The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government would have placed increased “financial strain” upon itself had it gone through with the initial Non-Profit Organisations Bill version, sector representatives warned.

Civil Society Bahamas (CSB), in a report to Carl Bethel QC, the attorney general, said the Government would have been forced to fill the vacuum created as a result of “devastating” legislation that would render many Bahamian non-profits “incapable of operating”.

The analysis of the original bill, which has been obtained by Tribune Business, warned: “The bill as drafted will have a devastating impact on the civil society organisation sector resulting in the reduction of services provided to the general public.

“It is generally accepted that these services ultimately reduce strain, financial and otherwise, on The Bahamas’ government, which cannot provide all of the services required to address all of the social issues of this country.

“So if Parliament, the legislative branch, proceeds with this bill as drafted it will render many civil society organisations (CSOs) incapable of operating, which will increase the demand for public services on the executive branch which it is already finding challenging to deliver. This will not benefit anyone.”

With the Government cash-strapped from an $8bn-plus national debt that continues to grow, and still confronting a $415m deficit that it is trying to shrink to at least $237m to meet the Fiscal Responsibility Act’s requirements, it needs all the help it can get in meeting some of the necessary financial burden to address society’s needs.

But the Civil Society Bahamas analysis also warned that “many non-profits (NPOs) will be unable to comply” with the Act’s original registration demands, especially given that it currently takes more than two years for the registrar general to register most entities.

“The registry does not have the capacity to register all the non profits in existence,” the report to the attorney general warned. “Most existing non-profits took years to get their NPO licence under the Companies Act from the Attorney General’s office, and they certainly would not want to go through that long process again.”

The Civil Society Bahamas analysis called for existing non-profits to be permitted to complete “a partial registration process”, with all such organisations given six months - as opposed to the Bill’s 90 days - to complete the process.

And it branded the initial registration requirements, which included details on anticipated donation sources, records of past contributions and how they were applied as “excessive and onerous given the current capacity of non-profit organisations”.

“This level of information is not required for registration of a for-profit company,” Civil Society Bahamas added. “​Many local non-profit associations (NGOs) operate on a shoe string through the goodness of their heart and provide services that the Government cannot, will not and should not provide.”

It also suggested that providing evidence that a non-profit was compliant with Know Your Customer (KYC) style due diligence on donors was unnecessary, given that the banks which held their accounts already performed such a function.

“Having a licensed bank administering anti-money laundering and counter terror financing procedures protects and ensures that a non-profit organisation is not engaged in activities that constitute an identified risk,” Civil Society Bahamas added.

It recommended that the Non-Profit Organisations Bill not apply to entities regulated under other laws, such as the Foundations Act and Banks and Trust Companies Act, in a bid to avoid regulatory duplication.

However, Civil Society Bahamas acknowledged the need to strike a balance between allowing the sector to operate freely and addressing the Government’s desire to protect this nation from any further “blacklisting” or sanctions because it is deemed non-compliant with global anti-money laundering/counter terror financing standards.

“Anonymous donors must be balanced with the overriding priority for the Government to curb/eliminate money laundering, corruption, exploitation of the vulnerable,” it agreed. “It must be concretely demonstrated to Government that civil society understands and is prepared to assist the Government in solving this challenge.”

Yet it suggested that the requirement to report donors who made aggregate, or total contributions, of $50,000 or more in any given year imposed a greater burden than that place on the private sector.

“The requirement for aggregate sums means that any not-for-profit... has to report on all donations across the year by that donor,” Civil Society Bahamas said. “This is more stringent than investment firms that have to report KYC to the Central Banks.

“What about groups who run events like Hands for Hunger? This would require a person-by-person list for that event or anyone who purchased an auction prize or brought Red Cross raffle tickets. What about those donors that wish to give anonymously? What assurances can be given to ensure that their information would be kept confidential?

“Wouldn’t this be available via Freedom of Information Act (FOIA)? Seems more logical to track amounts of the top five to six significant donations and total donations overall. Then, as the Registrar sees a pattern or questions related to the services provided or impact, they can further investigate that specific charity. Otherwise you are incentivising donors to give less than $50,000.”

Mr Bethel and the Government subsequently appeared to heed the warnings from Civil Society Bahamas and other non-profits, withdrawing the Bill for redrafting following extensive consultation with the sector in the hope it can be re-presented to Parliament in January.

The Attorney General told Tribune Business it had “accommodated 80-90 percent” of non-profit concerns over plans to regulate the sector, and ensure The Bahamas was not subjected to “blacklisting” or any further sanctions by the Financial Action Task Force (FATF).

The FATF, which sets the global standards for combating money laundering and terrorism financing, is understood to be particularly vexed by what it views as minimal to non-existent regulation of non-profits by The Bahamas.

“I think we’ve accommodated 80-90 percent of their concerns, and possibly even more than that..... At the end of the day, the Government does not wish to make life difficult for anybody. We don’t want to make it so difficult for non-profits to function that we drive them out of their causes,” Mr Bethel told this newspaper previously.

“It’s in light that the Government has taken on as many of their concerns as we possibly can, and is still trying to find other ways to make the Bill more effective and serviceable. This week we’ll be preparing the Bill, cutting it down and making it more user friendly. It requires a bit of good thought. We’ll come up with something broadly acceptable, and I think they’ll be alright.”

Civil Society Bahamas, in a later statement, said the Government had agreed to raise the $50,000 threshold above which donors - and their donations/disbursements - must be reported to a “considerably higher” level.