Non Profit Organisations capacitation & compliance with NPO Act: NDA & DSD briefing

Social Development

22 August 2018
Chairperson: Ms R Capa (ANC)
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Meeting Summary

The Committee was addressed by the Department of Social Development (DSD) and the National Development Agency (NDA) with regard to the capacitation of non-profit organisations (NPOs), as well as compliance with the NPO Act.

The DSD’s presentation shed light on the NPO database, the mandate in terms of the NPO Act, and how the Department planed to interact further with NPOs. It was stated that the NPO register was available online to all the government departments that wished to access it, and was not specially reserved for the DSD. The NPO Act was currently being amended by the Department in order for it to be stricter in ensuring NPO compliance, as well as ensuring that NPOs were treated and funded more or less the same way. The presentation also highlighted that the Department was currently working on its interaction with NPOs through roadshows and capacity building programmes, which increased the chances for NPOs to strengthen their structures and communicate with the Department if need be.

The presentation by the NDA dealt more with NPO funding. It highlighted the confusion as well as the problems that arose pertaining to NPO funding. Since 1998, the NDA had provided grant funds to all those that needed it. This funding came solely from the DSD, as many government departments and officials believed that the DSD was solely responsible for the NDA. This confusion was clarified by stating that each and every government department was meant to allocate funds to the NDA in order for the NDA to be able to give those funds to respective NPOs.

This presentation was welcomed by Committee Members, especially as it revealed that the Cabinet was responsible for the NDA not receiving enough funding, due to the lack of interest in cooperation with the NDA. The departments rather preferred to give the funds straight to their respective NPOs, which was unlawful. The NDA was working on becoming the legitimate ‘middle-man’ for NPOs to receive funding from.

Meeting report

NPO ACT: Department of Social Development Presentation

Mr Peter Netshipale, Deputy Director General: Department of Social Development (DSD) said the presentation would include more information on the non-profit organisation (NPO) register or database, the mandate in terms of the NPO Act, the plan the Department had with NPOs, as well as how they work together.

The NPO Act highlighted the relations the Department had with NPOs. One of those was to register NPOs, and then insert them into the national database. As of last week, the number of registered NPOs had increased to 197 000. Of this number, only 20% were compliant. Most of the registered NPOs were found in Gauteng, followed by KwaZulu-Natal (KZN). The least were found in the Northern Cape.

When registering the NPOs, the United Nations (UN) classification was used as a guideline. This meant that they were registered as voluntary companies that would not receive any personal profits in any way. Majority of the NPOs on the national database deal directly with social issues. This register was a national one, and if an NPO was not on it, then it meant it was not registered. The annual growth rate was steady. There were various NPOs that were registered and were continuing to register, but compliance was still a big issue.

In terms of the NPO Act, the Department was mandated to provide certain activities and services, some of them being capacity and support to the NPOs, as well as assisting community members that wanted to register new ones. Section 25 of this Act states that the Department needs to facilitate the development and implementation of policies that affect NPOs, and to make sure that NPOs maintain their governance standards, etc. In April through to December 2017, 54 local municipalities were visited, at which 3 150 NPOs were workshopped.

Following the resolution from the NPO summit, there were a few observations brought forward by the NPOs themselves. NPOs complained that the DSD was not accessible, did not provide guidance and that they needed more assistance from the Department than what was being provided at the time. Roadshows, capacity building programmes, NPO compliance announcements, NPO audits, NPO forums as well as inter-governmental coordination, were some of the programmes being implemented by the DSD to try and address these complaints. The roadshows were improving access to the Department. The DSD goes to areas where small and unregistered NPOs are found, and meets with these NPOs, helps them to apply and register, and provides them with their certificates. The Department then receives report-backs from these NPOs to ensure that they were complying. Compliance enhancement was also done to ensure that all NPOs were aware of their responsibilities. 147 roadshows were conducted, visiting all 147 local municipalities and assisting all NPOs that required assistance. NPO forums were created to once more increase the DSD’s accessibility for the NPOs, and these were spaces where they could voice all that they wanted to the Department.

Intergovernmental forums were also created. This was because other government Departments were sometimes not aware if NPOs were registered or not, which affected the manner in which they interacted with them. This was why the Department then meets with them quarterly each year to update them, as well as train them on how to deal with and manage NPOs that they may have, or wish, to interact with. It also creates a platform for enhancing partnerships within government departments.

Over 16 000 NPOs were currently being funded by the DSD, the majority of them being in Limpopo. They all render a variety of services. Over R7 billion was due to be transferred by different provinces to their respective NPOs. The majority of the funds go to NPOs that deal directly with children and families, social welfare services as well as restorative services. NPOs that provide development and research services receive the least funding.

There was a request that the Department partners with the NPOs they fund. A partnership model was then drawn up and was being implemented. It helps in providing guidance as well as ensuring that planning was not one-sided when it comes to projects to be undertaken. The issue of transformation in the sector still needs to be addressed. Most of the funding goes to NPOs that are well-off, so one of the pressing matters is to ensure that funding goes to NPOs that are really in need. This partnership would allow this transformation or correction to take place. It would also improve transparency as well as accountability of NPOs and would encourage productivity as well as the effectiveness of NPOs.

