Saudi Arabia - The non-profit sector in Saudi Arabia plays a vital role in promoting community engagement and social responsibility. The government is actively supporting non-profit organizations through financial initiatives and regulatory changes, aiming to revitalize the sector as part of Vision 2030.

Vision 2030 strives to build a strong and productive society. One of its primary goals is to maximize the impact of the non-profit sector across all socio-economic spheres. This is to be achieved through the development of institutional transformation systems, support for impactful projects and programs, and facilitation of non-profit organizations.

In a new publication titled “A robust third sector for a thriving nation” KPMG offers a comprehensive guide that delves into the trends, innovations, and significant advances that are shaping the non-profit sector in Saudi Arabia.

“Funding and financial sustainability pose significant challenges to NPOs, impacting their growth and longevity. While government funding has been the primary source for NPOs, recognizing the vital need for reliable and sustainable funding, alternative options have emerged.” stated Hanan Alowain, Partner, Government & Public Sector at KPMG in Saudi Arabia.

“These include recurring private donations, government grants, membership fees, commercial activities, and fundraising events.” she said, adding Vision 2030 views the non-profit sector as a contributor to society and a mechanism to strengthen the public sector without burdening the government with excessive costs.

A key goal of Vision 2030 is for the non-profit sector’s contribution to Saudi Arabia’s gross domestic product (GDP) to grow to 5 percent by 2030.

“A successful non-profit sector will operate at the intersection of the public and private sectors, leveraging the advantages offered by such positioning” Alowain noted.

The sector’s progress is evident as it has seen a rapid growth from 2,598 non-profit organizations in 2017 to reaching 36,151 organizations in June 2023. Efforts are underway to develop a robust funding, engagement and support platform that will enable the establishment of more non-profit startups and enhance capabilities within the sector.

“Vision 2030 encapsulates the plans and processes necessary to realize a collective vision for Saudi Arabia, providing a level of policy transparency at the highest level, said Omar Alhalabi, Head of Enterprise Strategy at KPMG in Saudi Arabia.

The strategic focus and goal-setting towards a vibrant and fulfilled society provide clear direction and defined objectives for the non-profit sector in the Kingdom.

“Although Saudi Arabia’s non-profit sector has made significant strides in a relatively short time, there is more that can and should be done to ensure that non-profit organizations can fully contribute to the goals of Vision 2030,” Alhalabi added.

To optimize effectiveness and accelerate impact, additional initiatives, such as strategic measures aimed at long-term financial sustainability and creating a more diverse funding mix, as well as tactical initiatives that deliver quick wins, generate immediate funding, and build momentum, should be undertaken.

Various external factors, such as changing demographics, economic conditions, growing donor sophistication, increased competition, regulation and policy, and technology,

have a profound impact on non-profit organizations and sectors worldwide, the KPMG paper revealed.

“Therefore, non-profit organizations must be adaptive and responsive to these factors in order remain effective, relevant, and able to fulfil their missions. The structural framework for non-profit organizations in Saudi Arabia is undergoing positive regulatory changes to offer a wider choice of regulated structures and more flexibility,” noted Alhalabi.

At the forefront of this progress is the National Center for the Development of the Non-Profit Sector (NCNP), which aims to activate and expand the role of non-profit sector organizations. By integrating government efforts and increasing coordination and awareness, citizens can now establish non-profits online through the digital services portal of NCNP.

NCNP has regulated three organizational forms for the establishment of a non-profit organization: non-governmental institutions, non-governmental associations, and family funds, with each a different set of requirements and purposes.

Strong governance and compliance with regulations enable non-profit organizations to operate effectively, efficiently and with accountability, meeting the needs and expectations of their stakeholders and leading to greater impact.

“Non-profit organizations recognize their potential to make a positive impact and meet the needs of the communities they serve. However, this can only be achieved when all the necessary elements are in place, including good governance, operational proficiency and access to regular, predictable funding,” Alowain concluded.

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