Department of Social Development Policy on Financial Awards & NPO Policy: Children's Institute response

Social Development

12 September 2011
Chairperson: Ms Y Botha (ANC)
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Meeting Summary

The Department of Social Development (DSD) had previously presented its National Policy on Financial Awards (the Policy) to the Committee, and the Committee now heard comments on that policy from the Children’s Institute (CI), endorsed by 25 other non profit organisations (NPOs) in the children’s sector. These organisations provided a range of direct and indirect services to children, families and communities in poor urban and rural areas.

Although the Children’s Institute broadly welcomed the policy submission made by the Department, it cited several areas in which it was inconsistent, incorrect or lacking in detail. DSD had not adequately highlighted that funds provided to NPOs did constitute an essential part of delivery on government’s mandate and obligations. The document was also far too broad. While the DSD’s submissions explained some of the general concerns, however it did not raise a range of concerns that the Children’s Institute had about specific provisions. The Document was too broad and as a result could not be implemented. There were further concerns about the consultation process. Although the National Welfare Foundation website describe it as a final document, it had not been subjected to a public comment process and still contained several inaccuracies, particularly the glossary which referred to matters not included in the document, and used terms that had been replaced in 1994. A number of concerns raised were simply not addressed, and correcting only some would not result in real benefit. This was even more serious since the government referred to the NPOs as “partners”.  

Another inconsistency related to funding, as the words “financial awards for service providers” implied that the funding was a gift from government, rather than remuneration in terms of a contract, and it was stressed that full funding, not partial funding, should be described and delivered. The DSD had claimed that there were 100 000 NPOs, but the CI pointed out that only 72 000 were registered, and of the remainder, many did not provide the specific social services that the DSD would fund. Although there were not as many affected NPOs as had been estimated, their numbers were still large enough to warrant a new approach. The CI recommended that funding must be prioritised, first, to be delivered to children’s social services and protection from abuse and neglect, and then to proper realisation of children’s rights through child protection services, parenting programmes and Early Childhood Development, emphasising children as a priority over other groups.  The CI was concerned about provincial expenditure on social development services, since several provinces had underspent their allocations for Child Care and Support. The DSD document also conflated the two ideas of equitable redistribution to the historically disadvantaged, and transformation, whereas the first concept meant delivery to those who were most in need of services. Although the DSD had said that a uniform funding model should be developed, this had not happened and provinces had their own policies and practices. The correct situation would be for the new funding policy to fund all services under proper contractual arrangements, under a clear commitment to ensure adequate funding of social services for children.

Members asked if NPOs had looked into seeking private sector funding or partnerships, whether their funding had declined, and if they had any suggestions around improving capacity. The Department was asked to respond to allegations around lack of consultation, and how a uniform framework would be created for social programmes, as well as the monitoring of new funding practices. They enquired where the NPOs operated, what would happen if an NPO ceased operations in an area, in what provinces the organisations were working, and asked for examples of the spending in provinces. They also noted that some NPOs who were able to get private funding did not bother to do so, but instead relied on government, and said that the multiple-department funding in some provinces had to be addressed. Members asked about work with disabled children, the particular funding in Western Cape and how much was allocated to implement the policy.

The minutes of meetings on 10, 16 and 23 August 2011 were adopted, with minor grammatical changes.

Meeting report

Department of Social Development National Policy on financial awards and Non-Profit Organisations Policy: Comments by Children’s Institute (on behalf of other organisations)
Mr Patric Solomons, Director; Molo Songololo, tabled a submission on the Department of Social Development’s Policy on Financial Awards and Non-Profit Organisations (NPO) Policy. He noted that this submission (see attached document) was drafted by the Children’s Institute (CI) but was endorsed by 25 other children’s sector Non Profit Organisations (NPOs). These organisations provided direct and indirect services to children, families and communities in poor urban and rural areas. These services included- prevention services, early intervention, services, statutory services, and research and monitoring and evaluation services.  

However, he added that many of the services at present were being threatened as the children’s sector NPOs were experiencing severe funding crisis. Thus there was a need for dialogue and development of a national policy that reflected Government’s responsibilities, obligations and commitment for full funding of service contracted from NPOs was crucial.

