Monitoring and evaluation of NGOs in the province; Fundraising A/B: final mandate

Meeting report

The Chairperson opened the meeting, welcoming Members of the Committee and officials of the Western Cape Department of Social Development. The Chairperson asked Members to introduce themselves and make mention of the division they come from.

The meeting was about monitoring and evaluating non-governmental organisations (NGOs). The Chairperson afforded Dr Robert Macdonald, Head of Department (HOD), the platform for his presentation.

Mr Charles Jordan, Chief Director: Children, Families and Vulnerable Groups, delivered the presentation.

Briefing by the Department of Social Development

Mr Jordan discussed the monitoring and evaluation processes within the Department of Social Development. He said the Western Cape Department of Social Development (DSD) provides more than R1 billion to non-profit organisations annually. To that aim, the DSD's monitoring of allocated money and the initiatives supported by these funds is a critical function. Officials assigned to this job are members of the programme office in budget programmes two, three, four and five - the budget programmes where transfer funds are granted.

Monitoring is carried out in accordance with the following rules and directives:

- Standard Operating Procedure for sponsored NGOs/NPOs' performance monitoring and assessment procedure (2017). This was said to be reviewed very soon.

- DSD Policy on NGO Funding in the Social Development Sector (revised 2023). How does the Department fund the injuries, according to what procedures, and who is responsible for what functions with the allocation of funding?

- The Agreement on Transfer Payments between the Department and the NGO.

 

Mr Jordan further outlined ten programmes that DSD currently funds. The programmes, budgets and expenditures will be discussed below in alphabetical order:

- Care & service to families – the Department has R107 million budget; spent R48 million up to mid-year.

- Child and Youth Care Centres – the Department received R119 million, and R58 million was spent by mid-term.

- Child Care & Protection – the Department received almost a R200 million budget, with R104 million since spent by mid-term.

- Crime Prevention and Support – the Department had a budget of R17 million and has spent so far R8 million. 

- ECD & Partial Care (After School) – the Department received a budget of R18 million and spent R7 million.

- Poverty Alleviation and Sustainable Livelihood – there is a budget of R53 million, with R24 million being spent so far.

- Services to Older Persons – there is a budget of R255 million and so far, R118 million has been spent.

- Services to Persons with Disabilities – there is a budget of R164 million and the Department has spent R78 Million so far.

- Substance Abuse Prevention & Rehabilitation programme – there is a budget of R58 million and the Department has spent R28 million thus far.

- Victim Empowerment programme – a R71 million budget and thus far, the Department spent R33 million.

- Youth Development programme received a R14 million budget and spent so far R7 million.

 

In conclusion, Mr Jordan said that, of the R1.06 billion budget, as a Department, they have spent R516 million, so far. So, they are above the 50% average spending rate, which is within their projections for the rest of the financial year.

The DSD funds, supervises, and assists around 1 200 non-profit organisations (NPOs) in the Western Cape. The Department monitors either yearly or on a three-year basis. The parameters of monitoring are outlined in the Transfer Payment Agreement signed by the NGO and the Department. The contract administration of these Transfer Payment Agreements (including contract monitoring and programme implementation assessment) is centralised in the Department's Head Office.

These 1 200 financed NGOs are overseen by a total of 49 officials in the following ranks:

- 11 Assistant Directors

- 24 Administrative Officers

- 14 Licensed Social Workers

 

Explaining why they have a combined team, Mr Jordan said that when they monitor an NGO, they have at least two people going to the NGO to do a site visit. The administrative monitoring official is the one who will assess the finance and governance of that NGO. The official will look for financial compliance, look at the financial systems, look at expenditure, and look at invoices if there are systems in place for specifically the funds that DSD has allocated to them.

DSD has various monitoring tools and methods to assess NGOs’ implementation of sponsored activities. The monitoring and evaluation teams employ a variety of instruments and approaches, including:

- Desktop monitoring: a quarterly review of progress reports, customer registrations, and financial records. The desktop also includes looking at the once-a-year audit financial statements of an NGO. So, the DSD has a specific team that would analyse an organisation’s audit financial statements to look at the financial liquidity of the organisation and also for the Department to pick up red flags if this organisation is in financial difficulty, because that would also be part of DSD’s interventions to see how it could support them – whatever that might be.

- The Department conducts on-site monitoring for NGOs, assessing operations against legislative norms and standards. This includes assessing client notes and individual development plans. The NGO is notified ten working days in advance of monitoring visits.