A few challenges were noted by the DSD, mainly that of the national level wanting to increase the number of registered NPOs. This puts a strain on human capacity in the Department, as there was only so much employees could do. Another challenge was that of NPOs’ non-compliance. They were not submitting the relevant reports to the Department, which makes it difficult for the Department to keep track of the NPOs that were still functioning and those that no longer are. There was also an issue of internal squabbling once NPOs receive funding. This was counterproductive for both the Department and the NPOs, as they were not using the monetary resources provided to their full capacity.

Going forward, the Department was currently reviewing the NPO legislation. This would ensure that the issue of some NPOs receiving special treatment would be sorted out. NPO roadshows would also continue to help with all that they were meant to. Lastly, the Department recommendation was that the Committee provides the Department with assistance and continues to help.

Discussion

 
Ms B Abrahams (ANC) asked if the Committee could get a complete register of all NPOs in SA. How many NPOs were actually sustainable and effective? What seemed to be the challenge of NPO compliance, even though so many roadshows and compliance help had been supplied? Were there criteria to look at when NPOs send in their application forms and do not qualify to be registered? How many churches had registered NPOs and cooperatives? How frequently were NPOs monitored? What were the consequences for NPOs that were non-compliant? Were there places where the community could send in complaints about them?

 

Ms V Mogotsi (ANC) asked that since the presentation stated that capacitation assistance for NPOs had already been provided, which fields was it provided in? What criteria were used to fund the NPOs that the DSD was funding? What mechanism did it use to monitor those that it was funding, as well as those that it had trained? What criteria were used to decide that forums are established? Were funded NPOs transparent? Did the Department really know their activities, or did they just continue funding them even though they were not performing? What was meant by ‘covered’ and ‘visited,’ when making reference to the roadshows during the presentation?

Ms S Tsoleli (ANC) asked if the Department had undertaken a study to see why there were so many NPOs. Were people now making money through the government by registering as NPOs? This was very serious and alarming. Even with the well-established NPOs, there were cases of abuse -- either of their staff or of the people they were meant to be assisting.

Ms B Masango (DA) asked if the model would be able to prevent a National Welfare Organisations and Non-Governmental Organisations (NAWONGO) situation? What was its weight? What did it mean to say that an NPO was well off, as reference to this had been made during the presentation? Although a NPO might be well-off, the people that it was meant to help were not. How was this going to affect the beneficiaries of the well-off NPOs? Did any of the old, long-standing NPOs fall under the category of non-compliant? What were the tweaks that were being made to the legislation?

The Chairperson fully agreed with the issues raised by Committee Members. Seeing as how there have now been so many changes in the country, had the Department been in a position to review the role of NPOs? This was because the role of NPOs seemed to have changed from being a strong support system in communities to something else. The contribution NPOs made to the history of the country was immense. Had the role of NPOs been reviewed when transformation occurred in the country -- for example, when the South African Social Security Agency (SASSA) was developed? Whose needs do NPOs meet? This needed to be clear, as they were funded by the Department. Were the older NPOs told that although they still received support, they needed to transform in order to keep up with current times and be able to solve current issues? Why did the Department keep registering new NPOs instead of helping the already existing ones to transform and be able to adapt to the changes that occurred? If the DSD continued to register new NPOs, it might find itself in hot water.

DSD’s response

Mr Netshipale said that registration of NPOs was in compliance with the NPO Act. The register of all NPOs in the country was available online. The registration function was also in compliance with the NPO Act, and had no relation with funding. Every single department in the country helped with the funding -- the function of the Department was to merely register NPOs. It did not ask much when registering NPOs, as that would be infringing upon the Fund Raising Act. This was just a general registration process. Once the NPO was registered and wanted to start performing a certain function, the province needed to determine whether it would have the ability to perform or not. If yes, then the provincial government accredited the NPO, and provided it with a second certificate that then allowed it to function legally. If an NPO did not submit reports, it needed to be deregistered.


The Chairperson asked if the older NPOs were also being transformed in order for them to be conducive to current conditions, more especially those that ran early childhood development (ECD) centres? She asked for to be answered, even if it was not now.

Mr Netshipale noted the Chairperson’s question. He proceeded to respond to the question of compliance by saying NPOs that did not submit reports to the DSD were those that were categorised as non-compliant. The policy clearly stipulated the manner in which monitoring was carried out.

The policy prescribed the criteria for funding NPOs, together with Treasury. Opportunities for funding were announced or advertised publicly, and NPOs that wished to receive this funding respond and an agreement is reached as to how much funding the NPO would receive, as per the policy stipulations.

The model aimed to include all the various categories of NPOs and create a space where all units would work cohesively together. It was not there to intimidate NPOs, but it was there to encourage them to speak up about all the challenges they face and how the Department may be of assistance.

The Chairperson expressed dissatisfaction with the fact that the national forum was a representative of the whole country. There was a disjuncture between those who attended national forums and those who lived in rural areas and who really needed to be able to attend these forums. How were locals represented?  She was asking these questions to try and expose, as well as stimulate, the Department to grow in the aspect of capacity building. She also requested a draft of the DSD’s policy direction.