Ms Vivienne Lalu, Advocacy Coordinator: Association against Child Abuse and Neglect (RAPCAN), stated the children’s sector welcomed the release of the Department of Social Development (DSD) Policy on Financial Awards to Service Providers. However she argued that the DSD document did not give adequate recognition to the fact that funds provided to NPOs were an essential element of how Government delivered on its own mandate and obligations.

She further noted that while the DSD’s submissions explained some of the general concerns, they also had not ranged a number of concerns that the CI had raised on specific provisions. Ms Lalu noted that correcting some concerns in isolation would be of no benefit if the more general concerns were not addressed.

The first concern related to the process of drawing up the document. The DSD had said that submissions by the National Welfare Forum (NWF) had been taken into account when drawing up the document, but the final draft did not reflect the substance of those submissions. Furthermore, consideration of written inputs did not constitute sufficient “consultation”. She believed that it should be standard Government policy to have a proper consultation process around key policy documents, involving, at the very least publication of the draft for comment, in the Government Gazette, and Parliamentary debate prior to finalisation. It was particularly inappropriate that there had been lack of consultation when the whole policy focused on so-called “partnerships” between government and service delivery NPOs.

Ms Lulu noted a recommendation that the name of the DSD policy should be changed to “Funding of Social Service Providers” rather than “Financial Awards for Service Providers”. The word “awards” implied that the funding was a gift from Government, whereas the funding should properly be viewed as payment for services rendered. The NPOs should be properly contracted to provide the services, and paid a full cost for delivering quality services.

Ms Lulu noted that the section of the policy outlining the background provided estimates of the number of NPOs in the country. The policy claimed that there were more than 100 000 organisations in the country, of which 72 000 were registered. They also claimed that 23 500 organisations worked in the broad area of “social services” but many of these organisations were not delivering the types of services that DSD would fund. The number of organisations who required funding was not as large as initially estimated, but the numbers were still large enough to warrant a new approach to the DSD funding schemes.

The CI recommended that the funding should have been prioritised along two lines. Firstly, it should recognise Government’s constitutional and legislative obligations, which included the right of every child to “social services” and “protection from abuse and neglect”. The Constitution’s Bill of Rights set out child rights. The Children’s Act, No 38 of 2005, specified that the provincial MECs “must provide” for a range of services, namely child protection services, prevention and early intervention programmes, and child and youth care centres.

The second prioritisation was on the basis that the Constitution contained a stronger imperative for children than for other members of the population. The “First Call for Children” should dictate that priority should be given to supporting families to care for their children (for instance, by way of parenting education) and for Early Childhood Development (ECD).

The DSD document had accepted the idea that NPO funding should occur through subsidisation, which it defined as “financial aid furnished by the government as supplementary income to the NPOs in order to purchase their services”. However, this definition was contradictory. “Supplementary income” or “partial funding” were not the same as compensation in terms of a contract for sale of services. The CI and other organisations argued that government should, at the very least, be covering the full cost of those services that the Constitution required it to provide, in exactly the same way as it would when procuring roads or buildings.

Ms Lulu noted that an examination of the provincial expenditure, as tabled in the provincial legislatures over the last months, revealed that several provinces under-spent their allocations for the Child Care and Support sub-programme, which was the main source of funding for the Children’s Act obligations which were delivered by NPOs. In North West, the revised estimate for 2010/11 was 82% of the original allocation. In Free State and KwaZulu-Natal it was only 94% of the original allocation. It was important to question why these amounts that government could not spend itself were not being transferred to other NPOs to enable them, instead, to deliver services to more beneficiaries.

The DSD document referred repeatedly emphasised the need for “equitable redistribution to the historically disadvantaged” and “transformation”. Ms Lalu argued that the document conflated two different things, namely, equitable redistribution towards the vulnerable groups, and redistribution to “new emerging organisations”. The two were not the same. Equitable distribution to vulnerable groups meant delivery to those people who were most in need. She referred Members to the attached document, for more information.

