MasiboLaw LLP

By Tracy Gakii

The landscape for non-profits in Kenya has undergone a definitive shift. Following the commencement of the Public Benefits Organizations Act in 2024, the 2026 PBO Regulations have now been gazetted to operationalize the law. These regulations replace the outdated 1992 NGO Coordination Regulations, introducing a modern framework built on transparency, strict governance, and digital-age accountability.

1. Streamlined Registration and Name Reservation

The 2026 framework eliminates previous bureaucratic opacity by introducing a step-by-step registration timeline.

• Mandatory Name Reservation: Organizations must reserve a name before registration, which remains valid for 60 days.
• Prohibited Names: Names implying government affiliation or state sponsorship are strictly forbidden.
• The 60-Day Rule: The Authority is now legally mandated to determine any registration application within 60 days.

Requirements for New PBOs

To register, an entity must submit its constitution, name reservation certificate, and a formal resolution to register. Notably, at least one-third of the directors must be Kenyan residents.

2. The “Public Benefit Test”

Under the new rules, status is not guaranteed; it is earned through the Public Benefit Test. To qualify, an organization must:

• Engage in activities recognized under the Act.
• Serve identifiable beneficiaries.
• Ensure that any benefits are not purely incidental to their purpose.
• Prohibit any private financial gain for Directors.

Key Note: Compliance is holistic. Performing one charitable activity does not excuse non-compliance in other areas of the organization.

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3. Pathways for Existing Companies and Trusts

The Regulations allow existing entities (such as Companies Limited by Guarantee or Trusts) to apply for “PBO Status” without re-incorporating.

• Eligibility: Entities must show 3 years of proven public benefit activity.
• Documentation: Submission of audited accounts and governance records is mandatory.

4. International PBOs: Tighter Oversight

The 2026 Regulations clarify the distinction between two types of international players:

1. Fully Registered International PBOs: Those directly implementing projects in Kenya.
2. Exempt International PBOs: Those operating indirectly through local partners, who must now apply for a specific permit.

Requirements for International Entities:

• Proof of registration in the home country.
• A minimum 3-year operational track record.
• A certificate of “Good Standing” from their home regulator.

5. Ongoing Compliance and Asset Protection

Registration is merely the beginning. PBOs face continuous reporting obligations to maintain their status:

• Annual Filings: Organizations must file annual reports, audited financial statements, and an inventory of assets.
• Material Changes: Any change in leadership, physical address, or banking details must be disclosed within set timelines.
• Asset Safeguarding: PBO assets must be used exclusively for public benefit. Upon dissolution, assets cannot be privatized; they must be transferred to another compliant PBO.

6. Enforcement: Suspension and Deregistration

The PBO Regulatory Authority now possesses significant enforcement powers.

• Suspension: Triggers immediate operational restrictions, including a freeze on all financial transactions and activities.
• Deregistration Grounds: Includes non-compliance, financial crime, or being inactive for more than 3 years.
• Right of Appeal: Organizations may appeal Authority decisions to the Public Benefits Organization Disputes Tribunal.

7. Economic Activities and Self-Regulation

The law acknowledges the need for sustainability by allowing PBOs to engage in income-generating activities, provided the proceeds are used solely for the organization’s public benefit mission.

Additionally, the regulations encourage Self-Regulation Forums. A forum can be formed by at least 10 registered PBOs that share a geographical area or a specific sector (e.g., health, education) to promote peer oversight and harmonized standards.

Conclusion

The 2026 PBO Regulations mark the final transition from the old NGO Coordination Act era to a modern regime. By balancing strict regulatory control with operational autonomy, the framework aims to foster a more resilient and credible civil society in Kenya.