There were 228 822 Non-Profit Organisations (NPOs) registered in South Africa, of which 58.44% were non-compliant with the relevant legislation. In the Western Cape, there were 23 492 registered NPOs, and the non-compliance figure was even higher, at 60.36%. These statistics were shared with the Committee by the Department of Social Development (DSD) during its presentation on the registration process and the funding, monitoring and evaluation of NPOs in the province.
The Department said the programme that gave effect to the registration of non-profit organisations (NPOs) was the Institutional Capacity Building (ICB) programme. It covered the various aspects of the programme, such as the state of the NPO register, NPO certificate distribution, capacity building, the Know Your NPO Status (KYNS) campaign, and the response to the impact of COVID-19 on operations. It also discussed the Community Development monitoring approach and process, the organisational risk assessment, and indicated the organisations visited in the 2019/20 financial year.
The funding, monitoring and evaluation of NGOs was discussed in detail, including the expenditure for the 2019/20 financial year, the funding process for social welfare and community development services, and the funding criteria and methods for funding NGOs. Attention was also given to the monitoring, supervision and assistance provided to these organisations.
Members were mainly concerned about the registration process, and asked for clarity on what the Department meant by monitoring all funded NGOs based on a three-year cycle. What methods were used to determine if NGOs were medium or high-risk organisations? What constituted non-compliance, and was the Department in contact with non-compliant NPOs? The Committee wanted to know the number of applications received for funding, those that were unsuccessful, and the reasons for that. With the 60% non-compliance rate, members asked whether the Department would increase its number and target for training sessions. There was interest in the funding application and evaluation process, and whether this could be completed online or whether it was still a paper-based process. Did the Department assist NPOs with drafting business plans?
The Committee also asked whether it was permissible for NPOs to receive donations/funding from foreign sources. Members asked about the number of monitoring officers in the Department, and requested an on-site monitoring report and a schedule of all NPOs recommended for funding. Another issue was that many NPOs were struggling to cope with bank charges on business accounts, and Members suggested the Department should allocate funding to assist them to sustain their accounts. The Department was asked if it had plans to increase funding for victim empowerment programmes at centres located in rural and working-class communities, given the increased incidence of gender-based violence (GBV) in the Western Cape.
Funding, monitoring and evaluation of NGOs
Dr Robert Macdonald, Head: Western Province Department of Social Development (DSD), said the programme that gave effect to the registration of non-profit organisations (NPOs) was the Institutional Capacity Building (ICB) programme. This was based at the DSD’s head office, and had five staff.
The programme was responsible for providing assistance in terms of NPO registration and compliance in terms of the NPO Act 1997, and had a provincial designated desk at the contact centre that assisted in the registration process. The actual registration was done by the NPO directorate at the national DSD.
The ICB programme worked in conjunction with Community Development Practitioners (CDPs) in regions to assist NPOs. It had a holistic approach and did not focus solely on legislation and compliance, but also on other aspects of organisational development through an extensive training and mentoring programme that enhanced the overall sustainability of the organisation. It was currently an ‘own service’ programme, and it did ‘in house’ programmes in conjunction with partnerships.
The register currently listed 228 822 NPOs nationally, of which 23 492 were in the Western Cape. Nationally, 58.44% of the NPOs were non-compliant, while the figure for the Western Cape was even higher, at 60.36%.
The number of NPOs assisted with registration had almost doubled in the past four years – from 862 to 1 552 – and many registered with the national DSD directly.
The NPO help desk was responsible for all certificate distribution in the province, and this process had also enjoyed year on year improvement. One of the challenges was the delay from the time the organisation was registered in Pretoria to the time the certificates got to the help desk. Sometimes it took months for certificates to reach Cape Town. The help desk had migrated a large part of its operations online in the last two years. The benefit of processing online uploads was better tracking and a turnaround time of 14 days on average per registration. The national DSD turnaround time was three to four months per registration.
Dr Macdonald said with capacity building, the training focus was on NPO registration and compliance.
The training of officials also featured prominently in the programme. Thirty-six training sessions had been conducted in the province, which included Beaufort West, George, Wolseley, Knysna, Oudsthoorn, Vredenburg, Paarl, Worcester and the metros. Training was for both registered and unregistered organisations, regardless of funding status.
