The Portfolio Committee on Social Development met on a virtual platform to receive a briefing from its Content Advisor on the analysis of a submission received on the Fundraising Amendment Bill [B29 – 2020]. The Department of Social Development also presented its response to a submission received on the Fundraising Amendment Bill [B29 – 2020].
The Bill was summarised as follows:
It amends the Fundraising Act, (No. 107 of 1978), which provided for control over collections of contributions from the public and to set up five funds: Disaster Relief Fund, the State President’s Fund, the Refugee Relief Fund, the Social Relief Fund and the South African National Defence Force Fund. It then amends the Act by removing duplication of services in relation to the five funds. It also streamlines responses to disasters and allows for risk mitigation and developmental strategies to be deployed. It thus provides for the establishment of the National Social Development and Relief Fund – empowered to raise funds from the public, and private sectors including international donors to address short-term intervention and also impact long-term developmental issues. It also seeks to align the Fundraising Act with the Disaster Management Act.
In her overview, the Minister of Social Development noted that it was important to realise that the Department had a lot of experience now that it saw that disaster management was one of the things that South Africa needed to focus on, given what the country had seen in KwaZulu-Natal (KZN) and the Eastern Cape. South Africa needed to prepare for the future, and it needed systems that were responsive. When the Non-Profit Organisation (NPO) Act 71 of 1997 was promulgated, various portions of the Fundraising Act were repealed. That led to the Fundraising Act becoming incoherent with other existing legislation, as only the portions dealing with the Relief Fund remained active. Apart from being outdated and redundant, the Fundraising Act created multiple funds with a huge administrative burden that hampered the Department’s efficiency to respond to disasters.
Administering the Act in its current form was onerous and complex, and made provision for five funds. Of that number, three were dormant: The Refugee Relief Fund, the State President Fund, and the Social Relief Fund. Taken together, there were currently over R92 million in the dormant funds. That amount of money was currently lying idle, and could be put to good use in supporting responsible initiatives to effect positive change by redirecting the money to some of government’s most pressing issues. In addition to those funds being dormant, the Auditor-General (AG) had raised audit queries over the years, and recommended that those funds be closed down. The two active funds, namely the Disaster Relief Fund, were administered by the Department of Social Development, while the South African National Defence Force Fund was administered by the Department of Defence and Military Veterans (DDMV).
The advent of COVID-19 and recent disasters across the country had once again brought to the fore the urgent need for a harmonised statutory regime. In that regard, the Fundraising Amendment Bill sought to introduce the Disaster Relief and National Social Development Fund. The proposed fund would harmonise the three dormant funds, with the exception of the South African Defence Force Fund. The proposed Disaster Relief and National Social Development Fund would provide social and disaster relief in a developmental manner, considering existing provisions in the Social Assistance Act of 2004, and supporting social assistance regulations, which also provided assistance to people requiring short-term relief. The proposed Fund also made provision for raising funds from the public and private sectors for the purpose of addressing identified social relief projects.
A Member asked how far the Department was with the regulations related to the Bill, and when those would be presented to the Committee. The Bill’s proposed funding structure was supposed to be in response to disasters. Since South Africa had COVID-19, which was declared a disaster, the President set up the Solidarity Fund. Would that all-inclusive national fund replace such funds? In the future, would there be parallel funds set up, similar to the Solidarity Fund, or would it be an all-inclusive fund?
There was also a question on why the Minister of Finance was not included in the proposed national fund, especially since the fund dealt with investment and money, and why the Minister of Defence was included in the proposed fund. Questions were also raised on: Defining the powers of the board administering the fund to prevent mismanagement; how the board would be appointed; what would replace dormant funds that were being done away with; what the baseline criteria would be for allocations to empowerment projects; what would happen to the Solidarity Fund; the definition of ethical principles; how the consolidation of funding into one Bill would affect and impact on non-governmental organisations (NGOs) and non-profit organisations (NPOs) in need of funding; in what ways the board administering the fund would be transparent.
The Chairperson opened the virtual meeting, welcoming Members and the Department of Social Development (DSD). She reminded Members that there would be a sitting of Parliament later in the afternoon so she hoped that the Committee would finish the items on the agenda by that time.
