In a physical meeting of the Standing Committee on Social Development, the national Department of Social Development (DSD) presented on the Fund-Raising Amendment Bill [B29B-2020] which was currently being considered by the National Council of Provinces (NCOP). The Bill seeks to consolidate the Disaster Relief Fund, the State President’s Fund, the Refugee Relief Fund and the Social Relief Fund with the aim to align the funds with other legislation such as the PFMA, improve response times and enhance efficiency. Three of the four funds have been dormant since the early 2000s due to the prescripts of the funds, the funds were also outdated and tailored to Apartheid South Africa. This Amendment Bill will ensure that the funds can be utilised for South Africa’s current dispensation. If the funds were consolidated, there would be about R110 million available.
In response to why the Act was not simply repealed to start afresh, the Department explained that it was to ensure that the funds were not lost. Other questions from the Committee and members of the public were about the amount of interest accumulated by the dormant funds and sector representation on the board.
The Chairperson noted that the Committee had a quorum with four members present. This public hearing is for a briefing and discussion on the Fund-Raising Amendment Bill [29B-2020]. Public hearings will be held in various parts of the province and this meeting is held in the City of Cape Town. Hearings will be held in Saldana, Laingsburg and Mossel Bay. After these hearings, a meeting will be convened in Cape Town to consider the input received from the public. The National Department of Social Development will be responsible for streamlining the legislative process for this Bill.
The Chairperson gave the Committee members the opportunity to introduce themselves. Also present from National DSD was Mr Luyanda Mtshotshisa, Specialist: Legislative Drafting and Review, and Adv Nkosinathi Dladla, DSD Head of Legal Services. Members of the public introduced themselves as representing Saint Luke’s Combined Hospices, Agri Western Cape and the Cape Community Minstrel Board.
The Chairperson said that this meeting is part of the NCOP legislative process and the two DSD experts will brief them on the Amendment Bill which was referred to the Western Cape Standing Committee on 24 February 2023. On 17 May 2023, the Committee was briefed by the National Department of Social Development on the Bill. In terms of public participation, the Bill was advertised in mainstream and community newspapers in three official languages to reach stakeholders from different communities. In addition a notice for all public hearings was emailed to municipalities and NGOs. The Committee is complying with Section 118 of the Constitution and Standing Rule 72 of the Provincial Parliament standing rules. There rules state that the Provincial Parliament must facilitate public involvement in the processes of its Committees as required by the Constitution. The Committee will formulate the Western Cape mandate based on the public input received during the public hearings on the Bill.
Fund-Raising Amendment Bill [B 29B-2020]: briefing
Adv Nkosinathi Dladla, DSD Head of Legal Services, said that in the early ‘70s the Apartheid government established the Fund-Raising Act of 1978 to provide social relief to the white minority in the country at the time. The money accumulated in the various funds were disbursed mainly to the white communities who were allegedly affected by disasters, acts of terrorism, acts of social violence and refugees who supported the regime at the time. This is 45 years ago so an update to the outdated Bill is needed.
The declaration of disaster was confined to the then South Africa which excluded the homelands and the other self-governing states that South Africa had. As a result, only a few people benefited from the social relief services to the exclusion of the majority of the country. When democracy was established, the Department of Social Development was given a mandate to develop a safety net to cushion vulnerable communities against the impact of food insecurity and other life exigencies. One of the main issues for the disaster management system is disaster risk mitigation measures such as for flooding and veld fires.
Recognising the need for uniformity of approach, the Disaster Management Act of 2002 was developed and it called for the development of the National Disaster Management Framework to provide a coherent, transparent and inclusive policy on disaster risk mediation appropriate for South Africa. It is administered by the Department for Cooperative Governance and Traditional Affairs (CoGTA). Each department, according to the National Disaster Management Framework, is supposed to have a role to play. It is against this backdrop that this piece of legislation exists in the Department of Social Development. The contents of the National Disaster Management Framework are based on the requirements of the Disaster Management Act which gives priority to the principle of cooperative governance and the involvement of all stakeholders in strengthening the capabilities of national, provincial and municipal organs to reduce disasters and their severity.
