Fund-Raising Amendment Bill: briefing; with Minister

Social Development

02 June 2021
Chairperson: Mr M Gungubele (ANC)
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Meeting Summary

Minister Lindiwe Zulu noted that the lack of access to dormant relief funds. The distribution of state finances amongst five relief funds posed a costly administrative problem which prevented accessing money quickly and efficiently in the event of emergencies or disasters. This Bill would amend the Fund-Raising Act of 1978 to consolidate the money disbursed from the Disaster Relief Fund, State President’s Fund, Refugee Relief Fund, Social Relief Fund and South African National Defence Force Fun into the National Social Development and Relief Fund. The Department of Social Development (DSD) then gave a briefing on the Fund-Raising Amendment Bill [B29-2020].

Questions from Members included:
Were dormant funds earning interest?
Would the board members of the Fund be paid or be voluntary?
Would DSD need to hire more board members at a later stage?
Who would be responsible for fund-raising?
What was the purpose of the Board if the Minister was empowered how to spend the Fund?
Was the Fund duplicating some of the National Development Agency’s work?
Could DSD share the public comments on the Bill with the Committee?
What would be the timeline going forward?
When would the new Board be established and when would the Bill be passed?
Could DSD give a briefing to explain the Fund's operations?
Would the Fund have different categories to spend on?
Would there be a percentage allocation of funds per category?

The Committee were briefed on the plans for the upcoming provincial public hearings tour.

Meeting report

The Chairperson welcomed Minister and Deputy Minister. He congratulated DSD for finally launching the Central Drug Authority (CDA) Board. Hopefully it would hit the ground running on the implementation of the National Drug Master Plan (NDMP) 2019-2024. The implementation of the NDMP was a serious priority as the state of the economy had translated into many psychosocial and socioeconomic challenges. He congratulated the Minister on Child Protection Week which he had been following.

The Members were in for a tough week of hearings. They would be going to Limpopo and would be updated on the logistics. The Chairperson called on the Minister and her team to present the Fund-Raising Amendment Bill which intends to consolidate relief funds.

Minister's remarks
Minister Lindiwe Zulu appreciated the Chairperson’s attendance at the inaugural launch of the CDA Board. She hoped that the Portfolio Committee would continue with its usual oversight. She agreed that the economy was not doing very well. They would need to do a lot of work, especially in the implementation of the NDMP. It was important that DSD kept a coordinated approach as the NDMP was not something which could have been implemented by the Department and Portfolio Committee of Social Development alone. There was also work to be done by other departments.

For Child Protection Week, the Minister and Deputy Minister had a long discussion about highlighting the importance of children in different facets of life. They agreed that Child Protection Week was not only a week for DSD but it should be a Child Protection Week for all government departments because Health, Human Settlements, Education, everything related to children, was dependent on how the government could create a conducive environment for children. Members should follow up on the state of South Africa’s children and what government, the private sector, non-profit organisations (NPOs) and non-governmental organisations (NGOs) were doing for children. For the Minister, Child Protection Week was about the value of government finances being spent on institutions which assist this Department in implementing child-related services.

The Minister wanted DSD to brief the Committee so she would not to talk too much. When the Minister was a new member of the Department, she was initially concerned about money being divided amongst different funds without proper consolidation. The Minister had a discussion about this with the former Director General who had retired. However, the search for resources during the COVID-19 crisis made the situation even more acute. What was the Department going to do? Where would it find the money? What funds were available, and where were they?

The Minister was responsible for placing this topic on the agenda for this meeting. She knew that this matter had taken long because there had been previous public hearings and a change of administration. The Chairperson had been a frontrunner in solving state capacity challenges and the ability to deliver at the right time without delay. The Minister hoped that the presentation would help the Committee to move the implementation process forward.

DSD Director General, Mr Linton Mchunu, introduced his team which included Ms Brenda Sibeko, Deputy Director General (DDG): Comprehensive Social Security and Adv Nkosinathi Dladla. The presentation was very short. The Act was straightforward and not as complex as others that had been tabled. The Fund-Raising Act No 107 was an old piece of legislation from 1978. The Act had been largely replaced by the Non-Profit Organisation (NPO) Act of 1997, as a lot of the work DSD did to support disasters was largely done through NPOs.