- Quality assurance for NGOs receiving over R2 million per annum in transfer payments is conducted over a two-year cycle. This involves self-rating and assessment with evidence, with the Department also assessing the NGOs. Differences in ratings can be addressed with additional evidence.

- Rapid Assessment method: often unannounced and conducted annually.

- Financial inspections are conducted on NGOs to identify any financial mismanagement. These inspections assess their financial records over the past five years, focusing on policy implementation and evidence of mismanagement.

- Annual analysis of financial statements: NGOs receiving R600 000 or more must submit an audited financial statement, while those receiving less must submit an income and expenditure report certified by a registered accountant.

Desktop assessment/monitoring entails scrutiny quarterly of the progress reports submitted by NGOs. The due dates for said reports are stipulated in the transfer payment agreement and NGOs are usually given a one-week extension if they do not meet the due date for submission. Should an NGO regularly not provide the required report, it risks of cessation of funding until compliance is achieved.

- Verification and validation of performance information: for example, a register of beneficiaries of each NGO, check for birth certificates, etc.

- Assessments of attainment with respect to targets, outcomes and activities as indicated by the NGO in its approved business plan.

On the scrutiny of income and expenditure per quarter and audited/certified financial statements on an annual basis (September-December of a particular year), Mr Jordan explained that the Department asks for three months’ financial statements and bank statements to prove the income and expenditure on those budgets. Also, they must have a separate ledger account so they do not have to have a different bank account if they get funds from more than one organisation. This is because, sometimes, some of them are also funded by the Health Department. So, they must have a separate ledger account just with the DSD funds. The DSD can then actually look at the Ledger accounts and trace the money more easily – what they have received and what they have spent.

Monitoring and reporting officials oversee financial and governance, while registered social workers monitor service delivery norms and standards in accordance with relevant legislation, such as the Children's Act.

On-site monitoring means physically being on site. It will be a Department’s monitoring officer looking at financial governance and then the social worker will look at service delivery standards. There is also a post-monitoring process. The NGO plays a crucial role in ensuring satisfactory service delivery by implementing a post-monitoring process. This process involves the NGO collaborating with the M&E team to identify non-compliance, such as fraud, and developing an NGO Service Improvement Delivery (SDIP). The NGO is given three to six months to restore its performance to a satisfactory standard, with support provided through the Department's Institutional Capacity Building sub-directorate. Following-up visits or evidence provision are conducted to assess progress and provide further assistance as needed. This process ensures the NGO's continued commitment to improving service delivery.

If fraud is suspected, a departmental rapid response team is deployed. If confirmed, the matter is referred to the provincial fraud investigation unit. The unit's recommendations determine whether to report the matter to SAPS. The NGO transfer payment agreement is terminated if human rights violations and health and safety non-compliance are found.

The Department assists NGOs on request, whether or not it enters a formal arrangement with them. This includes assistance with registration of residential facilities, inpatient SUD treatment centres, child and youth care centres, after-school care centres, designated child protection organisations, and adoption agencies. The Department also assists with registering service delivery programmes at these facilities and adults in conflict with the law. It also assists NGOs with compliance with legislative norms and standards. Additionally, funded NGOs are assisted in completing their quarterly progress reports, including financial information and evidence, to ensure accurate and verifiable performance information.

Finally, some areas are not within the scope of the Departmental M&E (monitoring and evaluation) process: the NGO, as an autonomous organisation, is responsible for various aspects such as management board composition, staff matters like salary negotiation, recruitment, grievance, disciplinary, and dismissal procedures, managing non-departmental funding for NGOs' operations, and admission criteria.

See attached for full presentation

Discussion

The Chairperson mentioned that what he liked about the presentation is that the presentation highlights the importance of NGOs from diverse community backgrounds in society as a lengthening arm of the state and government. Regardless of their qualifications or education, these entities play a meaningful role in society and can fulfil government's responsibilities. However, the issue lies in the capacity-building mechanisms in place to guide these entities in their efforts. Governments cannot do everything in society, and community involvement is crucial. The presentation emphasises the need for assistance and entities to take on these responsibilities. The capacity-building mechanisms are crucial in guiding these entities to assist in their efforts.

Mr C Fry (DA) posed a question on the aspect of health and safety. He asked whether the Department provides specific funding for the development of a health and safety and environment officer on site.

Ms A Bans (ANC) raised concerns about compliance with NGOs board appointments and funding. She questioned why the Department is not involved in the appointment process and why NGO boards have not been compliant for the past decade. She also inquired about a system to track NGO board applications. She also questioned the frequency of visits to NGOs, the protection of older persons in old age homes, and accountability for those receiving government funding and misusing funds. The Department's actions could potentially impact the quality of care provided to elderly individuals.