Since the gap in the legislation has been identified, the Department of Social Development has embarked on fundraising efforts by approaching both private and public sectors to deal with short-term relief and sustainable development because all government departments are now expected to make a contribution towards disaster risk management.
It must be taken into account that some of the functions of the 1978 legislation have been overtaken by the Non Profit Organisation (NPO) Act because fundraising has been taken over by the organisations themselves with the minor part which is for the state to solicit funding from the community and international donors. It is therefore prudent for the Fund-raising Act to be amended so as to introduce the Disaster Relief and National Social Development Fund. This would address disaster risk mitigation that is part of the requirements of the Disaster Management Act.
The Fund-Raising Act of 1978 controlled collections and contributions from members of the public and other sources and set up various funds. The funds include the Disaster Relief Fund, State President’s Fund, Refugee Relief Fund and Social Relief Fund.
The Disaster Relief Fund is active and provides short-term relief to victims of disaster in poor communities. The State President’s Fund is meant to provide short-term relief to victims and survivors of acts of terrorism. The fund was activated in 2002 to assist in the burial of the victims of a bomb blast in Soweto. The fund is, however, not active at present as there are not many such instances in South Africa. The Refugee Relief Fund has remained dormant ever since the new dispensation. The fund is not for refugees in the context of South Africa today but in the context of the refugees that one had at the time the fund was created in 1978. During that time, there were refugees in support of the Apartheid system of government who would come in and assist government; in turn, they were assisted by this fund. This fund is therefore dormant. The Social Relief Fund provided funding to organisations assisting victims of violence. The fund was last active in 2001 and has remained dormant ever since.
In creating a new fund it is important to ensure that these monies lying dormant are incorporated. One of the purposes of the Amendment Bill is to ensure that all these funds are consolidated and put into a new fund. This new fund should be fit for contemporary disasters as the existing funds cannot be utilised as they are meant for specific purposes.
There is also the South African National Defence Force Fund that provides short-term relief to SANDF members and their dependents who suffer financial hardship arising from the performance of their duties, which may have rendered them incapable of providing for themselves. This fund is housed at the National Department of Defence so for the purposes of this Amendment Bill, this fund will not be dealt with.
There have been a number of challenges with the 1978 Act due to non-alignment with the current dispensation. In 1997 the NPO Act was promulgated and took part of the functions of the Act where the power to solicit funding by NPOs is concerned. In 1999, the Public Finance Management Act (PFMA) was passed into law and that also had an impact on these funds because you cannot speak of any funding in government outside the context of the PFMA. The funds are not recognised as Schedule 3 public entities as set out in the PFMA. These funds have to be recognised as public entities and need to be in line with the PFMA which is another reason for the need for this Amendment Bill.
As a result of the introduction of the NPO Act of 1997 only two pieces of legislation remain, these are the chapters that will be dealt with in this meeting. Currently, relief services as contained in the Fundraising Act are fragmented and costly to administer due to lack of consistency in application and implementation because there are four different funds with four different boards even though some of the funds are inactive.
The funds also need to be able to respond quicker to disasters because the turnaround times are currently too slow. It needs to be a couple of minutes whereas it takes up to a week in some cases due to the process that government needs to follow to use public funds. The amendments seek to address this.
In most cases of the Fundraising Act there is duplication of relief services because there is also a Social Assistance Act of 2004 that speaks to disaster. There is therefore the need to harmonise the different pieces of legislation to increase efficiency and effectiveness.
The Fundraising Act promotes reactive short-term intervention with no provision for sustainable long-term development. The amendments must therefore ensure that the new legislation caters for that.
