Fundraising Amendment Bill: DSD briefing

Meeting report

Opening Remarks
The Chairperson welcomed Committee members and department officials to the Select Committee meeting.

The Chairperson provided an outline of the meeting’s agenda. The Department of Social Development (DSD) would brief the Committee on the Fundraising Amendment Bill [B29-2020]. The Committee would also consider the minutes of the previous meeting and the Committee Budget Vote Reports.

Apologies
An apology was shared on behalf of the Minister who was unable to attend the meeting.

The Chairperson said that the meeting could proceed with the presentation on the Fund-Raising Amendment Bill. He indicated that the Department could begin the presentation.

Fundraising Amendment Bill [B29-2020] Presentation
Ms Brenda Sibeko, DDG: Welfare Services, DSD, extended apologies on behalf of the Minister, who was at a conference on behalf of the Department where the Department had won two awards.

Ms Sibeko introduced the presentation. She highlighted that the principal Act was old and dated back to apartheid (1978). This meant that a lot of what it entailed had since become obsolete.

Ms Sibeko said that the amendment to the Act was done with the intent to bring the legislation into the democratic era and align it with the Disaster Management Act and the Public Finance Management Act. The Department intended to consolidate existing funds to provide a cohesive response to a disaster. She highlighted the intention to rename the Disaster Management Act to ensure the adoption of a more developmental approach to disaster management.

Ms Sibeko highlighted that the National Assembly approved the Bill in September 2022.

Adv Luyanda Mtshotshisa, DSD Legislative Drafting and Review Specialist, DSD, highlighted that the Fund-Raising Act of 1978 was meant to set up and manage the following funds: the Disaster Relief Fund; the State’s President’s Fund; the Refugee Relief Fund; the Social Relief Fund and the South African National Defence Force Fund.

Adv Mtshotshisa said the Fund-Raising Act has become dysfunctional. He explained that some of the funds had become dormant and that the money was locked in these dormant funds. The relief instituted by the Act was fragmented and difficult to administer. He noted that the Act was largely responsive and did not generate interventions to mitigate disasters.

The focus of the Amendment Bill was the removal of duplicate service in the current relief funds, streamlining disaster response and risk mitigation, and addressing socio-economic developmental issues.

The Amendment Bill sought to consolidate the Disaster Relief Find, the Refugee Relief Fund, the Social Relief Fund, and the State President’s Fund into the Disaster Relief and National Social Development Fund. The consolidated fund would focus on the proactive mitigation of disasters. This contributed to the streamlining of the administrative processes. The consolidated fund would be empowered to raise funds to aid its purpose.

The Presentation provided an outline of the original provisions of the Fund-Raising Act. The presentation detailed the provisions and clauses of the Amendment Bill (see slides 13-17). Key provisions include:
The reduction of board members from a maximum of 15 to 10.
Empowering the Minister to direct the board in terms of disbursements
The consolidation of the four funds
The renaming of the Disaster Relief Fund to the Disaster Relief and National Social Development Fund

(See Presentation)

Discussion
The Chairperson thanked the DSD for the presentation and invited Members to engage with the Department.

Ms S Luthuli (EFF, KwaZulu-Natal) highlighted that the presentation stated that the board had previously consisted of 15 people but would be reduced to 10. She asked what the rationale behind this reduction was.

Ms Luthuli asked how much money was in the three dormant funds.

Ms Luthuli asked for clarity on the process the DSD would use to appoint board members. How would the board members be remunerated?

Ms D Christians (DA, Northern Cape) noted the three dormant funds. She reiterated the question of how much money was in the three funds. Were the funds gaining any interest while dormant?

Ms Christians asked how the DSD was planning to mitigate future disasters. Did the DSD intend to work with other departments?

Ms Christians asked if the board members would be directly advised by the Minister. If so, would DSD regulate the board to administer the funds?

Ms Christians asked what the plan was going forward in terms of bringing strategic partners on board and committing future resources to add to the fund.

Ms Christians asked what would be done differently if money was put into a single, combined fund. How would DSD ensure that funds could be made available during disasters in a more efficient and effective manner?

Ms Christians asked how the board and DSD would ensure that fraud in relation to the fund was mitigated.

Ms N Ndongeni (ANC, Eastern Cape) referred to the report of the Ad Hoc Committee on Flood Disaster Relief and Recovery. The report indicated that there were challenges in coordinating role-players in the disaster management space in all three spheres of government. How would the DSD ensure better coordination of role-players?

