The National Lotteries Commission (NLC) Announces New Requirement: The submission of Tax Clearance Certificates for Funding Applications


In a move aimed at ensuring transparency and accountability in the distribution of funds, the NLC has recently announced a significant change to its funding application process. “As of 20 June 2023 (retrospectively applied as 2 May 2023), organisations applying for National Lotteries Commission funding are required to submit a valid and original Tax Clearance Certificate when submitting their applications,” they mentioned in their funding notice. This means that organisations seeking funding from the NLC will now be required to submit their tax clearance certificates along with their applications.

They further mentioned that, “This measure has been adopted in line with the requirements of the Public Finance Management Act No. 1 of 1999 (“PFMA”), and Section 18A of the Income Tax Act, that all applicants for government funding must have a valid Tax Clearance Certificate or Public Benefit Organisation (PBO) number.”

While this new measure aims to enhance transparency and accountability, the change has positive implications and impact on grant applicants and the broader community, it however also raises concerns about the financial burden it may impose on organisations.

Tax Compliance as a Prerequisite

The inclusion of tax clearance certificates in the funding application process underscores the NLC’s commitment to supporting organizations that operate responsibly. This new requirement is in line with the commission’s effort to safeguard the proper utilization of funds and minimize the risk of misuse or misappropriation. By evaluating tax compliance, the NLC can ensure that organisations seeking financial support are actively contributing to the national tax revenue and adhering to legal obligations.

By requiring tax clearance certificates, the National Lotteries Commission sends a clear message about the importance of ethical funding practices. Grant applicants are expected to demonstrate not only their eligibility but also their commitment to maintaining high standards of financial integrity. This measure helps establish trust and confidence in the NLC’s funding distribution process among both applicants and the general public.

Enhancing Transparency and Accountability

The requirement for tax clearance certificates strengthens the NLC’s commitment to transparency and accountability. By evaluating an organisations tax compliance, the commission can ensure that grant recipients fulfill their financial obligations and operate responsibly. This measure promotes a more rigorous and thorough assessment process, reducing the risk of funds being misused or misappropriated.

Negative Impact: Financial Burden on Organisations

While the inclusion of tax clearance certificates aligns with the NLC’s mission to uphold responsible funding practices, it may present challenges for some organizations, particularly those with limited financial resources. Obtaining tax clearance certificates often involves costs, such as hiring professional accountants or tax consultants. In South Africa, just to obtain a tax clearance certificate you are looking to spend a minimum of R600.00 with a regular tax consultant provided all your documents are in order.  These expenses can place a burden on organisations that are already struggling with limited budgets. For smaller or grassroots organisations, the additional financial strain could potentially hinder their ability to access funding opportunities.

Considering ECDs in rural areas that can barely even afford to pay practitioner salaries, an orphanage that has been in existence for over 15 years with limited funding and is behind on their tax submission or a sports organisation operating without funding and was hoping applying to the NLC would be their big break. How do we assist those cases?

Inclusion: Recognising the gap

The gap between financially stable organisations and those that struggle to sustain themselves is a significant concern. Many organizations, particularly smaller ones or those working in disadvantaged communities, face obstacles in generating consistent funding streams or meeting financial requirements. Without addressing this gap, there is a risk of perpetuating inequality and limiting opportunities for organizations that may have valuable social impact but lack financial stability.

In as much as it is a legal requirement to be compliant, we cannot overlook the status of organisations in South Africa. Both financial status and managements education on running compliant and sustainable organisations. NPOs in communities exist to make a difference, which makes it extremely crucial for the government, other institutions and organisations to protect and assist them at all times.

Balancing Affordability and Compliance

To address concerns regarding affordability, the NLC should consider implementing measures to support organizations in obtaining tax clearance certificates. This could include providing guidance and resources to help applicants navigate the process more effectively. Collaborating with SARS or financial institutions to offer reduced-cost or subsidised services for tax clearance or Section 18A. This could also alleviate the burden on organisations with limited resources. Striking a balance between compliance and affordability is crucial to ensure that organisations of all sizes and financial capacities can access funding opportunities while maintaining the NLC’s integrity.


The National Lotteries Commission’s decision to require tax clearance certificates in the funding application process demonstrates its commitment to ensuring funds are allocated to the most deserving organisations. While this change enhances transparency and accountability, concerns about the financial burden on organizations arise. By implementing support mechanisms and exploring partnerships to reduce costs, the NLC can mitigate the negative impact on organizations’ affordability. Balancing these considerations will help ensure that the funding application process remains inclusive and accessible, while safeguarding the integrity of the NLC’s operations.

Written by: NGOConnectSA

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