National Treasury and the Auditor General have raised concerns about the four different boards and the many board members as this raises concerns over efficiency and effectiveness as well as austerity measures that need to be taken in the face of the declining financial position of the state.
The available funds are as follows:
Disaster Relief Fund – R30 million. As an active fund, this is the current balance.
State President Fund – R40 701 682
Refugee Relief Fund – R640 408
Social Relief Fund – R39 008 852
Total funds available is R110 390 942. This is the amount of money that will be transferred to the new Disaster Relief National Social Development Fund. It will also be budgeted for to add to the fund from time to time.
The Fundraising Amendment Bill is strategy-focused and aims to amend the provisions of the Fundraising Act by removing the duplication of services in the current relief funds so there will be clarity on which actor is responsible for which duties in the case of disaster. The duties will fall to national, provincial and local levels.
The Bill was accepted as Section 76 legislation after some difficulty with reaching a consensus on if it should be tagged a Section 75 or 76 Bill. At the time the legislation was created, all the power was in the hands of the national minister.
The new Disaster Relief Fund should be empowered to raise funds from members of the public, the private sector and international donors to address short-term intervention and impact long-term development.
Since the 1978 Act, many of its functions have been taken over by other pieces of legislation or circumstances have changed. The Amendment Bill will ensure all the legislation aligns. He provided examples of this alignment:
Section 12 provides for the Minister of Social Development, but the Minister is defined as the Minister of Social Welfare and Pensions, a title that no longer exists.
Section 17 provides for the number of board members which is currently sitting at 15, the amendment seeks to reduce this to 10.
Section 18 provides for the board of the Disaster Relief Fund, with due regard to the financial position of the fund, and the requirements of each case to render to persons, organisations and bodies who suffer from disaster. On that section, to deal with financial issues and the displacement of funds, it needs to be done within the scope of the PFMA, therefore it needs to be amended to align with the current financial prescripts.
Section 20 says that to achieve its objectives the board may collect contributions and control the collection of contributions by other persons and bodies. Once again, this cannot be done outside of the fiduciary duties that as a board member one must have as laid out in the PFMA.
Section 20(1) states a board may in order to achieve its objectives collect contributions. So a board may exercise such powers and perform such functions as imposed upon it by this Act. The challenge here is that it does not give the power to a specific person which slows down the response to a disaster. Who is it that must act? Is it the head of department, mayor, director general, member of the executive council, minister or deputy minister? Until that is made clear, it is difficult to utilise funds.
Section 25 relates to the administrative work including the receipt and disbursement of money. As mentioned previously, this needs to align with the PFMA and fiduciary duty.
In Section 36, the Minister has the power to make regulations or to form any Application Authority, Temporary Authority, Special Authority and other instruments required in carrying out the provisions of the Act. This power assists in the lessening the time for assistance to be given in a disaster scenario.
Adv Dladla went through the clauses that have been proposed and require the commentary of the public as part of the processes of a participatory democracy.
Cause 1 seeks to amend the definition of the Minister to be in line with the current dispensation because that title is obsolete.
Clauses 2 seeks to reduce the number of board members from 15 to 10 to deal with issues of efficiency, cost effectiveness and to ensure that an optimal turnaround time is being achieved.
Clause 3 seeks to amend Section 18 to make provision for the objects of the Disaster Relief Fund. As four funds which previously had different objective are being consolidated, this needs to be redefined for the new National Social Development Fund.
Clause 4 seeks to amend Section 20 to empower the Minister to give directions.
Clause 5 seeks to amend Section 22 of the Act to provide for the financial management and control of the funds to align with the PFMA.
Clause 6 seeks to substitute section 25 of the Act to further provide for the administrative work of the board and for the displacement of funds. Once the funds are consolidated and made into a singular fund, how they will be administered is spelled out clearly.