Ms Ndongeni said that one of the mandates of the Fundraising Amendment Bill was to raise funds related to disaster management. This was commendable, but fundraising seemed like a difficult exercise for some entities within the country. Recently, the Committee had a meeting with the National Development Agency where it had been reported that there was a lack of enthusiasm from strategic partners to commit financial resources. Given this lack of enthusiasm, how would the DSD encourage strategic partners to commit financial resources?

Ms Ndongeni said the Bill provided that each fund was to be subjected to the direction of the Minister. Did this mean that the Minister would direct the board? How would the Department regulate the board to administer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                funds?

The Chairperson thanked the members for their contribution. The Chairperson asked if there were any further questions or concerns.

Ms B Badenhorst (EFF), Gauteng Provincial Legislature, asked why the funds had been locked up since 1978. How much money had been accumulated in this time? She asked if it was a crime against humanity that the money had not been freed for any of the recent disasters that had occurred.

The Chairperson indicated that the Department could respond to the questions and concerns raised.

Ms Sibeko said that the funds had not been dormant for the whole period. The presentation highlighted when the funds had last been active. She said that one had been active up to 2002. Part of the reason for the funds being dormant was because each of them was required to have a board because of current legislation. The functioning of the funds was restricted to responding to national disasters. There had not been sufficient disasters at a national level to warrant having a board, that would need to be paid when the board would largely be inactive. The DSD decided that it would be too expensive because each fund needed a board that would make decisions on how money was spent. She reiterated that the boards would mostly be inactive because it was their responsibility to respond to nationally declared disasters. The Disaster Relief Fund was the only fund to remain active.

Ms Sibeko responded to queries regarding the amount of money in these funds. The Refugee Relief Fund had R635 000. The Social Relief Fund had R44 Million. The President’s Fund had R46 Million. The Disaster Relief Fund, which had remained active, had a significant amount of money. Money from the Disaster Relief Fund was used during COVID-19. The Disaster Relief Fund currently had R31 Million. In total R124 Million was contained in these funds. She indicated that this was not a lot of money. She clarified that all of the funds were gaining interest. No fund-raising had occurred during the dormant period. The Department was interested in increasing fund-raising initiatives.

Ms Sibeko responded to the reduction in the number of board members. This decision had been made on the basis of cost and the amount of work that had to be done. The Department decided that having 15 board members was excessive and it made sense to have only 10 board members, five of which would be civil servants and the other five would be from outside of government. The board members would be paid in terms of the Public Finance Management Act. The rates of remuneration of board members would be determined by National Treasury.

Ms Sibeko referred to the appointment process of board members. The Department was in the process of appointing board members for the Disaster Relief Fund because the term of the previous board had expired. The process entailed the Minister advertising the positions and people were nominated. The Department made an effort to ensure that there was a mix of skills in the nominations. The Department recognised the importance of having nominees who had fundraising experience and abilities and had access to connections with strategic partners. It was also important to include people who had financial management, auditing, and strategic planning skills, and had a knowledge of disaster management and mitigation. The Department had been fortunate that the nominees being proposed had a mix of these skills. This process was currently underway. The Minister would make the appointments.

Ms Sibeko said that the board needed to operate in line with the Public Finance Management Act, in terms of accounting for money spent. The Minister would not explicitly direct the board. The Department was proposing regulations that would create parameters and clarify the authority of the Minister. The regulations should clarify the role and authority of the Minister. Following the approval of the Legislation, the Department would create these regulations which would be signed off by the Minister. She said the financial implications had to be concurred with the Minister of Finance.