Contextual Background
The Fund-Raising Act was promulgated in 1978 to provide control over collections of contributions from the public and to set up the following funds: Disaster Relief Fund, State President’s Fund, Refugee Relief Fund, Social Relief Fund and South African National Defence Force Fund.

Problem Statement
The Fund-Raising Act had become dysfunctional over many years because the relief services and funds were fragmented. Its application was inconsistent, and the implementation of the NPO Act exacerbated this. The institutional arrangement for the distribution of funds was ineffective for emergency response. There were four separate boards with large amounts of inaccessible dormant funds. This increased administration costs. The Fund-Raising Act promoted reactive short term intervention with no provision for sustainable long term development. This contradicted the Disaster Management Act which advised the enjoinment of government departments for more effective risk mitigation.

Current Financial Status
The Relief Funds totalled R110 390 942. However, only R30 000 000 from the Disaster Relief Funds was active. The balance was dormant.

Strategic Focus of the Bill
The Fund-Raising Amendment Bill would remove the duplication of services in each relief fund, streamline risk mitigation strategies and responses, and empower the Minister to deal with socio-economic developmental issues.

Purposes of the Bill
The Fund-Raising Amendment Bill would rationalise the Fund-Raising Act by consolidating the Disaster Relief Fund, Refugee Relief Fund, Social Relief Fund and State President’s Fund into the Disaster Relief and National Social Development Fund. This would aid proactive mitigation of disasters and promote social development of communities. It would align administration, encourage fund-raising through public, private and international donors in the short and long term. It would also align the Fund-Raising Act with the Disaster Management Act and the Public Finance Management Act, as well as other related financial frameworks.

Explanation of the changes to the Act and Bill clauses
Sections 12(1), 17(3), 18(a), 20(1), 20(2), 25 and 36 of the Act were explained. Clauses 1 to 9 of the Bill were elaborated on (see document).

The Chairperson asked if the main object of the Bill was rationalisation, simplification, and institutional singularisation for more effective, transparent and accountable administration of funds.

Ms Brenda Sibeko, DDG: Comprehensive Social Security, said he was absolutely correct.

The Chairperson commented that the Bill appeared very administrative to him. He respected Members’ commitment to exploring the Bill in depth and asked for questions and comments.

Ms L van der Merwe (IFP) appreciated the briefing. On the appointment of the CDA Board, she wished them well and hoped that they could make progress on the NDMP implementation and pledged her support of its implementation. She thanked the Minister for the Child Protection Week and her emphasis on the need to do more for vulnerable children and women in need.

The briefing on the Bill was technical in nature, and the Committee could not disagree with the proposal to align and consolidate funds. Those dormant funds were very much needed in the fight against COVID-19. If the Committee looked at the Refugee Relief Fund, they will recall that government ran into a lot of trouble when assisting refugees in camps in Wingfield and Paint City, Bellville. DSD had to spend a lot of money it did not have. Between the City of Cape Town and Home Affairs, both had incurred irregular expenditure as funds were not available to assist the refugees. In that instance, the Refugee Relief Fund would have been handy.

Ms van der Merwe asked if DSD was collecting interest on the dormant funds? About the change from 15 to nine board members, would the members’ positions be voluntary or paid? They were reducing the members as an austerity measures. If the DSD had R100 million in its consolidated fund, and it decided to take on more board members again to manage the Fund, would it not spend money again on administration and paying board members? Who would be responsible for fund-raising? Would it be the board members themselves? Clause 4 amends section 20 of the Act to empower the Minister to give directions on disbursement of funds. The Minister would ensure that the Board acted in compliance with ethical principles. She did not have a problem with the Minister giving direction on ethical principles, but if the Minister was empowered to tell the Board how to spend its money, then what was the real purpose of the Board? Should the Minister not just manage the Fund with the Portfolio Committee overseeing it? She understood the fund-raising element. Would DSD not be duplicating the work of the National Development Agency (NDA), since fund-raising to alleviate poverty and help with disasters was also its mandate?

