation should also ensure that required filings and returns are submitted to the CAC within the applicable periods.

Under the Companies Regulations 2021, Incorporated Trustees are also subject to specific requirements relating to accounting records, statements of accounts and statutory filings. The organisation should obtain current professional advice where necessary because filing procedures and electronic systems may change.

10. Consider SCUML and Anti-Money Laundering Compliance Where Applicable

Some non-profit organisations may also need to consider requirements relating to anti-money laundering and the prevention of terrorist financing.

The Special Control Unit Against Money Laundering (SCUML), operating within the Nigerian anti-money laundering framework, publishes registration and compliance guidance for organisations falling within relevant categories.

SCUML currently identifies certain non-profit organisations and non-profit structures within its published registration guidance. Its published requirements for relevant NPOs include documents such as incorporation documents, trustee information, the organisation’s constitution and applicable tax identification or tax exemption documentation.

Not every organisation should assume that the same regulatory obligations apply in exactly the same way. The organisation should review the current requirements applicable to its activities and risk profile.

Where applicable, organisations should also maintain appropriate controls over donations, funding sources, beneficiaries and financial transactions.

11. Develop a Clear Fundraising and Funding Strategy

Many NGOs depend on donations, grants and partnerships to carry out their programmes. A sustainable organisation should therefore have a clear funding strategy.

Possible funding sources may include:

Individual donations;
Corporate donations;
Grants;
Development partnerships;
Fundraising events; and
Other lawful funding arrangements consistent with the organisation’s objectives.

Organisations receiving restricted grants should ensure that funds are applied for the purposes agreed with the donor and that appropriate records are maintained.

12. Implement Programmes Consistently with the Organisation’s Objectives

An NGO should ensure that its programmes and projects remain consistent with its registered objectives and governing documents.

Before implementing a major programme, the organisation should consider:

The purpose and expected outcome of the project;
The persons or communities to be served;
The available budget;
The project timeline;
Applicable regulatory approvals or permits; and
How the impact of the programme will be monitored.

Depending on the sector in which the organisation operates, additional approvals or regulatory requirements may apply.

13. Monitor Projects and Maintain Accountability

Good governance requires more than carrying out projects. The organisation should also monitor whether its programmes are achieving their intended objectives.

Monitoring and evaluation may involve:

Setting measurable objectives;
Maintaining records of programme activities;
Monitoring the use of project funds;
Obtaining feedback from beneficiaries;
Preparing periodic reports; and
Reviewing programmes to identify areas requiring improvement.

Clear documentation can also assist the organisation in reporting to donors, regulators and other stakeholders.

14. Build Partnerships Carefully

Partnerships can help an NGO increase its reach and access additional expertise or resources. An organisation may collaborate with other NGOs, government institutions, private organisations, professional bodies or international development partners.

Before entering into a significant partnership, the organisation should clearly understand:

The responsibilities of each party;
The purpose of the collaboration;
Funding arrangements;
Ownership and use of project materials or data;
Reporting obligations; and
The procedure for resolving disputes or ending the relationship.

Written agreements may be appropriate for significant partnerships or projects.

15. Ensure Transparency and Accountability

Transparency and accountability are essential to maintaining public confidence in a non-profit organisation.

Practical measures may include:

Maintaining accurate financial records;
Keeping proper minutes of important decisions;
Preparing periodic reports;
Following internal approval procedures;
Managing conflicts of interest; and
Conducting audits where required or appropriate.

Common Mistakes to Avoid When Operating an NGO in Nigeria

Some common problems faced by organisations include:

Operating without a clearly defined governance structure;
Using organisational funds through personal accounts;
Failing to maintain proper accounting records;
Failing to comply with CAC filing obligations;
Undertaking activities outside the organisation’s objectives;
Failing to document major decisions;
Ignoring applicable tax obligations;
Assuming that registration automatically provides exemption from every regulatory requirement; and
Failing to seek professional advice where the organisation receives significant funding or undertakes regulated activities.

Conclusion

Operating an NGO in Nigeria can provide an effective structure for pursuing charitable, humanitarian, educational, developmental and other lawful non-profit objectives. However, successful operation requires more than registration with the Corporate Affairs Commission.

An organisation should establish an appropriate legal structure, maintain a clear constitution, appoint suitable trustees, implement effective financial controls and comply with applicable corporate, tax and regulatory requirements.

Because regulatory requirements may depend on the nature of the organisation’s activities and may change over time, professional legal or regulatory advice may be appropriate before registration and when undertaking significant projects, receiving substantial funding or entering regulated sectors.

Key Legal and Regulatory References

Companies and Allied Matters Act 2020, particularly Part F relating to Incorporated Trustees.
Companies Regulations 2021, including provisions relating to Incorporated Trustees, accounting records and statutory compliance.
Corporate Affairs Commission (CAC) registration and compliance requirements.
Money Laundering (Prevention and Prohibition) Act 2022, where applicable.
Relevant SCUML regulations and guidance concerning non-profit organisations falling within applicable categories.
Applicable Nigerian tax legislation and tax administration requirements.

Useful Official Resources

For current registration and regulatory requirements, organisations may consult the following official resources:

Legal Disclaimer

This article is provided for general informational purposes only and does not constitute legal, tax, financial or regulatory advice. The requirements applicable to an NGO or other non-profit organisation may depend on its legal structure, objectives, funding, activities and the laws and regulations in force at the relevant time.

For advice concerning the registration, governance, tax obligations or regulatory compliance of a particular organisation, consult a qualified legal practitioner, tax professional or other appropriately qualified adviser.

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