The DSD document also stated that both National and Provincial Governments must move towards developing a uniform funding model. Page 41 stated that one of the roles and responsibilities of the National Department was to “develop a uniform framework for the financing of social services programmes.” However, in the absence of a uniform national policy, provinces had developed their own policies and practices. This was contrary to what was stated in the document, which had not listed “policy development” as one of the roles and responsibilities of provincial departments. The CI argued that a national policy was urgently needed to avoid wasting of resources. This must include provisions that allowed NPOs to deliver quality services on behalf of government. Whilst CI fully supported the development of a policy that would ensure uniformity in respect of both service providers and beneficiaries, it felt that the current policy was not yet adequate.

The National Welfare Forum website reported that the new policy was approved by MinMEC on 31 March 2011 for implementation, and came into effect April 2011. However, it was unclear how this document could be “implemented”. It consisted of broad principles only. Furthermore, it had not been made available for public comment. The CI pointed out that the document was entitled “Final draft”. The long glossary at the end of the document indicated certain problems, such as a note asking whether Gross Domestic Product was even used in this document, but there were also several terms described here - for example, “founding documents”, “institutional development” and “head of department” -  that were not found elsewhere in the document. The glossary also used the old terms of  “welfare organisation” and “welfare services”, suggesting that it could have been copied across from something prior to 1994.

Mr Solomons concluded that the existing and proposed new funding policy created would perpetuate a situation where the children’s sector NPOs were subsidised by the Department of Social Development for vital social services being provided to children, instead of the correct position, where the DSD must full fund all services that it contracted from this sector. In addition, he summarised that the new policy must reflect a clear commitment by government to ensure adequate funding of social services for children, within a clear transformation and development agenda.

The Chairperson asked whether the organisations had looked into developing partnerships with the private sector and various international foundations.

The Chairperson asked whether the NPO sector felt that any improvements could be made through capacity building, and she asked the presenters to expand on what they saw as government’s role in building capacity.

The Chairperson also wanted the presenters to comment on their general impressions of the DSD document.

Ms J Masilo (ANC) asked in what provinces the organisations were working.

Ms Masilo asked if the funding received by the various organisations had declined, or whether they were able to expand their base of operations.

Ms Masilo also wanted more clarity on the Free State judgement.

Ms S Kopane (DA) wanted to know whether the policy set out by the National Welfare Forum had been implemented. She agreed that it was unclear how the policy could be implemented if it only contained broad suggestions. She wanted the DSD to respond the allegations made by the presenters that the Document was not made available for comment before being enforced.

Ms H Makhuba (IFP) agreed that NPOs should have been consulted when the policy was being drafted as it would have addressed several issues raised in the meeting.

Ms Kopane further asked the DSD to explain how it would create a uniform framework for the financing of social welfare programmes and what monitoring methods were being used to evaluate the success of the new funding practices. She also asked what was being done to ensure the sustainability of funding for the NPOs.

Mr R Bhoola (MF) wanted examples of the under spending by the provinces.

Mr Bhoola asked what lessons might have been learned from the consultative process between various NPOs working in a specific area.

Ms H Lamoela (DA) sympathised with the NPO’s positions on funding schemes. She wanted to know the NPO’s suggestions around remuneration of staff, and what solutions they might proffer for the Department.

Mr Lamoela wanted to know what happened to children if the NPO in an area ceased operations.

Ms N Gcume (COPE) was under the impression that many NPOs in rural and remote areas did not possess the expertise to render adequate services, and asked if, in this situation, a mentoring programme in a lager organisation might not be able to assist a smaller NPO.

Ms Gcume argued that there were probably many organisations who would be able to get funding from private institutions and donors, but instead relied on government for funding. This had to be addressed, and she suggested that government must reassess its role when funding NPOs. She also argued that the there were NPOs in the Free State that were receiving funding from various difference departments, and said that this too must be addressed.

Ms Makhuba wanted more information about the allocation of funds to individual provinces.

Ms Makhuba also wanted to know how much work was being done with disabled children.

Ms M Mafolo (ANC) wanted to know about the level of funding in Western Cape and asked whether the change in administration had made any impact on the operation of the NPOs.

Ms Kopane wanted to know how much money the Department had allocated in order to implement the policy.