A campaign had been launched by the national DSD to make organisations aware of the need to comply with the NPO Act. There was currently a moratorium on the deregistration of NPOs, all of which were encouraged to find out their status and then comply. The Western Cape was actively participating in this campaign, with head office and regional Community Development staff having been trained on how they could assist NPOs to comply. The “Know Your NPO Status” (KYNS) campaign had been incorporated in all of the ICB training.
The NPO registration and training programme involved groups of people in training venues, and because of the Covid-19 situation, this posed and compelled the ICB programme to revise its operations. Although the NPO help desk was still operational, in the current lockdown phase, face to face contact was being avoided, and assistance was given via telephone and email. There was a drop box at the contact centre for organisations to drop documents. The Department’s current material was being modified for online training sessions with NPOs and officials, but there would be greater use of social media platforms in the future. Post lockdown, ‘social distance’ training would be introduced.
Dr Macdonald described Community Development’s approach to monitoring NPOs.
He said the DSD contracts and funds NPOs to assist with its service delivery mandate. Due to a lack of human resources, Community Development had initially focused on line monitoring performed by policy developers, but since October 2018, for the first time it had a full staff complement of three monitoring officials. During the 2019/20 financial year, an integrated performance monitoring approach was implemented/piloted in the Community Development directorate. This approach was implemented based on the departmental Standard Operating Procedure (SOP) for performance monitoring and evaluation which was approved in August 2017. Performance monitoring was focused on the governance, management, human resources (HR), occupational health and safety (OHS), finances, service delivery, external relations and sustainability of funded organisations. It involved engaging the board, management and beneficiaries over a period of three days. Performance monitoring interrogated compliance with the transfer payment agreement (TPA), annual performance plan (APP0 and performance information.
Dr Macdonald said all funded organisations were earmarked to be monitored, based on a cyclical process of three years, as recommended by internal audit. Risk based performance monitoring was directed at :
- All youth cafes;
- All organisations that were not monitored in the past 24 months;
- Organisations with a budget exceeding R1 million;
- Organisations with developmental areas as identified in quarterly assessments and line monitoring;
- Medium to high risk organisations;
- Low risk organisations.
The DSD’s approved performance monitoring plan involved 21 organisations, and monitoring was conducted from 18 June 2019 to 4 March 2020. This had been divided into four block periods to accommodate verification of performance information.
Funding, Monitoring and Evaluation of NGOs
Dr Macdonald said the funding of NPOs represented a large part of the DSD’s budget. The Department contributed significantly to the lives of the poor and vulnerable in the Western Cape through this funding. In the 2019/20 financial year, a total of 2 186 NPOs had received funding from the DSD in order to further its policy objectives and priorities. Funding was implemented in accordance with the Department’s policy on the funding of non-governmental organisations (NGOs) for the provision of social welfare and community development services. Last year, just under R1.3 billion was provided to organisations delivering a wide range of social services to the community.
The Department allocated funding provided by a Vote of the Provincial Parliament to the NGO sector on the basis of the following core principles: accountability and transparency; appropriate prioritisation; capacity building; efficiency and cost-effectiveness; equity: and professionalism and best practice. The funding was allocated within the ethical framework and governing practices of professional councils, such as the South African Council for Social Service Professionals, and within the legislative requirements and norms and standards as prescribed by the Children’s Act, the Older Persons’ Act, the Child Justice Act, the Prevention and Treatment of Substance Act, etc, and in line with internationally established best practices.
Within its available budgetary resources, the DSD funds the provision of statutory social welfare services and approved priority social welfare and community development services to achieve the progressive realisation of social services rights pertaining to children, older persons, and other vulnerable members of society, as envisaged in the Constitution of the Republic of South Africa;
The funding process takes place within a three-year funding cycle, starting with the notification of the intent of the DSD, calling for proposals via advertising in the media and circulars. Business plans and application forms are submitted by NGOs which set out the main cost-drivers of each project/service output to one central point in the DSD. The business plans submissions are recorded and then submitted to relevant programme managers.
The programme managers analyse and assess the business plans and application forms in terms of the DSD-approved eligibility for funding criteria and predetermined specifications. Currently funded organisations are also assessed on current performance. New organisations are assessed on their capacity and site visits conducted. Programme managers compile a schedule of all NGOs recommended for funding, and those which are not. The funding schedule is recommended by the relevant Chief Director and Social Development Head of Department. The funding schedule is approved by the Minister of Social Development, and the successful and unsuccessful NGOs are notified of the outcomes.
