MPs: Underfunding of NPOs need comprehensive solutions

What started out as a petition to parliament about the underfunding of child welfare NPOs on behalf of residents of the East Rand in Johannesburg, has this week spiralled into a broader call for a more comprehensive solution to underfunding across all provinces.

Funding does not match costs

DA MP Mike Waters raised alarm over struggling child welfare NPOs earlier this year when he submitted the petition on behalf of these residents. His oversight visits to the East Rand and subsequent parliamentary questions to the Minister of Social Development Bathabile Dlamini had some concerning revelations. Figures Dlamini provided showed shortfalls of up to 70% between the estimated costs of delivering statutory child welfare services on behalf of government and what government ultimately allocate to these NPOs. An answer to a DA MP’s question about Alberton Child Welfare showed the estimated costs for the service in the 2014/15 financial year was R5,2 million yet the government only allocated R1,5 million. In the same period, Child Welfare Edenvale only received about half of the R920 000 it needed to provide services over the same period.

Concern over under expenditure

In its recent Budget Review and Recommendations Report Parliament’s Portfolio Committee on Social Development raised concern over the department’s under-expenditure in its programme on transfers to non-profit organisations stating this may disadvantage NPOs. The budget for the overall NPO sector in the current financial year stands at R7 billion. During a briefing to MPs this week, officials from Gauteng’s department of social development said their budget for NPOs from 2015/16 to 2017/18 financial year amounts to approximately R2,5 billon. This according to the provincial department is “not enough to respond to the needs of all welfare organisations”. A further breakdown of the provincial department’s figures shows a budget of R133 million is allocated for 122 welfare NPOs providing family services in Gauteng.

Funding not just government’s problem

Due to shortfalls many of these NPOs must supplement their funds by other means Many are forced to take their begging bowls to social media. Edenvale Child Welfare is among those NPOs which has resorted to Facebook to ask community members for donations ranging from storage space to bakkie hire, a switchboard, and phones for social workers. According to Waters, however, the prevailing economic climate result in less donor funding making it difficult for NPOs to supplement its income. Dlamini in her responses to questions on these funding issues made it clear the financial sustainability of NGOs remains the NGOs' responsibility. “There is no doubt whatsoever that NGOs have played and continue to play a very critical role in the provision of social services in this country,” she acknowledged in one response. “Government funding to an NGO is provided based on a service to be delivered and according to a clear set of criteria as well as taking into consideration Government’s limited resources.”

NPO funding a national issue

Part of the set criteria for NPO funding Dlamini refers to is compliance with the NPO Act. One of the main reasons her department cited to explain its underspending of R1,5 billion, however, is that payments to some NPOs could not be made due to their non-compliance with the Act this past financial year. Yet the Financial and Fiscal Commission in its report to the committee last month raised concern over this excuse as the department spent millions on roadshows and training of NPOs on the very issue of compliance.

The committee this week acknowledged the underfunding of welfare organisations is a broader national issue and proposed more collaborations with other programmes for childhood and youth development that is funded separately in the department. Waters asked the committee to meet with treasury, the NGO sector and the National Lottery to address funding problem. In the meantime, hope is on National Treasury and the department to fast track the funding model for welfare services in the hope that this will assist with budget gaps.

Article by Alicestine October