Saudi's non-profit sector on dynamic journey to Vision 2030 goals

09 October 2023 3 min. read

Saudi Arabia’s non-profit sector has shown strong growth in recent years, backed by robust financial, policy and regulatory support from the government. New research from KPMG shows that further growth and revitalization is possible – and needed – in the years ahead to meet Vision 2030 goals.

Back in 2017, Saudi Arabia counted around 2,500 organizations in the non-profit (or: third) sector. But over the past six years, the number of organizations grew strongly to over 36,000 (as of June 2023).

“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,” said Hanan Alowain, partner at KPMG in Saudi Arabia.

 Hanan Alowain and Omar Alhalabi - KPMG

“This progress realised demonstrates the development of a robust funding, engagement, and support platform to enable more startups in the non-profit sector and foster greater capabilities,” she added.

Building on

Building on the progress already booked, more still needs to be done, said KPMG’s report. “Vision 2030 sets out that the non-profit sector’s contribution to the nation’s GDP reaches 5% by 2030,” explained Omar Alhalabi, Director at the Global Strategy Group of KPMG for Saudi Arabia and Levant. “There is therefore more that can and should be done to ensure that non-profits can fully contribute to the goals of Vision 2030.”

To support this next growth journey, ensuring financial stability and durability is key. “Additional initiatives aimed at long-term financial sustainability and creating a more diverse funding mix should be undertaken,” Alhalabi said.

While government funding will across the board remain the primary source of finances for non-profit organizations, avenues should be tapped to up funding from areas such as recurring private donations, membership fees, commercial activities, and fundraising events.

Meanwhile, at the government level, “financial stability should be encouraged through the adoption of a robust system of funding appraisal and awarding, as well as rigorous monitoring procedures and reporting,” noted Alowain. “The public sector can enforce protocols, regulations and binding requirements within the grant or contract application ss well as impose regular, stringent checks on the quality and efficiency of services delivered.”

Responding to shifts

As the non-profit sector continues its journey, it should at the same time cater to the changing business environment. KPMG’s report said that various external factors, such as changing demographics, economic conditions, growing donor sophistication, increased competition, regulation, and technology, are having a profound impact on the sector’s dynamics.

“Therefore, non-profit organizations must be adaptive and responsive to these factors in order remain effective, relevant, and able to fulfil their missions,” noted Alhalabi.

Take the regulatory pillar as an example. “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,” he said.

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 NCNP’s digital services portal.

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.

“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.