Mr Solomons responded that the trend, both within the Children’s Institute and the NPO sector as a whole, was that funding from the private sector and private foundations was declining, as well as the funding from government. As a result, many NPOs experienced extensive financial stress, and this in turn had resulted in a decline in the number of services that the NPOs were able to offer. He added that all NPOs had reported a drop in income, irrespective of the source. While there had been an increase in demand for the service, there was a decline in the final services provided, because of lack of funding. He cited the example of Molo Songololo, who had signed a three year agreement with DSD to provide services in the Western Cape. However the funds released by the DSD were not sufficient to provide all the services requested by the DSD.

He added that many NPOs were now re-examining their structure and services in order to address the funding crisis. While some might reduce the number of services rendered, others might reduce the number of staff and facilities. He further pointed out that if the NPOs had to retrench staff, these talented staff were lost to the sector as a whole, and this would be harmful to the broad sector. NPOs were governed by the Companies Act, and in addition, in order to work with government, had to be a registered organisation. They had to meet the necessary strictures around good governance, good management and good financial practices. This required sufficient administrative staff. Government and private companies would impose their own requirements for funding, so the NPOs had constantly to monitor their finances and structures to comply with those requirements. Strong monitoring and evaluation processes would be part of the requirements.

Ms Lalu responded to the questions around financing, noting that the sector was conducting extensive research on the allocation of funds to each province, and analysing the provincial expenditure. She added that she could give access to the ongoing research on a later date.

Ms Lalu agreed with the remarks of Mr Solomon but said that the NPOs had shown incredible tenacity and adapted to the new budgetary constraints. However, under-funding was not sustainable and eventually the services provided by the NPOs would be disrupted. The NPOs had requested the DSD not to cut funding, so that the NPOs could continue fulfilling the DSD mandates. She indicated that in areas where the NPOs ceased operations, the people were simply left to their own devices, and that nobody would be monitoring what happened to children. In some cases, NPOs from nearby areas would assist in absorbing the people left behind. However, in most cases, if an NPO closed its doors, the children, in particular, would have no other place to go.

Mr Zane Dangor, Special Advisor, Department of Social Development, stated that the submission made by the CI was helpful to the Department. The DSD would look into reopening the channels of dialogue with the NPO sector.

He said that the NWF did fund some organisations in recognition of the good work done in their communities. However, the Minister had found that, in some of the poorest and remotest areas, the NPOs were fund-raising on their own and were not receiving any government funds. The DSD needed to look into this matter and examine which of these very remote organisations could qualify for DSD funding. He agreed that it would be important for the DSD to examine whether all the needs for Early Childhood Development were being met, and to provide maximum funding to NPOs that were fulfilling this particular mandate. He also indicated that another of the DSD priorities was tackling gender based violence. Mr Dangor assured the Committee that “prioritisation” would not mean taking away resources from NPOs but it focused on how better to manage the few funds the Department had, in order to render its services better.

Mr Dangor said that the DSD felt that the provinces had too much discretion around how the funds were to be used. In many cases, the funds could be mismanaged, and it was in order to prevent this that the Department had decided to implement a uniform national policy on the usage of funds.

Dr Maria Mabetoa, Deputy Director General: Welfare Services, Department of Social Development,  stated that the policy was not final, and that more policies would be created to address the issues raised by the CI. She added that the establishment of a uniform national funding policy would be critical, in order to ensure that all provinces were treated equally but in line with their own capacity, and that there were no discrepancies in the way the funds were being utilised by the provincial departments. She acknowledged that the actual amount of funds received the NPOs could not be stated because most of the funds were allocated by provincial governments. At the national level, approximately R22 million was allocated to national NGOs.

Dr Mabetoa urged Members to study the guidelines in conjunction with the main policy document, to get a better sense of how matters would unfold.

Dr Mabetoa also noted, in response to the consultation queries, that DSD had consulted with several national and provincial NGOs before drafting the policy. The comprehensive final policy would take into account those consultations. She added that more consultations would take place before any legislation would be passed.

Adoption of Outstanding Minutes: 10, 16 and 23 August
The Draft Minutes of meetings held on 10 August 2011, 16 August 2011 and 23 August 2011 were adopted, with minor grammatical amendments

Oversight visit to Bloemfontein
The Chairperson and the Members discussed the logistical details of their oversight visit to Bloemfontein.

The meeting was adjourned.


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