Clause 7 seeks to insert Section 25A to consolidate the funds that have been referred to. It states that a new fund is being established and that from the commencement date set out in Section 7 the other funds will be dissolved to form the Disaster Relief and National Social Development Fund. Any board that had previously been established for these funds will also dissolve to allow for the creation of a new board and the assets and liabilities that these funds had will become devolved unto the Department.
Clause 8 seeks to amend Section 36, it states that the Minister will be given the power to make regulations so that in the case of disaster it is easy for the money to be unlocked and utilised for the purpose of the disaster. The power is given to create regulation instead of creating regulations as each disaster is different and room needs to be left to adapt to the needs of a particular situation.
He asked that the Committee and public provide input on these proposed amendments.
The Chairperson said that the goal seems clear as the dissolution of dormant funds and their consolidation into one fund. It is the rationalisation of the current Fundraising Act of 1978 which had become dysfunctional. The aim is to remove duplication and streamline the response to disasters. The Fund will deal with a broad spectrum of socio-economic and other disaster management.
Mr C Fry (DA) asked why the Bill is not being repealed and started completely from scratch.
Ms A Cassiem (EFF) said that this briefing was given in the previous meeting as well and asked why it has taken so long for the Act to be amended? How much have board members been paid while the funds have been lying dormant? Is it not a crime against humanity that these funds have been lying dormant for all these years knowing the crisis that we are going through and how gender-based violence has increased? Why have payments to board members not also been dormant? Since the funds have been lying dormant, how much money has accumulated during this time? She asked if Adv Dladla thinks that his department has been negligent in the delaying the Act’s amendment. As mentioned in the presentation, many of the funds were created for the purpose of social relief to white poverty at that time and several white organisations benefited from the funds. Are any of those organisations still on our systems today? In the Coloured, Black African and Indian communities there are still many community organisations that are struggling to get onto the system to get funding for these communities.
Ms D Baartman (DA) said Clause 3 speaks about the disbursement of cash. She asked how the board will account for the disbursement of cash. Clause 4 deals with the consolidation of disaster relief money. Where does the COVID-19 Relief Fund money go? In Clause 5(6), it states that the financial year of the Fund shall terminate on 31 March in each year or as prescribed by the Minister. What would the purpose be for the Minister to prescribe a different financial year end? In Clause 7(e), it states that all liabilities, assets and rights must devolve upon the Department of Social Development. What is the purpose of those assets and liabilities devolving on the Department and not on the Fund itself as a juristic entity? Clause 8 needs clarity as it seems that the amendment does not allow for the Minister to create regulations but to simply determine the financial year end.
Ms R Windvogel (ANC) asked if the funds in the SANDF Fund will be transferred to the Defence Force or will it become part of the new Disaster Relief Fund.
Adv Dladla explained that the decision to amend rather than repeal the Act was taken by the Department in consultation with the State Law Advisors on what would work best. Legislation can be amended by repeal, insertion, or addition. In this case, an Amendment Bill was chosen as opposed to repeal as the monies that were in the dormant funds would otherwise have gone ‘off the road’.
Adv Dladla acknowledged that addressing this has taken long but it is simply an opportunity that the previous five administrations have missed out on. When the PFMA was developed in the early 1990s, those involved with the process should have taken into account that there were state funds lying dormant and should have gone through this process at that time. In 2002, with the creation of the Disaster Relief Management Act, they should have taken into account that there are other disaster relief funds in terms of the 1978 Act. Now that the amendment process has started, the parliamentary process is also taking long. The Portfolio Committee on Social Development finalised this Bill in August/September 2022, but it has taken so long to move from the Portfolio Committee to the Select Committee in the NCOP, so we need to work on the efficiency of these processes. The parliamentary process is beyond the control of the drafters. He assured the Committee that he was not shifting the blame but merely illustrating that there is a lengthy process that needs to be followed when making legislation.
On why the funds have been dormant for so long, it is not because there was no need for the money. It was because the fund labels have not been consistent with the issues we deal with in modern day South Africa. The funds could not be used if the crisis was not in line with the original purpose of the fund. The Disaster Relief Fund, however, has been used all along by the Department of Social Development as it has the obligation to play a role during disaster.