There were apologies from Ms A Abrahams (DA), who needed to depart the meeting at 12:20 to attend to prior commitments. Ms B Masango (DA) requested to depart at 12:00.
The Chairperson observed that the Committee hoped to finish the meeting by 12:00.
There was an apology from the Department of Social Development (DSD): The Director-General (DG) was absent, as he had to attend a Social Cluster meeting. The Minister would be making remarks, and would be departing the Committee meeting to attend a Cabinet meeting.
Minister’s opening remarks
The Minister of Social Development, Ms Lindiwe Zulu, made remarks. She wished the Chairperson a speedy recovery from the flu. She also observed that COVID-19 was not over yet, and encouraged Members to take care of themselves.
The Department would be briefing the Committee on its response to the public comments on the Fundraising Amendment Bill [B29 – 2020]. The Minister was informed that the Department did not get many comments from the public, but it would be able to work with what it had. From a legislative process point of view, the Bill was published in October 2020 after Cabinet’s approval. It was presented to the Committee in June 2021, and published in July 2021 for public comment. She had indicated to the Department that sometimes it had to do its best to push things forward, and not delay. The systems between the Executive and Parliament sometimes took too long. She therefore hoped that the Bill would not take too long to process, because decisions that had been taken previously by other ministers took too long to be implemented. The Department needed to shorten the time for implementation.
She thanked the Members who had been with the Department since the Bill’s introduction to Parliament. The Department was grateful for the Members’ thoughtful contributions to that process. As Members were aware, the Act that the Bill sought to amend, the Fundraising Act of 1978, was antiquated, redundant, and was not compatible with progressive pieces of legislation that supported democracy, such as the Public Funds Management Act (PFMA) and the Disaster Management Act, to name a few. It was important to realise that the Department had a lot of experience now that it saw that disaster management was one of the things that South Africa needed to focus on, given what the country had seen in KwaZulu-Natal (KZN) and the Eastern Cape. South Africa needed to prepare for the future, and it needed systems that were responsive. When the Non-Profit Organisation (NPO) Act 71 of 1997 was promulgated, various portions of the Fundraising Act were repealed. That led to the Fundraising Act becoming incoherent with other existing legislation, as only the portions dealing with the Relief Fund remained active. Apart from being outdated and redundant, the Fundraising Act created multiple funds with a huge administrative burden that hampered the Department’s efficiency to respond to disasters. Administering the Act, in its current form, was onerous and complex, and made provision for five funds. Of that number, three were dormant: The Refugee Relief Fund, the State President Fund, and the Social Relief Fund. Taken together, there were currently over R92 million in the dormant funds. It might have been a relatively small amount, but it was money that was needed to service people. That amount of money was currently lying idle, and it could be put to good use in supporting responsible initiatives to effect positive change by redirecting the money to some of the Government’s most pressing issues. In addition to those funds being dormant, the Auditor-General (AG) had raised audit queries over the years, and recommended that those funds be closed down. The two active funds, namely the Disaster Relief Fund, were administered by the DSD, while the South African Defence Force Fund was administered by the Department of Defence and Military Veterans (DDMV).
The advent of COVID-19 and recent disasters across the country had once again brought to the fore the urgent need for a harmonised statutory regime. In that regard, the Fundraising Amendment Bill sought to introduce the Disaster Relief and National Social Development Fund. The proposed fund would harmonise the three dormant funds, with the exception of the South African Defence Force Fund. The proposed Disaster Relief and National Social Development Fund would provide social and disaster relief in a developmental manner, considering existing provisions in the Social Assistance Act of 2004, and supporting social assistance regulations, which also provided assistance to people requiring short-term relief. The proposed Fund also made provision for raising funds from the public and private sectors for the purpose of addressing identified social relief projects. The Minister emphasised that the Department got a lot of experience from the disaster that recently befell South Africa (i.e., the recent flooding in KZN). Practically, the Department could see the need to have an opportunity for fundraising, and also for accountability and putting systems in place. It would be very helpful for coordinated efforts in responding to the needs of South African people. The Bill would also allow the Department to address current policy gaps, in ensuring that it upheld human dignity in its disaster response.
The Chairperson observed that it was not the first time that the Committee had heard about that Bill, but it definitely needed to deal with it and check how far it was with the process.
Adoption of the meeting agenda
The agenda was considered and adopted.
