08 Sep Jacob Zuma Foundation: A public benefit organisation, or for the benefit of one man only?
The Jacob Zuma Foundation, which is tax exempt according to SARS’ website, does not seem to be carrying out public benefit activities for the benefit of, or widely accessible to, the general public. It appears to be focusing only on its founder and speaking on his behalf, as well as raising money on his behalf.
There is a constant stream of statements, comments and opinions from Mzwanele Manyi, now official spokesperson of the Jacob Zuma Foundation and Zuma himself.
He certainly has a lot to say, with multiple comments on Jacob Zuma’s legal situation, demands for evidence of corruption from the ANC itself, criticism of the Constitutional Court and support for the “righteous anger” of the people who burnt trucks and looted and destroyed infrastructure in July 2021, whose outrage was linked to the Constitutional Court “which acted in a manner that is unlawful”. Most importantly, he is focusing on the personal interests of one person: Jacob G Zuma.
Yet the Jacob Zuma Foundation is registered as a public benefit organisation (PBO) with the SA Revenue Service. This means that its activities are meant to be for the public benefit, most of which are outlined in Schedule 9 of the Income Tax Act, including, inter alia, welfare, healthcare, housing, education, conservation and research.
The foundation is therefore tax exempt and can offer tax certificates to its donors so that a portion of their donation can come off their tax returns. On Tuesday, Manyi appealed for donations to help Jacob Zuma pay his legal fees. Are these to go into the foundation’s tax-exempt bank account and will the donors receive their certificates?
Years ago, the foundation indeed undertook some public benefit activities such as soccer games, chess competitions, bursaries and even gave a donation to the Diocese of Mariannhill for an updated translation of the Bible. These feature on the foundation’s Facebook page but are mostly dated 2014. According to its Facebook page, bursary applications closed in January 2015 and its website no longer exists.
However, without a transparent website that elucidates its public benefit activities, its sole purpose at present appears to be to look after the interests of Jacob Zuma, the foundation’s founder and patron.
According to information on the SARS website: “Approved PBOs have the privilege and responsibility of spending public funds, which they derive from donations or grants, in the public interest on a tax-free basis. The donations or grants may be received from the general public or directly or indirectly from the State.
“It is therefore important to ensure that exempt organisations use their funds responsibly and solely for their stated objectives, without any personal gain being enjoyed by any person including the founders and the fiduciaries.” The last clause is a critical element and it appears that the Jacob Zuma Foundation is not complying with SARS requirements as its founder seems to be benefiting from its tax-exempt status.
When applying for tax-exempt status, an organisation’s board members agree to comply with the following: “1. The sole or principal object of the PBO is to carry on one or more public benefit activity (PBA), in a non-profit manner and with an altruistic or philanthropic intent. 2. No PBA will directly or indirectly promote the economic self-interest of any fiduciary or employee of the PBO, otherwise than by way of reasonable remuneration payable to that fiduciary or employee. 3. All PBAs carried on by the PBO will be for the benefit of, or widely accessible to, the general public at large, including any sector thereof other than small and exclusive groups.”
In its current situation, the Jacob Zuma Foundation, which is tax exempt according to SARS’ website, does not seem to be carrying out public benefit activities for the benefit of, or widely accessible to, the general public. It appears to be focusing only on its founder and speaking on his behalf, as well as raising money on his behalf.
In addition, when applying for tax-exempt status, the foundation provides a written undertaking to SARS that “no resources will be used directly or indirectly to support, advance or oppose any political party”. While the foundation is not supporting or advancing a political party, it could be said that it opposes elements in the ANC, while trying to advance a particular faction, and is therefore playing a political role.
The foundation, which is registered with the NPO Directorate in the Department of Social Development as a voluntary association, does not publish its list of board members, its donors or its audited financial statements.
A voluntary association (an association of persons) is usually made up of members who elect an executive, but there is no clarity on who the members are and whether there is ever an annual general meeting. Even if Mzwanele Manyi were to say that what they are doing is in the public interest, it is extremely unlikely to be aligned with the purpose of the foundation in its founding document for which it received tax exemption in terms of Schedule 9 of the Income Tax Act.
Providing financial and other support for a founder is certainly not in Schedule 9.
The foundation’s Facebook page says it is “broadening its network of donor partners to enable life-changing upliftment of impoverished South Africans”. If that is indeed the purpose of the foundation, for which it received tax exemption, it is certainly time for SARS to review this tax privilege as there is currently no evidence that this is what it is actually doing.
Of course, people, companies and philanthropic entities can give money to Jacob Zuma in his personal capacity. He does not need the foundation as a conduit. However, a personal donation tax of 20% is payable by the donor if the gift(s) exceeds R100,000 per annum, and in addition, Jacob Zuma will need to pay income tax on this income.
It appears the foundation is possibly being used as a channel for this funding so that everyone benefits — the donor and the founder.
There are about 220,000 non-profit organisations in South Africa that have to comply with legislation. There are some that have lost their tax-exempt status when operating contrary to the requirements set down by SARS.
It is only fair that the Jacob Zuma Foundation should be expected to stick to the rulebook as well.