A Non-Profit Organization (NPO) is an entity that does not receive profits for its owners. The money earned by or contributed to an NPO is used to follow the organization’s objectives and keep it running. Sometimes we confuse the term NPO with Non-Governmental Organization (NGO), and most NGOs are indeed non-profits, but few non-profits are NGOs. A Non-Government Organization works independently from the government to promote change and, most of the time, work in an international scope.
This article will focus our attention on NPOs charity in the United Arab Emirates and NGOs. First, to set up a charity in the UAE, the application is different between locals and expatriates. In the UAE nationals’ case, to set up a charitable organization must apply online to the Ministry of Community Development but expatriate residents must submit their application to the ministry through their corresponding embassy or consulate in the UAE. After, the Minister will refer to the Cabinet application, which concludes registering the organization.
The entities that give official recognition and licenses for charitable organizations, NGOs, and humanitarian relief organizations are:
In the UAE, we can find Government entities responsible for social, charitable, and humanitarian work within and outside the UAE (1) and charitable organizations (2) such as:
The legal frame for donations is in Decree Number 9 of 2015 (the Law) that regulates the raising of contributions in the Emirate of Dubai. As per article 3 of the Law, all the donations raised must obtain the written approval of the Islamic Affairs and Charitable Activities Department (IACAD).
Nevertheless, this will not apply to:
For the application in the IACAD to obtain a license to raise donations, the following information must be provided:
the purpose of raising donations, the name of persons authorized to collect donations, the places where Donations will be collected, the method of collection, the period proposed for raising, the organization to which donations will be transferred and the number of contributions to be raised (Article 6).
In case of no compliance of the provisions of this Law, the penalty will be between one month to one year of imprisonment and/or a fine of not less than five thousand Dirhams (AED 5.000) and not more than one hundred thousand Dirhams (AED 100.000). Furthermore, Federal Law Number 5 of 2012 Combating Cybercrimes lays down that it is illegal to call for endorsing and collecting donations online without first procurement the proper permission, in case of not compliance, the penalty is either jail time of up to three (3) years and/or a fine between AED 200,000 to AED 500,000.
Additionally, it is possible to fundraise without registering as a charity with YallaGive. Abdulla al Nuaimi (Director of Operations and International Cooperation at Etihad Credit Insurance) founded the first licensed online donation and crowdfunding platform in the Middle East; its name is YallaGive. With this platform, it is possible that an individual person could fundraise legally and safely. Another way to do charitable actions is paying ‘zakat, which is one of the five (5) pillars of Islam, and it is a mandatory contribution for the Muslims.
The Federal Law Number 4 of 2003 was created the Zakat Fund in the UAE, and its main objective involves paying money to the poor or the needed, for example, the UAE’s Zakat Fund has given USD 3.5 million in aid to 5.109 eligible families who have been affected by the Covid-19. As we mentioned before, most NGOs are non-profits organizations, and Law Number 12 of 2017 regulates NGOs in the Emirate of Dubai.
The activities of NGOs are authorized to practice in the Emirate in the social, health, educational, cultural, scientific, professional, creative, technical, humanitarian areas and any other areas seeking public benefit must be resolute by a decision of the Community Development Authority (CDA) ‘s Director-General (Article 5).
The conditions of establishing an NGO are (Article 8):
1. The number of founders cannot be less than ten (10) members and two (2) of them must be UAE nationals
2. The founding member must have the following requirements: the applicant may not be younger than 21 years old and must have legal capacity, he/she must be of good conduct, he/she must be a resident of UAE if he is a national of a GCC State.
3. The applicant must submit the Articles of Association of the NGOs that include information such as the purpose of the NGO, the manner of forming the Board Directors, lapse, and loss of membership.
4. The NGO to be licensed cannot be a branch of a licensed association outside the UAE. Concerning the NGOs’ funds, it must be the NGO’s property, and its members cannot claim any right in such funds.
The Non-governmental Association must deposit its cash in its name in one or more accounts at any of the licensed national banks in the Emirate. It must notify the CDA of such an account and any change in the type of account or the bank in which it has deposited its funds within ten (10) working days from the date of such change. The NGO must spend its funds for the purpose for which it was established, and after approval of the CDA and the Concerned authorities in the Emirate, the NGO can invest its funds in excess of its needs to achieve a return that will help it achieve its objectives and, in a manner, not inconsistent with the legislation in force in the Emirate (Article 32-33-34).
To carry out such formalities there is always an availability of an expert within the team of Fotis International Law firm in Dubai. Their expertise and guidance will certainly help you step by step in the formation of any organization.