Briefing by the Content Advisor: analysis of a submission received on the Fundraising Amendment Bill [B29 – 2020]
Ms Yolisa Khanye, Committee Content Advisor, delivered the presentation.
The presentation contained a summary of the Fundraising Amendment Bill [B29 – 2020], and a summary of a written submission by the Western Cape Government.
Summary of the Bill
The Bill amends the Fundraising Act, (No. 107 of 1978), which provided for control over collections of contributions from the public and to set up five funds: Disaster Relief Fund, the State President’s Fund, the Refugee Relief Fund, the Social Relief Fund and the South African National Defence Force Fund.
It then amends the Act by removing duplication of services in relation to the five funds. It also streamlines responses to disasters and allows for risk mitigation and developmental strategies to be deployed. It thus provides for the establishment of the National Social Development and Relief Fund – empowered to raise funds from the public, and private sectors including international donors to address short-term intervention and also impact long-term developmental issues. It also seeks to align the Fund-raising Act with the Disaster Management Act.
Summary of written submission
The submission from the Western Cape Government gave a general comment, and then gave comments, questions and recommendations on specific clauses.
[See the attached presentation for the full details]
Response by the Department of Social Development to a submission received on the Fundraising Amendment Bill [B29 – 2020]
Ms Brenda Sibeko, Deputy Director-General, DSD, briefly introduced the presentation.
Adv. Luyanda Mtshotshisa, Specialist: Legislative Drafting and Review, DSD, presented.
The presentation gave the legislative background to the Bill, and an overview of the Bill. The comments on the Bill were presented in a table format showing columns for the clause, comment, suggestion/recommendation, and the Department's response.
[See the attached presentation for the full details]
Ms A Abrahams (DA) remarked that she shared a lot of the concerns that the submissions covered. She asked when the Committee would get to see the regulations, which would help address many of the Members’ concerns. How far were the regulations, and when would they be presented to the Committee?
The Bill’s proposed funding structure was supposed to be in response to disasters. Since South Africa had COVID-19, which was declared a disaster, the President set up the Solidarity Fund. Would that all-inclusive national fund replace such funds? In the future, would there be parallel funds set up, similar to the Solidarity Fund, or would it be an all-inclusive fund?
The Minister of Finance was not included in this proposed national fund – why was that, especially since the fund dealt with investment and money? The presentation also said that the South African National Defence Fund would remain in its own ministry. The Minister of Defence was included in the Act – why was that?
She was glad that the board members had been reduced to nine people; perhaps the number would be reduced further given the consideration of an even number. The purpose of the Fund was to bring money in, and not to pay money out in salaries and senior management teams (SMTs). She was not sure if the Department had given consideration to how much the salaries would be, but it was important to keep salaries to a minimum, given that it was a fund to bring in money and not pay out money.
She asked for clarity on section 20, which said that “the board may exercise such powers”, and then went on to say “may exercise such other powers”. Powers were not infinite – what were the other powers? What did that mean? There should be set criteria and set baselines, as well as a set number of deviations to avoid abuse of this fund. South Africans were overwhelmed by the amount of abuse going on. The Department needed to make sure that the fund was protected from corruption and not being used as a “slush fund”.
How would the board be appointed – would it be a transparent process, and would the Committee be involved?
On the previous funds that were now dormant: These funds sought to provide relief to acts of terror, refugees, etc. Would refugees, for example, still be included in the new fund, given that other funds would go away?
Slide 12 noted that the fund would provide funds for social development and empowerment projects in the broad sense that the board may deem fair and reasonable. Would there be a concern that the board or fund could be accused of being selective, if there was no baseline to work from? She used the example of informal settlement fires that happened frequently. What baseline and criteria would be set to determine who gets assistance and who does not? There had often been the same informal settlement burned down more than twice or three times. Would such cases still be considered for the fund?
On empowerment projects: The DSD was already familiar with the number and types of empowerment projects. Would it not be cautious to have the set criteria, and the set baseline, to work from? Board members came and went, and they all had different frames of reference and interpretations. She was concerned that the board might say yes to one project, and no to another project, because that empowerment project had not been listed. How would it work in practice? How would these projects apply to the fund? Would it be a call for proposals if there was a certain need? For example, gender-based violence is prevalent now. Would the focus be on that? How would it work in practice, given that “empowerment project” is such a broad term?