The Chairperson noted the Committee was not debating the Bill now, only asking questions of clarity. However, her questions were very important.

Ms A Abrahams (DA) thanked DSD for the presentation. She said the Fifth Administration had dealt with the Bill. The current Portfolio Committee did not have access to relevant documents or comments from public participants in the previous administration. She asked if it would be possible to receive these documents and public comments to see what had been excluded and included in the current Bill.

What would be the timeline going forward? When would the new Board be established and the Bill passed? When able to do so, could DSD give a presentation on the National Social Development and Relief Fund and explain how they envisioned the fund operating? For example, would the fund have different categories to spend on? Would there be a percentage fund allocation per category? Currently, there was a section for refugees, for disaster and social relief.

Whenever there was a disaster in a municipality in the past, it was always easier to source service providers from within the municipality. Yet DSD would find itself going to other municipalities, paying additional transport costs to procure service providers to provide relief. Thus could DSD describe how the fund would operate in the future?

Department response
DDG Sibeko replied about the costs of the board, saying the Act provided for a Board of 15 Members. DSD thought that was too many, especially if they reduced the number of secretariats. Each Board required a secretariat for administration. If DSD consolidated and reduced members, then they would become more efficient by streamlining the money and reducing the salary costs. To appoint board members, the Minister would select from a list of nominations. All Members were paid by Treasury based on attendance at meetings, as determined by Treasury rules on payment of board members. They would only be remunerated for their presence and work within the Board.

On the Minister’s role, Members should remember that the current Board had narrow mandates. The Bill allowed the Board more agility and responsiveness during disasters, so that DSD would not have to go to individual funds. Sometimes disasters happen at such a scale that the individual funds, for example the Social Relief Fund, would be insufficient to manage it. With COVID-19, DSD could only take funds from a single category. The Bill implied that all disasters were more or less the same, irrespective of who was affected. Government’s primary concern was to address the needs of whoever was affected, without concern about which category or cause it fell under. DSD wanted to deal with all disasters in a coherent way. The Bill approached the funds according to the need of disaster victims, not the cause.

The Board would bring the details and project plans to the Minister, who would oversee the process. How did DSD mitigate disaster? The solutions were not only reactive, but also preventative. The Minister would guide the board, but would not do the actual work. The Minister would simply help the board to plan and mitigate against disasters.

Yes, the dormant funds had been invested and were earning interest. A year ago, after spending some  money from the Disaster Fund, the interest was reduced. But at this point, it was increasing again since all of the funds were re-invested and consolidated.

Ms Sibeko replied that timeline of the Bill would depend on the Portfolio Committee and the NCOP. DSD wanted the Bill implemented as soon as possible, but it was dependent on parliamentary processes and timelines.

DSD did not want to allocate proportionate funds for different categories. They wanted the entire National Social Development and Relief Fund to be accessible to every affected person in the country, without stipulating a certain category.

DSD would definitely share the public comments received, which would allow the Committee to see how the input was incorporated into the Amendment Bill.

On duplication of the NDA work, she reminded the Committee that the Bill dealt with disaster mitigation. The DG would delineate the two mandates.

Director General Mr Mchunu replied that there were two main challenges that DSD had with disaster management. Firstly, DSD was in certain circumstances able to plan for disasters. In Cape Town, for example, they knew that there would be a fire at a specific time annually. They had a good sense of seasonal problems because it was a common trend. However, there were instances when government could not anticipate properly so there needed to be a reinforcement of planning measures for all spheres of government. The other challenge was the coordination of disaster management role players in all three spheres of government. NPOs, institutions, agencies and departments had been put in place to address that. However, it did require the role players to work a lot closer together.

On procurement within specific municipalities, Mr Mchunu replied that DSD always tried to procure service providers such as NGOs and institutions from within the affected municipality. Of course, at times, the disasters required emergency procurement, and DSD would then have to follow the emergency procurement process. But in most cases, DSD tried to ensure that they procured from the affected municipalities.

