The non-profit sector in Pakistan is characterized by diversity and vibrancy, and in recent years it has grown considerably as the government has recognized the value of NGOs to development and improving the life of its citizens. It includes traditional welfare organizations, as well as modern development-oriented NGOs, and many informal networks of community-based organizations. The term “NGO” has gained currency in Pakistan in recent years and is generally considered to be any non-government organization, which works for the welfare of society, however there is no legal definition of the term in Pakistani law. Such organizations usually take the form of societies or voluntary welfare agencies and a large proportion of the sector remains informal and consequently unregistered with any government agency.
The right of free association is guaranteed by the Pakistan Constitution, though this right is limited.
The legal framework governing NGOs is complex, and there are several laws under which an NGO may be registered. The most significant of these are:
Voluntary Social Welfare Agencies Registration and Control Ordinance 1961. This Ordinance defines permissible purposes within the social welfare field. Registration under this legislation is mandatory if organizations wish to receive government funding.
The Societies Registration Act, 1860. This Act applies to charitable societies with a wide range of public benefit
THE COOPERATIVE SOCIETY ACT, 1925
The Companies Ordinance, 1984 (section 42). This section of the Ordinance applies to not-for- profit companies formed to promote ‘useful objects.
The Trust Act, 1882. This act applies to private trust with a wide range of purposes.
Income Tax Ordinance, 2001. This Act sets out the tax exemptions which NGOs are eligible for.
In most cases, registration is not compulsory. The exceptions are foreign NGOs and those in receipt of government funding which are required to register with the Economic Affairs Division and Central Board of Revenue respectively. As such the majority of NGOs can choose whether or not to register, and which regime to register under. The majority (65.4%) of NGOs are registered under the Societies Registration Act while around 20% of NGOs are not registered under any act.
Pakistan has a federal system of government. The states contribute to policy-making processes, and certain powers vis-à- vis NGOs are also devolved to the state level.
The Ministry of Social Welfare and Special Education and the Provincial Social Welfare Departments are responsible for registering and monitoring organizations under the Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961.
The District Offices of the Industry Department are responsible for registering organizations under the Societies Registration Act 1860.
Not-for- profit companies are required to apply for a license from the Securities and Exchange Commission (SEC). Certain conditions must be met before the SEC will grant a License. These include prohibitions on any payments to members and trading; a requirement for companies to have public company and limited liability status; and provisions that prevent changes to the memorandum and articles of association or members from resigning without SEC approval. Following this they must apply for a Certificate of Incorporation from one of eight Company Registration Offices.
International NGOs are required to register and agree a Memorandum of Understanding (MoU) with the Economic Affairs Division. While there is no legal basis for this expectation, it is understood by international NGOs and a failure to register can cause problems with other government agencies which can hinder their work. In addition the Minister of Interior is responsible for vetting foreign staff before registration is approved, and grants permission to operate in particular areas.