Dr Macdonald described the Department’s stringent funding criteria, and explained the funding methods which were used in respect of social welfare and community development services that were aligned to the DSD’s annual performance plan. He said funding may include seed funding for emerging organisations, pilot/new projects, funding for non-consumables such as furniture, equipment, and accommodation and vehicle rental as required to render a specific programme or project.
The DSD’s line programmes monitor and assist the 2 186 funded NPOs per annum, or alternatively in a three-year cycle, in terms of the relevant contract – the Transfer Payment Agreement -- legally entered into between the NGO and the Department. This entailed the assessment of:
- Progress reports submitted by NGOs on a quarterly basis;
- Verification and validation of non-financial data, such as a register of beneficiaries of each NGO;
- Targets, outcomes and activities as prescribed in the contract;
- Income and expenditure per quarter;
- Audited financial statements on an annual basis (September-December of a particular year).
Line programmes would conduct site visits on an annual basis which would entail:
- Financial and governance monitoring by monitoring and reporting officials; and
- Service delivery monitoring on norms and standards by registered social workers (in accordance with relevant legislation, such as the Children’s Act).
Capacity building would be provided by line programmes for funded NPOs. If any non-compliance was identified, the line programmes would develop a service delivery improvement plan (SDIP) in order for compliance within a three to six-month period. Follow-ups would be done within a six-month period to ensure that SDIPs were implemented and, if needed, further capacity building and support would be provided by the capacity building unit on issues of finance and governance management.
Line programmes would assist NPOs with:
- Registration of NPOs as old age homes, in-patient treatment centres, child and youth care centres (CYCCs), early childhood development (ECD) facilities and after school care facilities (funded and unfunded NPOs);
- Registration of service delivery programmes at CYCCs and ECDs (funded and unfunded)/diversion programmes etc.;
- Training and registration of carers/ECD educators;
- Accurate completion of non-financial data, progress reports and contracts; and
- Any new NPO that applied for funding would be assessed by line programmes and be guided in order to comply with legislative norms and standards.
Ms A Bans (ANC) asked about registration and whether the Department could explain what it meant when it mentioned that all-funded organisations were earmarked to be monitored, based on a cyclical process of three years. She wanted clarity on whether monitoring took place once every three years, and the method used by the Department to determine the medium/high-risk organisations. She asked for the exact amount of monitoring conducted by the Department, and whether there was any work conducted on the financial compliance of NPOs.
The final two questions were on funding. She asked the Department to indicate the number of applications received for funding, the amount of those applications that were unsuccessful and the reasons behind that. She also wanted to know the kind of powers the MEC had for making changes and recommendations to the funding schedule.
She asked how many monitoring officers the Department had, and requested an on-site monitoring report and schedule of all NPOs recommended for funding.
Mr R Mackenzie (DA) said the Department had mentioned that 91 applications had been rejected and four cancelled, and asked for the reasons for those rejections and cancellations. Did the DSD provide training for individuals to ensure the applications were completed correctly?
Mr G Brinkhuis (Al Jama-Ah) said the Committee supported the Department’s budgets and all its allocations to the various NPOs and NGOs. He commented on the requirement for an NPO to have a business account, arguing that many NPOs were struggling to maintain their accounts because of monthly bank charges. He urged the Department to budget and to also allocate money to assist NPOs in sustaining their business accounts.
The Chairperson asked the Department to respond to the first round of questions before proceeding to take follow-up questions.
Dr Macdonald addressed the question on the monitoring of financial compliance of NPOs, and confirmed that monitoring did include looking at financial compliance alongside the financial requirements as set out in the agreement signed by NPOs with the Department for the transfer of funds. He also mentioned the reconciliation used by the Department to ensure that funds were used for their intended purposes.
The Department would submit a response in writing detailing the amount of applications received and the reasons for unsuccessful applications.
He referred the MEC’s power to make changes and recommendations, and said the MEC would not change any recommendations, but did act as a decision maker on the final allocation in terms of the departmental funding policy, alongside the Accounting Officer. The MEC could disagree with recommendations and request alternative measures, but the recommendations would not change.