Mr Mchunu welcomed the proposal for DSD to present on the new Fund at a later stage once they were done with the groundwork of the Bill. DSD did not want to put pressure on the Committee, but its implementation target was set for the current financial year. That is why DSD requested the briefing on the Bill be moved earlier so DSD could move as swiftly as possible, with the Committee's guidance.

Mr Mchunu replied that DSD was certainly not duplicating the work of the NDA. The NDA mandate was primarily fund-raising for poverty and hunger alleviation. The Fund-Raising Amendment Bill was mandated for the raising of funds related to disasters. They should note that there were no specific allocations for disasters. Just like the Solidarity Fund, DSD would work similarly so that money could be available when a disaster happened. He guaranteed that there was no duplication whatsoever between the Department work and the NDA work.

The Chairperson said there was still a question from Ms van der Merwe which needed response. If there was a board and the Minister directed it, then how would DSD regulate the board to administer funds? Would there be regulations and would the Minister direct the funds?

DDG Sibeko replied that the Minister’s primary direction of the board would happen via regulations. The Minister would write regulations on the Board’s tasks. Beyond that, the Board itself would become hands-on. They would raise funds and implement mitigation strategies based on the directions and guidance given by the Minister, as specified in legislation. The Minister would not inspect the board on a day-to-day basis, she would only write regulations.

Ms van der Merwe thanked DSD for the clarity. She also wondered if the board would be responsible for fund-raising. However, she would await that response in the next Committee meeting on the Bill.

Closing Remarks
The Minister said that she was happy with the proceedings. However, there was still work to be done. She understood why Members asked if she would willingly direct the board or not. She thought that she should not direct them. On regulations, DSD would still have to reconvene with the Committee to clarify which regulations were made and how they were managed.

DSD would not create a big board which would cost a lot of money to pay salaries. DSD needed a lean, mean board which would help them implement disaster relief. The DG had replied to audit queries, but for the Minister the more important question was how DSD was sitting with so much unused money. It might look small considering the billions administered by DSD, but the aim was to respond to cries of need whenever a disaster happened. They had to be able to respond on time, but they also had to be proactive. Much work still had to be done to be proactive, to ensure disasters did not happen.

The Chairperson hoped that the implementation would not be unnecessarily prolonged. In a short space of time, with focus, they had to assist so this plan could be realised. He thanked everybody.

The Minister thanked everybody.

Children’s Amendment Bill: provincial public hearings update
The Committee Secretary, Ms Lindiwe Ntsabo, gave a progress report for public hearings in Limpopo and Mpumalanga. The Committee logistics and preparations were 100% ready. They had internal meetings which ensured that all parliamentary partners were on par with the Committee’s expectations. Members would meet in Johannesburg at 12:30 on Saturday 5 June. Kombis would depart for the five-hour drive to Limpopo. Unfortunately there was no airline available between Johannesburg and Limpopo. Members would go to four districts once in Limpopo starting from Sunday 6 June until Wednesday 9 June.

The Chairperson was surprised they were starting on a Sunday.

Ms Ntsabo replied that the National Health Insurance Bill hearings were also on weekends. For Mpumalanga, the Committee would leave only on Thursday afternoon of 10 June so Members could attend the plenary session. The Mpumalanga programme was from Friday 11 June until Monday 14 June. The hearings were from Friday to Sunday, and the Committee would finish their provincial tour on Monday.

The Committee plan to go to Free State from 16 to 18 June was cancelled as a safety measure due to third wave concerns. The Committee would decide how to proceed after consultation with Free State Health Department as it had been advised to postpone the trip until COVID-19 infections had settled down. The Committee was due to visit North West  from 22 to 24 June but the North West was also affected by the third wave. On 1 July the Committee would go to Kwa-Zulu Natal.