Ms Sibeko said that the Department would rename the Disaster Relief Fund to the Social Development Fund. The addition of ‘social development’ aspect would be added to ensure that the Fund was not only a reactive mechanism but one that would consider ways to prevent disasters. She noted that some areas were prone to certain disasters. In areas where certain disasters were predictable, the Department sought to initiate mechanisms to aid the communities where disasters had a high likelihood of occurring. She explained that this depended on the amount of money that was raised. The Department wanted to empower communities to be more resilient and put preventative measures in place. She stated that this function was not currently available to the Disaster Relief Fund but was hopeful that once the fund was changed to the Social Development Fund it would be able to function in this way. The Department would rely on the expertise of board members who had experience in disaster risk and mitigation.
Ms Sibeko responded to concerns about fraud. She said the requirement for board members were the normal provisions of ‘fit and proper’. The provisions were in place in terms of the criteria used for the appointment of board members. Board members would be required to report funding reports under the Public Finance Management Act and would be audited by the Auditor-General. The board would be governed by a Board Charter which specified procurement issues and operating mechanisms. The Board Charter would be scrutinised by the Department to ensure that it was in line with the Public Finance Management Act and government procurement procedures.
Ms Sibeko said that fundraising would be an issue. The Department was confident that the people who were being proposed for the board had a lot of experience with fundraising. The Department purposefully sought out people who had fundraising abilities. She noted that some of these people had worked in private companies that had an interest in social development and risk mitigation. She indicated that fundraising would be a priority of the new board because the previous board did not focus on this. The Department was hopeful that under the direction and because of the expertise of the board, it would be able to initiate and engage in fundraising mechanisms. She said that there were many companies who wanted to offer support to the Department, but there had not been an efficient and effective mechanism for this to occur. There was no proper mechanism for the Department to account for, manage, and direct funds. She said that having a constant self-raising approach that was not dependent on responding to a crisis was a sounder approach to dealing with funding for disasters. If there was a board empowered to do this there would be a proper co-ordinating mechanism and we are able to have funds on hand by the time disaster happened. She said the board would do this by encouraging potential funders and sponsors to provide money throughout the year, rather than waiting for disaster to strike. She said this provided a good platform for sponsors to understand how they could support.
The Chairperson thanked the Deputy Director-General for her response and asked if there were any further responses or questions that had not been covered. He invited members to ask any further questions they had.
The Chairperson provided a summary of the inputs. He noted that the purpose of the Bill was to streamline, be more proactive and align the funding. A board would be established and enabled to collect contributions and manage disbursements. A summary of the amendment of the Bill included the role of the Minister, the reduction of board members/the size of the board, provision for objectives, financial management, disbursement, administration, and regulations. He indicated that these were the key points that he had noted throughout the presentation and responses. This should assist the Committee moving forward.
The Chairperson provided an outline of how the Bill would unfold. The Bill would have a six-week cycle; it was currently in the first week. Provincial delegates would brief their provinces on the Bill in the second week, after which public hearings would take place. Delegates would then negotiate mandates. This sought to provide clarity for the next steps in moving forward with the Bill.
Ms E Nkosi (ANC, Mpumalanga) welcomed the presentation. She said that it had been informative and progressive.
The Chairperson indicated that the Bill would proceed accordingly. He thanked the Department for a concise presentation. He indicated that the meeting would proceed with the rest of the agenda. He excused the Department officials from the meeting.
Consideration of Minutes
The minutes of the meeting dated 9 May 2023 were considered. The minutes were adopted.

Consideration of Budget Vote Reports
The Policy Assessment and Recommendations Report of the Select Committee on Health and Social Services on the Annual Performance Plan and Budget of the DSD Vote 19, Vote 18, and Vote 14 dated 16 May 2023 were considered and adopted.

Read:

ATC230516: Policy Assessment and Recommendations Report of the Select Committee on Health and Social Services on the Annual Performance Plan and Budget of Statistics South Africa - Vote 14, Dated 16 May 2023

ATC230516: Policy Assessment and Recommendations Report of the Select Committee on Health and Social Services on Budget Vote 18: Health, Annual Performance Plan of the Department of Health, Dated, 16 May 2023

ATC230516: Policy Assessment and Recommendations Report of the Select Committee on Health and Social Services on the Annual Performance Plan and Budget of the Department of Social Development – Vote 19, Dated 16 May 2023

Closing Remarks
The Chairperson sought clarity from the Committee Secretary on the next steps moving forward.

The Committee Secretary had communicated with the provincial liaison offices and had sent out briefing dates for when Committee members would brief their legislatures. She indicated she would send members the dates of their briefings as soon as possible and had already provided some members with dates. The Department would accompany members to provincial briefings. Members would have public hearings during the two weeks following the briefings. The Select Committee would reconvene by 13 June for the negotiating mandate meeting.

The Chairperson thanked the Committee Secretary. He thanked the Committee members and support staff for their contribution to the meeting.

The meeting was adjourned.