He requested Mr Charles Jordan, Chief Director: Social Welfare, DSD, to address the question on the amount of monitoring officers present in the Department, and to provide a general overview. The Department would submit a detailed written response if Members needed additional information and clarity. He indicated that each programme officer had monitoring officers, and some of that information was in Mr Jordan’s sphere of expertise.
The Department would also submit a written response to the question on the schedule for NGOs recommended for funding. Mr Jordan would assist in responding to the question about the applications rejected and cancelled.
He responded to the question on NPOs struggling with bank costs. The Department’s funding allocations were usually determined by the percentage of administration costs involved in enabling NPOs to fund the cost for acquiring an auditor for their financial statements, management and book-keeping. These funds could also be used to assist with bank costs. The Department did try to assist where it could with NGOs experiencing significant challenges with liquidity, but generally the funding provided did include administrative costs.
Mr Jordan responded to the question on the monitoring cycle, and said the Department should get to the monitoring or the quality assurance tool within at least three years. This did not mean that the Department conducted monitoring every three years, but included in the three-year cycle would be the annual assessment, the desktop monitoring, rapid assessments and spot-checks. He added that once the Department implemented the quality assurance tool, it would conduct that at least every three years. The Department had decided on the three-year period because of the amount of NPOs. He explained that the quality assurance process could easily take up to five days because it was such an in-depth process of looking at budgets, governance, daily operations and interviewing clients etc. He clarified that every single NPO underwent some form of monitoring annually within a three-year cycle.
He addressed the question on the number of monitoring officials. There were an estimated 55 to 57 officials in the Department, and they were divided among programmes. The Department had an additional four staff members working solely on financial inspections. The officials were constituted of monitoring officers, specialised social workers and financial inspectors.
Mr Mzwandile Hewu, Chief Director: Community and Partnership Development, DSD, answered the question on rejected and cancelled applications. He explained that this was mainly based on insufficient information being provided by NPOs. The Department assisted organisations in providing such information, but in some instances, these organisations did not provide sufficient information within a specified period and were then rejected on those grounds. Since 2018, NPOs had been coming on board and acknowledging the value of the assistance provided by the Department, and the situation had improved since then.
Ms Bans said one of her questions about the number of applications received for funding and the amount of applications that were unsuccessful, had not been answered by the Department. She also repeated her question about the MEC’s power to make any changes or recommendations to the funding schedule.
The Chairperson responded that the question had been addressed by the Department – it had stated that it would provide the Committee with all that information in writing. He added that the MEC was part of the decision-making panel, and it could agree or disagree with the recommendations, but it did not have the power to make changes to any decisions once they had been made. He asked Dr Macdonald to provide clarity on this again.
Dr Macdonald confirmed the Chairperson’s response, and added that the MEC made his/her decisions based on the recommendations, and did not have the power to change the schedule either. Instead, the schedule was sent through to the MEC merely for consideration, and he/she could ask for clarity or any additional information on particular issues. Once the MEC had reached a final decision to agree to a set of allocations, there was an appeal process that followed involving a separate appeal panel. If the appeal was unsuccessful, then the organisation also had recourse to go to court and request that the decision be set aside and that its application be considered positively.
Ms N Bakubaku-Vos (ANC) asked the Department to explain what constituted non-compliance, and if it could provide the Committee with a breakdown of the non-compliant NPOs per region. She expressed interest in identifying the amount of regions that were rural, and those that were in working-class communities.
Given the 60% non-compliance rate in the Province, she asked whether or not the Province should increase its number and target for the training sessions.
She wanted clarity on what was meant by all-funded organisations earmarked to be monitored, based on a cyclical process of three years. She asked whether this meant that monitoring took place once in three years.
In line with the Department’s needs and assessment, as outlined in its core principles, she asked if there were any plans to increase funding for victim empowerment, especially in centres located in rural and working-class communities, given the increased number of cases of gender-based violence (GBV) in the province.
Mr Brinkhuis asked the Department to clarify if it was permissible for an NPO to receive donations from foreign sources.
The Chairperson asked about the 60% non-compliance rate in the province, and whether the Department was in contact with any of those NPOs. He also asked about the funding application and evaluation process, and whether these could be completed online or if they were still paper-based. He raised a point on the operation of the application process, and commented that NPOs applied through the national Department of Social Development, but that the NPO certificate was sent to the province for distribution. He asked whether NPOs were sent a notice on the arrival of their certificates, or if they were given an estimated time of arrival.
