Executive Regulations for Non-Governmental Organizations: Governance, Transparency, and Financial Oversight
In a strategic move aimed at strengthening the third sector in Saudi Arabia, and in line with the goals of Vision 2030 to increase the non-profit sector's contribution to the GDP, the National Center for Non-Profit Sector Development has adopted the executive regulations for the Law of Associations and Foundations. This step represents a qualitative leap in the mechanisms of civil society work, as it establishes precise regulatory frameworks that ensure the financial and administrative sustainability of non-profit entities.
Promoting governance and transparency in civil society work
The new regulations directly address previous regulatory gaps by imposing rigorous governance standards. They stipulate that the general assembly is the supreme authority within the association, and its decisions are binding on all members, thus reinforcing the principles of participation and internal oversight. Regarding the establishment process, the regulations establish clear requirements for founders, whether they are Saudi individuals with full legal capacity and good conduct, or legal entities obligated to provide valid official documentation, ensuring the seriousness of the association's operations from the outset.
Strict financial controls and protection of Zakat funds
The regulations placed great emphasis on financial matters, requiring associations to open separate accounts for Zakat funds and maintain dedicated records to ensure their disbursement according to Sharia principles. The regulations also mandated the appointment of a licensed external auditor and the retention of financial records and documents for a minimum of ten years. These measures aim to enhance the trust of donors and supporters, provide a secure environment that prevents financial waste or mismanagement, and grant the board of directors full responsibility for the association's funds and assets.
Prohibiting conflicts of interest and regulating international relations
To ensure the integrity of oversight, the regulations explicitly prohibit employees of the National Center for Non-Profit Sector Development or supervisors in government agencies from working within NGOs and civil society organizations in any capacity. This is to prevent any conflict of interest that could compromise the independence of decisions. Externally, the regulations impose precise regulatory constraints preventing NGOs from contracting with international entities or receiving foreign funding without obtaining the necessary official approvals from the Center and relevant authorities. This is to protect national sovereignty and ensure that activities comply with local regulations.
Expected impact and future of the sector
This regulation is expected to purify the sector of unprofessional practices, as it grants the center broad powers, including the authority to dissolve associations or dismiss their boards of directors in cases of serious violations or failure to conduct their activities. This precise regulation will pave the way for a promising investment environment within the non-profit sector, as the regulation permits associations to invest and own companies after fulfilling the necessary conditions. This will enhance their ability to achieve self-sufficiency and financial sustainability, moving away from total reliance on donations, which ultimately benefits beneficiaries and society as a whole.