Mr Netshipale noted the Chairpersons sentiments. He then responded to the question of churches by saying that some of the churches that functioned as NPOs were registered and some were not, as registration was completely voluntary.

The review of the NPO Act was still in process. Some of the things that were currently in the Act were no longer necessary, and these were all being corrected. There would also be categorisation of NPOs according to size, in order for the Department to determine how much attention was directed towards which NPO.  

Ms Abrahams clarified her question by asking if an NPO could be registered more than once, or if a person could register more than one NPO under their name?

 Mr Netshipale responded that this was not possible.

The Chairperson suggested that the Committee, the Department and the NPOs have an Indaba where they could all interact directly with each other. This would be beneficial for the NPOs, as they would get a chance to understand the Act properly, and also contribute to the amendment or correction of the policy if need be.

National Development Agency presentation

Ms Thamo Mzobe, CEO: National Development Agency (NDA), began by expressing appreciation for the support that the Committee had been giving the NDA. It was becoming clearer and clearer that the NDA had a void in discussing policy issues with the public. NPOs were but one section of all the people the NDA dealt with. It had the function of providing grant funds. However, there was a gap in the integration between funders and NPOs, and this was causing confusion with regard to who funded who.

The Chairperson asked if she was correct in saying that the database that the DSD provided was not for the Department only, but for all departments under the national government to be able to access and use.

Ms Mzobe agreed with the Chairperson, and informed her that she was indeed correct. The database was readily available for all the different actors that may want to engage with or fund NPOs in any possible way. This was important, because this was the only database that had on it every single registered NPO in the country, and any NPO that was not there was not legitimate.

The NDA had been granting funds since 1998. This funding had always been informed by civil society programmes. The grant funding that was made available to the NDA was coming only from the DSD, and not all departments, which was going against the stipulation of the Act. This engagement would address that confusion, and ensure that all departments became aware of the fact that they were all meant to be contributing towards the NDA. 

Discussion

Ms Mogotsi thanked Ms Mzobe for clarifying the issue of funding. She then asked what the NDA had done to try and resolve this issue, as the mandate of the NDA did not lie under the DSD only.

The Chairperson mentioned that what Ms Mogotsi was saying was indeed correct, as the issue of the NDA mandate had been brought before the Committee before. The NDA was meant to be funded by all government departments, but the former Minister had responded to that by saying that members of the Cabinet much rather preferred dealing with their respective NPOs directly, and not through the NDA. The problem therefore lay at the higher level of Cabinet.

Ms Masango welcomed the suggestion of dichotomising the DSD and the NDA, as the NDA was meant to be supported by the whole government and not just one department. It had been a misunderstanding since 2000. Although it worked closely with the DSD, the NDA did not belong to that Department solely.

Ms Mzobe said that in 2013, a new model called the Civil Society Organisation Development Model had been developed. The purpose of this model was to shift the NDA’s function from solely grant funding to performing more developmental actions, to ensure that NPOs that had already been funded did not fall between the cracks of non-compliance and ineffectiveness. The grant funding definitely had to come from the respective departments. For example, an NPO that dealt with sport had to receive funding that was contributed by the Department of Sport and Recreation. This programme would also help ensure that all NPOs were receiving funding the correct and fair way, and it would stop some NPOs from receiving more funding than others.

The Chairperson strongly recommended that NPOs needed to be present when they were being spoken of. She also brought to the NDA’s attention that some departments may not be aware of the NPO Act, which was why they relied solely on the DSD to fund the NDA. A letter from Minister Shabangu, which contained recommendations from the Speaker of Parliament, was read to everyone present.

Ms L van der Merwe (IFP) pleaded that this Committee engage with the Minister of Finance as well as Treasury in order to help guide the Minister with budget allocation. This was because Ministers made it clear that they directly wanted to fund their respective NPOs directly and not through the NDA, but that was unlawful. Treasury therefore had to intervene and sort this out.  

Ms Tsoleli strongly agreed with the Chairperson’s recommendation. She also agreed with the suggestion that the NDA remain the main fund distributor in order to prevent the issue of some NPOs being funded by multiple departments.

Ms Mogotsi referred back to the Indaba proposal, and suggested that a report or a media briefing be done in order to inform even the smaller NPOs about the Indaba so that they attended. This would increase civil society participation as well as engagement with governance issues.

The Chairperson fully agreed.

Ms Abrahams asked why the government still imported produce, rather than manufacturing the produce internally.

Mr Braam Hanekom, Board Member: NDA, thanked the Committee Members for their cooperation and support on a service delivery issue like this.

Ms Mogotsi asked the NDA if they had any big project in terms of civil society, and how that project had been faring in the public so far. This was simply just to check the capacity of the NDA.

Ms Mzobe responded by saying that while there was a database that they shared with the whole government, it was not all departments that were interested in working with the NDA. Even cooperation with SASSA had to be forced from their side. The lack of interest of officials was therefore the main reason why some Departments purchased produce externally, rather than getting it locally sourced.

The meeting was adjourned.

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