He also asked the Department to map out the extent of the roles of its monitoring and evaluation processes in instances where an NPO was registered by the national Department of Social Development and did not receive funding from the DSD or the Western Cape government in general.
Dr MacDonald said the Department would have to get more information on which regions were identified as rural and working-class communities. He was unsure of whether or not the Department had access to this information, since the national Department usually dealt with such records.
Mr Hewu said the Act required organisations to perform certain tasks annually -- for example, holding an annual general meeting (AGM), electing members of the board, and submitting audited financial statements. If any of those requirements were not complied with, the NPO would be deemed non-compliant.
Mr Abdul Ryklief, Deputy Director: Institutional Support and Capacity Building, DSD, said the business bank accounts were one of the biggest challenges faced by NPOs, and the Department was in constant contact with the National Office around the issue concerning NPO capacity building and registration. The National Office had met with the four major banks on several occasions to ask them to provide better deals for NPOs when it came to bank charges, etc. He said the matter was being addressed by the national Department.
Regarding non-compliance, there were two requirements that the NPO Act had set out for NPOs in the country -- they had to produce a narrative report and annual financial statements drawn up by an accounting officer. These reports were expected to be sent in to the National Office within nine months of the financial year end. Other non-compliance issues generally included the updating of details, ensuring activities were in line with the Constitution, etc. The Department also assisted organisations with meeting the requirements. He commented that the 60% non-compliance rate was a huge figure, but it was equally important to remember that the NPO register -- the actual database -- was extremely outdated. Much of the 60% had been dormant for a number of years, and so the Know Your NPO Status (KYNS) campaign was particularly targeting this aspect to ensure the DSD discovered who was still operating, and could assist them with registration.
Mr Ryklief also addressed the question on the distribution of certificates, and referred to a non-compliance list of the Western Cape. He was willing to send it through to the Committee at its request. He indicated the area with the highest non-compliance was the Metro East District, with Khayelitsha as the main area. Much of the Department’s training over the last couple of months had targeted that specific area. He said that before the lockdown, the Department had conducted a massive training programme in Somerset West, with 100 organisations targeted in those areas.
He confirmed that many NPOs received foreign funding, and that other legislation would come into play once this happened. The Department had forensic finance people in the National Office who monitored money coming in. The South African Revenue Service (SARS) also monitored money coming into the country.
He responded to the question about the Department having contact with non-compliant organisations. A large portion of contact with these organisations was conducted through the national Department, but unfortunately due to many organisations failing to update their contact details, there was a breakdown in communication. Some organisations could not receive e-mails, SMSs and mail from the national Department, so much of the KYNS campaign also involved getting organisations to contact the Department and to encourage them to update their details so that they could be invited to training programmes and various workshops that would be happening. He mentioned that his team did have the non-compliance list and had tried to get into contact with the various organisations. Overall, the Department kept in contact with many of the non-compliant organisations, but did not have contact with many of the other organisations.
Referring to the issue of certificates, he explained that when an organisation was registered, it received a standard response from the National Office, which stated that the certificate would be couriered to Cape Town within a specified period, and that the organisation would have to contact the Department. The Department had found that there were massive delays from the time an organisation would get registered and the certificate was delivered. When certificates were delivered, his team would phone or e-mail the organisations to collect their certificates. With the Department’s regional offices, it ensured that the certificates were transported to its regions. The Community Development officials located in these regions would then assist the organisations with the collection of certificates. He added that unfortunately many organisations would register for various reasons and despite being contacted to collect certificates, at times they refused to respond to those calls.
Dr Macdonald addressed questions about the high non-compliance rate and whether the Western Cape should increase its targets for assisting NPOs. He reiterated Mr Ryklief’s statement that many NPOs that were non-compliant had become redundant and had not been taken off the list yet. There was a similar problem on the company’s databases, where a large amount of outdated information was gathering. He indicated that the number of NPOs had doubled in the period reported in the presentation. This was partly due to an unequal number closing down. The reality of this was that there would always be NPOs opening up, and the Department aimed to support as many of them as possible, but it was not something that it had much capacity for, because it had to focus resources on rendering services and monitoring the organisations.