Ms Abrahams agreed with the submission that said that the term “ethical principles” was open to interpretation. The Department said that the regulations would cover that, but now the Committee was working in a situation where it had not seen the regulations.
The Department needed to look at the qualifications of the board members, and make sure that there was no conflict of interest, before they took up their seats.
Ms L Arries (EFF) raised the concern. Since this fund would cover so many sectors, why was it that only the Minister of Social Development was involved in the constitution of the board? The Department needed to consult with all other sectors that were involved. She had the same question as Ms Abrahams on the Solidarity Fund. The Committee needed clarity on what would happen to that fund. Would the new fund be a replacement for the Solidarity Fund, as the Solidarity Fund was a presidential fund?
On the disaster management funds: She believed that, with disbursement of funds, she wanted it to be more of a local government competency in terms of the Municipal Finance Management Act (MFMA). She was also concerned about the board members – what was the need for full-time appointments on the board? She asked because, even within one of the DSD’s entities, there was a situation where most of the money that was in that entity was going towards payment of board members. She did not want the same situation to happen again, because there was currently a need for empowerment projects and similar initiatives in order to ensure that the country’s economy was revived.
Ms B Masango (DA) agreed with her colleagues and what they had raised. She agreed with the submission that said that the Bill was mostly technical.
On clause four: Adv Mtshotshisa said that the Department would revise the Bill, but she wanted to comment on the issue of ethical principles. As the Department was, they came across as being vague and uncertain. She suggested that the term needed to be defined. She knew that a review was going to happen, so she wanted to make a contribution by suggesting that the term be either defined in section one of the Act or the term must be referred to another piece of legislation. An example of such is the Public Administration Act 11 of 2014.
Ms G Opperman (DA) noted that she was not in the meeting on 02 June, so she asked to be forgiven for asking something that had been asked before. She observed that, on the ground, Members dealt with many perceptions. How would this consolidation of funding into one Bill affect and impact on non-governmental organisations (NGOs) and non-profit organisations (NPOs) in need of funding? Will it make it easier to apply for funding or will the consolidation actually make it more strenuous? There had been huge budget cuts across various departments — was consolidation a way to make access to funding harder due to the budget cuts in the various departments? What was the fund limited or restricted to and what was the extent of the coverage? In the early stages of COVID-19, the Department of Cooperative Governance and Traditional Affairs (CoGTA) also provided funding; how would it differ from the DSD’s funding, and would there be duplication?
Mr D Stock (ANC) said that his questions were covered by Ms Abrahams. He commented that the Bill was straightforward. He appreciated the manner in which the Department dealt with the submissions on the Bill, and the responses it presented in the meeting.
Ms P Marais (EFF) observed that all saw what happened with the COVID-19 funds. How would the board involved with the fund be transparent, and how would the Committee know that it was doing the right things? There was no use repeating things and not learning from previous mistakes.
Ms Sibeko responded to questions. She prefaced her responses by saying that CoGTA was the primary custodian of disaster management. CoGTA was also the department responsible for the implementation of the Disaster Management Act, which dealt with disasters across the country. The Fundraising Amendment Bill being presented was designed to work as a piece of legislation that is supportive and aligned with the Disaster Management Act. She recalled that, in the Disaster Management Act, there was funding that was provided by government in the instance of disasters, such as the one in KZN (among others). There was already a National Disaster Management Framework under the legislation named the Disaster Management Act, and the Fundraising Amendment Bill would have to be supportive of that and be aligned to the Disaster Management Act. That was part of the motivation for the amendment that the Department was doing. Regarding issues of funding, for example, there was a national fund available for infrastructure and all sorts of other repair work that happened in the context of a disaster. That fund will be supportive of those things. The Bill would not necessarily take over those functions of the Disaster Management Act, but it had to be aligned to it.