Adv Dladla explained that he is not fit to speak to the interest that has accumulated during the time the money has been lying dormant because it is a matter of the Chief Financial Officer and Treasury. DSD has been guaranteed by Treasury that the money has been accumulating interest.
Adv Dladla replied that it would be difficult to determine the organisations that have benefited from the funds as the funds have been dormant for so long especially as they date back to Apartheid South Africa. As for the question on specific ethnic groups receiving funding, that information is not available.
On the fund being able to pay cash, Adv Dladla replied that disasters take different shapes and sizes and the Fund needs to cater for all possibilities. He referred to the Social Relief of Distress payment of R350 that came about due to COVID-19; that is a cash payment. Depending on the nature of the disaster a similar arrangement might be needed. It is important to note that the amendment says ‘may’ so in some cases it will be cash; in others it may be food parcels or school uniforms and so on.
The Committee must take into account that the Disaster Fundraising Act of 1978 is a subsidiary piece of legislation; it is an add-on to the Disaster Management Act. CoGTA is tasked with that function but each department is also expected to contribute. DSD, by its very business, will have a role to play.
On the financial year, it is simply a question of a discretion that may be used depending on the circumstances that may befall the country at that time. For instance, if a disaster like COVID-19 was declared to be over in September, the financial year ending may be adjusted to be in line with this.
Adv Dladla replied that the SANDF Fund will not be tampered with. That fund is not dormant and is being utilised by the SANDF and it is outside of the DSD mandate. It was merely mentioned as it is the fifth fund that is spoken about in the Fundraising Act.
Mr Mtshotshisa added that this is also why the Act has not been repealed because it would do away with the SANDF Fund and that is not within the purview of the Department of Social Development.
The Chairperson said that looking at the magnitude of the operations and the work that needs to be done, the amount of money is not enough. He asked for follow-up questions.
Ms Cassiem said that there will be public hearings over the next couple of days and the public would not want answers such as ‘we don’t have that information at hand’. She urged the presenters to get the information so they are able to provide answers to the public especially for questions on how much money was accumulated during the dormant period. She repeated her question on how many organisations that benefited from these funds during Apartheid are still on the system? Of the organisations on the system, how many are white organisations and how many are black organisations? Are the presenters able to get these responses before the public hearings?
Mr Dladla replied that he would be able to get the information in time for the public hearings. He will follow up on the number of organisations that are on the system.
Questions from the public
The Chairperson opened the floor to members of the public.
Ms Irene Saunders, St Luke’s Combined Hospices, asked what will happen to the remuneration for all the board members who sat on the boards of the dormant funds.
Mr Dladla replied that there were no board members actually sitting on the dormant funds but there were board members for the Disaster Relief Fund as it is the only fund that has been active. According to the current Act, there are 15 board members that are compensated. This board will cease to exist if this Amendment Bill comes into law.
Mr Daniel Minnaar, Agri Western Cape, agreed that the amendments are long overdue. He noted that in Laingsburg, 35% of its economy is made up of the agricultural sector. The town is very prone to droughts and other disasters such as locust plagues. This is then disastrous for the whole community. He referred to Clause 2 and asked how the board members will be appointed. Will there be an agricultural representative on the board as it is a sector that has a profound effect on the rest of the economy?
Mr Dladla said that the appointment of board members is a pre-determined kind of process. The Department of Social Development will not be deviating from the process. There is a nomination process that happens and the call for nominations will appear in the gazette. Usually it is recommended that representatives of all the groups that we have in South Africa must be appointed based on the principle of ‘nothing about us, without us’.
The Chairperson gave the opportunity for additional comments. There will be opportunity for written comments in the language of one’s choice until 9 June 2023. He thanked everyone and adjourned the meeting.
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