The Department partnered with many of the organisations – 2 200 organisations to be exact. The bulk of its capacity was dedicated to ensuring that the funds provided were used correctly and also provided support to the new and emerging ones. Many of them were established by people who were capable of managing operations themselves with minimal government assistance.
The NPO Directorate at the National level was also assisted by the National Development Agency (NDA), which was also involved in capacitating the NPO sector as well.
He responded to the question on the three-year cycle, and said the Department had put in place a process where low-risk NPOs were monitored once every three years, and that the medium and high-risk ones would be monitored more frequently. Some would be monitored twice a year, for instance, if they were facing serious challenges. It also depended on the nature of the kind of monitoring that was conducted by the Department, because some of the organisations that it would be monitoring used the Standardised Monitoring Process. With this standard process, the Department could check the financials and human resources, as well as the norms and standards, but with other organisations more intensive processes would have to be conducted if they experienced challenges in complying with specific statutory areas of service.
Regarding the digitisation of the application process, he explained that NPOs could access applications electronically, but the submission was paper-based. The reason for this was because many of the organisations did not have access to the internet, and were not necessarily strong administratively. Ideally, the Department was looking at moving towards becoming more digital, but the benefits of a paper-based submission ensured that the Department received all the necessary documents signed by the organisations.
When an NPO was registered by the national DSD and was not funded by the province, the Department would attempt to assist with the registration process, but the province played a supportive role alongside the NDA.
Mr Jordan responded to Ms Bakubaku-Vos’s question, and confirmed that the Department had increased some of the funding to the Victim Empowerment Programme (VEP), and was also looking at expanding it with an additional six shelters. The national Minister of Public Works and Infrastructure, Ms Patricia de Lille, had provided the province with six buildings, specifically in rural areas. It was in the process of establishing those services as soon as the buildings were formally transferred to the Department.
The DSD supported a number of organisations in the victim empowerment field, and added that before these organisations could receive funding, they needed to comply with the norms and standards. They needed clearance from the Municipality before they could be considered for funding. The clearance process included safety clearance, fire clearance, zoning clearance etc., but when it specifically came to its norms and standards as per legislation or the Domestic Violence Act, the Department assisted, regardless of funding.
Further follow-up questions
Ms Bans asked if the Department was assisting NPOs with the drafting of business plans, and whether the youth funding went entirely to youth cafes.
Mr Mackenzie asked whether the application forms were available on the Department’s website.
Dr Macdonald responded that the Department assisted organisations with compiling business plans and provided templates for organisations to utilise.
Regarding youth funding, he said there were other organisations which were funded for youth programmes, aside from the youth cafes, although the bulk of the funds in the youth programmes did go to the youth cafés. However, there was a range of different funded youth programmes to promote youth development. There were also departmental initiatives to assist the youth from a number of local offices. Some local offices had focal points for young people to access computers and receive assistance with writing up curricula vitae (CVs). There was a mixture of NGO-run and Departmental-run youth services.
The application forms were available on the website. The Department uploaded the forms on to the website when it advertised, and called for proposals so that people would be able to download them. The only time the application forms were not available on the site was when the Department had to take them down and replace them with updated versions. Alternatively, forms could be requested and sent by e-mail to interested parties, or they could be provided with a hard copy.
The Chairperson said the Committee was appreciative of the work that it was doing during the lockdown crisis.
The Chairperson requested the Procedural Officer share any noted resolutions.
Ms Nomonde Jamce, Procedural Officer, confirmed that there were a number of resolutions noted.
The first resolution noted that the Department would need to provide the Committee with the on-site monitoring reports for the 2019/20 financial year.
The second resolution noted that the Department would need to provide the Committee with the number of unsuccessful applications, with reasons, per province.
She said that Members had asked for the number of monitoring officers, but that had been answered during the discussion. They had also requested a breakdown per region of non-compliant NPOs.
The Chairperson asked Members whether there were any additional resolutions.
There were no additional resolutions.
The Chairperson asked the Procedural Officer to request the Department to provide the Committee with an Excel spreadsheet containing a breakdown of the additional information.
The Chairperson mentioned that the next meeting was scheduled for 2 June for a briefing by the Department of Social Development on the Western Cape Laws Repeal Bill [B5-2019].
The meeting was adjourned.
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