Public Benefit Organisation status and Section 18A approval give donors and corporates a formal, SARS-recognised way to make deductible donations. Here is what that means and why it matters for funding partnerships.
For corporates and individuals who support non-profit work in South Africa, the question of tax treatment is often an early practical concern in a funding conversation. It is a reasonable question, not a sign of insufficient generosity: donors who can claim a deduction on a donation can often give more than those who cannot, and properly structured donations benefit the NPO as much as the donor. Two mechanisms matter here: **Public Benefit Organisation (PBO) status** and **Section 18A approval**. Understanding what each provides helps both funders and NPOs structure partnerships that serve their respective purposes. This guide covers the general principles; the current tax treatment of specific donations should be confirmed with a qualified tax adviser, as this is general information rather than tax advice. This guide covers: - What PBO status is and what it enables for an NPO - What Section 18A approval means for donors - How the two relate - What funders should confirm before making a donation ## What PBO Status Is PBO status is a classification granted by SARS to qualifying non-profit organisations. An organisation with PBO status benefits from tax exemption on qualifying income — meaning that donations received, investment income on programme funds, and other qualifying receipts are not subject to income tax in the organisation's hands. To qualify for PBO status, an organisation must carry on qualifying public benefit activities as listed in the Ninth Schedule of the Income Tax Act, and must meet governance requirements around how it is structured, managed, and how its funds are applied. Welfare, education, health, and community development activities are among the qualifying categories. PBO status is not automatic — it must be applied for and approved by SARS, and the organisation must maintain the qualifying conditions to retain it. > PBO status is what allows an NPO to receive funding without paying tax on it. Section 18A is what allows donors to claim a deduction for what they give. ## What Section 18A Means for Donors Section 18A of the Income Tax Act allows a donor — whether an individual or a company — to deduct donations made to approved organisations from their taxable income, subject to specific limits. For companies, donations to Section 18A-approved organisations can be claimed as a deduction against taxable income, which reduces the tax payable. The donor must receive a valid **Section 18A receipt** from the organisation — a document in a format specified by SARS, confirming the donation amount, the organisation's PBO number, and the Section 18A approval status. Without this receipt, the deduction cannot be claimed. Not every PBO is Section 18A approved. The two are separate SARS approvals. An NPO can have PBO status without Section 18A approval — meaning it is tax-exempt, but donors cannot claim deductions on donations to it. Section 18A approval is a separate application, and the qualifying activities are more narrowly defined than PBO activities generally. ## What Funders Should Confirm Before structuring a donation to an NPO as a tax-deductible gift, funders should confirm: 1. **Does the organisation have PBO status?** Ask for the PBO approval letter or PBO number. 2. **Does the organisation have Section 18A approval?** Ask specifically — PBO status alone is not sufficient for deductibility. 3. **Is the donation being applied to qualifying activities?** Section 18A deductibility applies to funds used for specific approved public benefit activities. Donations that are partly or fully applied to commercial activities of the organisation may not fully qualify. 4. **Will a valid Section 18A receipt be issued?** Confirm the receipt will be provided in the correct SARS format. Confirm the tax treatment of your specific donation with your own tax adviser, as the application of these rules to particular circumstances can vary. ## Why This Matters for Programme Funders For corporates managing CSI or ESG budgets, the ability to issue Section 18A receipts meaningfully expands what is possible in a funding conversation. A donation that is partially offset by a tax saving effectively costs less than its face value — which allows the same budget to support more programme activity. For multi-year partnerships, where the programme requires sustained investment rather than once-off funding, Section 18A approval makes the partnership financially more viable over the longer term. It is one of the structural factors that separates NPOs that can maintain long-term corporate relationships from those that require full discretionary spend for every donation. Ulift welcomes conversations about how a partnership can be structured to work well for both the community programme and the funder's own financial and ESG reporting. Ulift can provide the documentation a funding decision requires; ask us for it directly.