Ms Abrahams asked questions about whether the funds that are now going to be consolidated into the Social Development Fund would still be available for addressing issues of terrorism, refugees, because that was what those funds were specifically set up for. The intent of that consolidation was so that one did not have small pockets of funds to focus only on a narrow issue such as refugees, for example. The view that the Department took was that, when a disaster happened, it became relevant whether it was because of terrorism, or whether it affected citizens or non-citizens. It was important, therefore, to have a response that responded to the disaster itself and the needs of the people. This new fund would therefore deal with all sorts of disasters irrespective of whether it affected refugees or any kind of person, and irrespective of whether the disaster was a result of terrorism or other kinds of natural disaster, and so on. The Department was calling the fund a Social Development Fund, because it wanted to not only be reactive to disaster, but also begin to look at developmental aspects. For example, assisting people who may be affected by disaster impacts, not only in giving them immediate relief, but assisting them with ways to become more resilient and to find ways of mitigating and preventing future disasters. The Department wanted to have that kind of scope for the fund, hence calling it the Social Development and Social Relief Fund, taking into account the fact that immediate intervention, such as provision of food and mattresses, was already provided for in the Social Assistance Act. The Social Assistance Act made provision for social relief, and also for people who are facing disasters to be assisted through the South African Social Security Agency (SASSA). There was an allocation that government already gave in that regard, whereas the funding that was in the Disaster Relief Fund were funds that had been sitting there for a long time. But because it was a Fundraising Act, it would allow the Social Development Fund board to also raise funds from different sources to augment what was already in the allocation to be able to intervene in a more sustained, long-term way, than where SASSA, for example, had short-term relief that was given to people in the instances of disaster. The idea was to create the capacity for the fund to also be able to raise additional funds, and also provide developmental interventions in the instances of disaster.
The parameters of where development would be were something that would be put into the regulations to make sure that the Department clarified where development started and ended, and the criteria and the basis on which the fund would be able to act. It was important that the fund did not become a slush fund, or become an issue of the Disaster Relief Fund or the Development Fund creating pet projects, etc. It was very important to make sure that those things were clarified in the regulations. The Department had not yet developed the regulations. The idea was to get the legislation passed, and then create the regulations. The regulations would be done via a proper consultation process to inform what those parameters must be. The Committee was welcome to make inputs into the regulations to make sure that the Department was creating correct parameters around where the intervention started, and to prevent unfettered powers being used by the board to exercise favouritism in some instances. The primary aim was to build resilience in communities to be able to survive and prevent disasters. Another aim was that the funds should be agile enough to be able to quickly intervene in a disaster, and augment the other interventions that government had in place, such as what was available from the Disaster Management Act, and also from SASSA interventions.
In response to Ms Abrahams’ question, Ms Sibeko said that there would be criteria established so that it was not a “free-for-all”. The appointment of the board would be through a transparent process where it was advertised. Then, based on the advertisements, people would be able to come to be nominated, and then be able to be selected on the basis of certain criteria. The regulations would also have to specify what the skills mix needed to be. From the Department’s perspective, the criteria for who could be on the board needed to include a mix of skills, and some representation across communities, so that not only expertise, but also representation would be present. Thus, the board would be able to understand the communities that needed to be supported, and in addition, had the skills in investment management, financial management, disaster response, and disaster management. That mix of skills would also need to be put into the regulations to say what composition the board needed to be able to meet.
On ethical principles: The Department looked at different bits of legislation to see whether there was any specific legislation that defined ethical principles. What it found were references to “fit and proper”. It found negative references. For example, in the company's equity stake, the directors of the board should not have criminal records, among other things. Different legislation made different provisions for defining ethics. The Department decided to put the definition of ethical principles in the regulations. For example, being “fit and proper” meant that the person cannot have a criminal record. “Fit and proper” was a broader, more encompassing definition of ethical standards than just saying “ethical”. The Department might put “fit and proper”, since that was defined even in legislation. The Department would then respond that way in the regulations and specify what that is.
On why only the Minister of Social Development was mentioned in relation to the fund: The fund was a DSD fund. Additionally, if there were financial decisions to be made, which had a financial implication for the country, there would ordinarily have to be the concurrence of the Minister of Finance. The PFMA specified that, in any instance where a government department wanted to do something that had financial implications, there needed to be provisions for that in the PFMA, and there needed to be concurrence with the Minister of Finance. The Department would therefore not be able to do any regulations in that respect without the concurrence of the Minister. In that regard, the Minister would be included in that way. But, in terms of the appointment of the board, it would be a public process, and then the Minister of Social Development would only appoint the people that had been nominated in a transparent process that would be publicly advertised.