Ms Abrahams thanked Ms Ntsabo and her team for their preparations. Considering the postponement of their Free State trip, and the possibility of postponing other provincial trips due to the third wave, how would the Committee meet their deadlines? Would they wait for provinces to give an indication after August? How did the Committee foresee the third wave affecting their timeline? Secondly, how had the Committee invitations to organisations with these provinces been handled? How would the Committee know which organisations would be present on the day? Was there an attendance register? Have NGOs and organisations previously communicated RSVPs to the secretariat? She was concerned that the Committee might arrive to an empty hall. On the other hand, an overly full hall would be a problem for COVID-19 social distancing regulations.

Ms van der Merwe said the Minister of Health June 1 statement flagged the Free State and North West as being in their third wave. Had the Secretariat finalised the programme for Limpopo and Mpumalanga? Did the Committee know how many organisations would present each day, and if the organisations were confirmed? Would the set programme be similar to that of the virtual public hearings? Parliament’s recess would be until August, and then there was the election. She was concerned that the postponement of the Free State and North West trip might affect their timelines. She asked if the Committee should consider having virtual hearings for those meetings. It would not be ideal, but time was not on their side.

The Committee Secretary replied that when it came to provincial public hearings, the Committee did not play a role in distributing invitations. The Public Education Office in Parliament was the unit which educated the public on Bills, and mobilised people to attend public hearings. The responsibility of mobilising the public belonged to the Public Education Office and parliament media. The media publicised the public hearings and was responsible for scheduling interviews at these municipalities and there were placards for the public to see that a parliamentary committee was visiting.

This year’s format was different from former national public hearings. In national public hearings people would respond to the Committee’s advertisements and requests for public submissions by indicating their intention to submit comments. This was unlike provincial public hearings, where the Public Education Office, the radio and municipalities would publicise the process. She was unsure of the participation of organisations but there was a mobilisation strategy by the Public Education Office when conducting public hearings in the municipalities. People would be transported from various districts. There would also be walk-ins, for those who would hear about the event from the radio, interviews and publications. Protection Services would handle the public. The public would present their submission on the stage. Some of the presentations would be both formally written and spoken, and some would only be made orally. The Committee could choose to follow up on particular submissions. The set-up was very different from national public hearings.

Ms Ntsabo said that the Chairperson had requested a consultation with Department of Health in North West to verify if the Committee should proceed there or not. Due to COVID-19, the inter-provincial hearings would be pushed to August. By September, all meetings should be finalised. The court deadline was 2022 so the Committee would still be within the timeline.

The Chairperson asked even if the Committee needed to do virtual hearings, would it still be within the deadline and the Committee Secretary replied that it would be.

The Chairperson was concerned that the Committee secretariat was not responsible for planning and attendance at the public hearings. When the Committee asked about logistics, it was important that they received answers. Was the Public Education Office available to answer those questions? The Chairperson assumed that the Committee owned the hearings and should then be responsible for all preparations and their readiness.
The Committee Secretary said she did not realise such questions would be asked and so did not include the Public Education Office in this meeting. When the Committee arrived in Limpopo there would be a debriefing where everyone would present their organisational role in the public hearings. The Committee could use that opportunity to ask for reports on public education and public awareness.

The Chairperson hoped that these questions were answered and Members could wait for the debriefing. He asked that Ms Ntsabo remain in contact with the Public Education Office.

Ms N Mvana (ANC) asked if the public hearings were formal or casual. She asked who would check that the venue did not exceed COVID-19 capacity regulations.

Ms Ntsabo replied that the public hearings were semi-formal.

The Chairperson replied that COVID-19 regulations were legally required in South Africa. He understood that all public hearings would happen in line with the regulations. Whoever handled logistics would be tasked with ensuring that the event was within legal requirements.

Ms Ntsabo added that the Protection Services unit would be responsible and present to enforce compliance. If there were more than 100 people, then they would have to wait outside. The Chairperson would communicate with those waiting outside. If they reached that limit, then the people who had finished their presentations would be asked to leave to make space for the people outside. There would be an organised and coordinated approach to enforce COVID-19 protocols.

The Chairperson thanked Members for their meticulousness which was why he loved working with the Portfolio Committee on Social Development.

The Committee adopted the minutes of 4, 5, 11, 12, 13, 14, 18 and 19 May

The meeting was adjourned.

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