On the need for board members being appointed full-time (a topic that the community could consider): From the Department’s perspective, it had found that, when there was a disaster, there was a lot of work that needed to be done. If it had board members who were only expecting to come once a quarter, etc., then it would not have the time commitment that it needed to have from board members in order to really focus and do the work that was required in the context of a disaster. The Department wanted to expand the scope of the board beyond just responding to a disaster. It wanted to see a situation where board members were also thinking through what sort of development initiatives could be done, etc. The Department thought that it was necessary for that capacity to be available to the board, but it would not be the whole board that was full-time. The Department was suggesting that half of the board should be full-time, and the other half should be in supporting roles (and also nominated from that public process). The original Fundraising Act did provide for part-time board members.
The Department would put the reference to the term “fit and proper” in the principal legislation, but it would put the specifics of other elements in the regulations. When it made the regulations (it had already appointed someone to assist it with that), it would then try to come up with more concrete provisions around ethical standards, the skills mix and what the representation needed to look like. It would be borrowing from existing legislation and also from the original Act.
On the consolidation of the funds and whether NPOs could access the funds: Ms Sibeko recounted that the Social Development Fund that the Department was proposing would not necessarily be a fund from which anyone could request funds. It would more be a fund responding to issues that had been identified as a disaster or potentially going to cause disasters. In that instance, when the fund wanted to intervene in different things, it would advertise and procure services from different parties, including NPOs that had particular skills that the Disaster Fund wanted to use at a particular time. It would not be a fund that would disburse funds to NPOs on an ongoing basis, but it would be related to the work of the board, which would include commissioning different parties, whether private or NPOs, to perform certain functions on behalf of the board.
On the proposed fund duplicating existing funding structures: The point was for the fund to sit alongside and align with existing disaster management provisions in the country, to be closer to communities, and to intervene in that sense. Hence, the developmental aspect that the Department wanted to introduce to the fund. It also wanted to enable the fund to raise funds. The proposed fund would not compete with, or necessarily replace, the Solidarity Fund. The Department did not envisage that. Currently, if the funds were consolidated, there would be around R20 million. That was “not a lot of money”, so more funds would need to be raised to provide support on an ongoing basis. The fund would need to raise more funds for that. In that sense, in any disaster, the fund would not be able to fully respond by itself, which was why it needed to sit alongside the existing structures and funding mechanisms, including the National Contingency Fund within National Treasury. When there were disasters, the latter fund could also be used. The proposed fund was therefore meant to support, rather than duplicate, activities that government was doing in the context of disasters.
On transparency: The intent was that when the board was appointed, there were public requests for nominations from different stakeholders. Once the nominations had been announced, anyone in the country would be able to nominate. The nominations would then be considered by the Department, taking into account the provisions of exactly what the competency mix needed to be, and what the other provisions were that needed to be met in order for the Department to have a competent board that was able to discharge its responsibilities.
Ms Abrahams asked how far the Department was with the regulations, and what were the timelines for that and for the Bill. When could Members expect the updated version of the Bill?
Ms Sibeko reported that Adv. Mtshotshisa reminded her that she did not respond to the question about salaries of board members. Those were prescribed in the PFMA, so the Department would not decide that itself, which was already specified in the PFMA. The amended Fund-raising Act would also adhere to that.
On the regulations, Adv Mtshotshisa reminded Members that regulations were ordinarily a support legislation. Support legislation needed to be empowered by the principal legislation. When that particular Bill was passed by Parliament, then assented to by the President, it would then become law. Then the regulations process would begin at that stage otherwise it would not be advisable at present to have regulations for a Bill, because it would not be procedural to do so. Since dealing with the Bill was not a very long exercise, the Department made a commitment that, once that particular Bill was signed into law, it would immediately embark on the development of regulations. If the Department were to make regulations at present, those regulations would be said to be ultra vires, because they would not be informed by any empowering provision.
He added that the Department would be in a position within two weeks to a month to finalise the incorporation of comments into the Bill. It would be going for an A-list Bill thereafter.
The Chairperson said that the meeting would be finished by 12:00, since there were only two agenda items. The Committee would wait two weeks to a month to hear what had taken place regarding the Bill.
She thanked everyone for attending the meeting.
The meeting was adjourned.
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