Ms R Windvogel (ANC) said that the Department mentioned that they cannot intervene when it is a labour-related issue. However, the Department is supposed to ensure that the NGO complies with all the regulations whenever they enter into an agreement with them.

The second question was why on-site monitoring and quality assurance are conducted on a two- to three-year circle and not annually or quarterly. What is rapid assessment and is it conducted on all NPOs? Lastly, on financial inspections, are any of the NPOs red-flagged in the current year? If so, what are the relevant details?

Ms N Bakubaku-Vos (ANC) raised concern regarding the funds transferred to the NPOs to date. Are there any incidents of mismanagement of funds or non-compliance that the Department has found? And what mechanisms are in place to prevent this from happening again?

She further asked if there was a unit for monitoring and evaluation in the Department. If so, is it adequately staffed? Secondly, what are the skills and education backgrounds of the assistant directors and admin officers, and how many of them have a background in monitoring and evaluation?

She also proposed the government employ graduates to assist with monitoring and evaluation if the Department is understaffed. Regarding scrutiny of income and expenditure, is there a limit in terms of the amount of transferred funds that can be spent on salaries and goods of the NGOs?

She asked the number of cases that have been referred to the Fraud Investigation Unit, and whether there have been any cases of contract termination due to human rights violations. If Members pick up such cases in their constituency, where should they report them? There are many unregistered NGOs, and they are doing their work. She would like to know if the Department is helping those NGOs comply to receive funding.

The Chairperson asked: what is going to happen to the old people when Huis Spitskop, an old age home, is closed and there was no other facility available in that area?

Responses

Dr Macdonald responded to Mr Fry's question on whether the DSD provides funding for an on-site health and safety officer for NGOs. They said that they do not do so. They give them money for their (NGOs) operations. So, if they (NGOs) need to have that service, they can include that in what they use the funds for. However, the Department does not specifically give the NGOs money and tell them to use it for a health and safety officer, per se. The NGO independently makes that decision. 

On question from Ms Bans about monitoring and evaluation, and the issue of closing down an old age home, Dr Macdonald responded that Social Development tries to follow a developmental approach with NGOs, and closing them down is a last resort. He added that they do not want to close places down that are doing good work, even if they are not fully compliant. The Department tries to help them to become compliant.

The Public Finance Management Act (PFMA) stipulates that the Department needs to ensure an NGO has proper financial systems in place to account for the use of the funds that the DSD gives them. The NGO must be able to account properly for the money that the DSD gives the NGO. The DSD policies have certain requirements as well that NGOs must meet norms and standards as well as registration requirements.

The non-negotiable is that NGOs must be able to account for the money. If they do not account for money, they do not submit annual financial statements, and DSD has to stop funding them. By law, DSD cannot continue funding. If they are complying with that but struggling with other aspects, DSD does try to assist them before resorting to closure.

In the case of Huis Spitskop: the closure was initiated by them, not by DSD. They decided to close down because they could not seem to get on top of the situation.

Mr Jordan further explained the issue of Huis Spitskop. He said: “I think what you have seen has also been a concern to us. With the last resolutions of your site visit, I think we have provided quite a comprehensive response by 31 August, with the service delivery improvement plans that we put in place in that home. I think it is also important to know and you are aware of it, that they have got two organisations that are registered there, a non-profit company and an NGO. So, those are two entities that are registered there.”

He added: “The one thing, for me, was the concern with the non-profit company that is in accordance with different legislation; it is in accordance with the Non-Profit Organisations Act (Act 71 of 1997). There is the question of totally different processes that differ from NPO processes, and I think that was probably sometimes used to the advantage by having an NPC there, which made it quite difficult.”

The DSD had a lot of visits Huis Spitskop. They talked to the old people and some staff members and sometimes interfered with the boundaries as the Department. That is why the two previous managers resigned and why there were two other managers whom the staff were also extremely unhappy about.

Mr Jordan reiterated Dr Macdonald's statement that the NGO initiated the closure of the old age home and DSD.

Mr Jordan further said that, for eight years, DSD could not increase its subsidies to the older people’s programme, which is very heart-breaking. On the lack of increased subsidies to the older people’s programmes, he said that DSD cannot appoint nurses and salaries inevitably fail to be increased.

The Committee was concerned about the loss of jobs. DSD informed the Committee that 28 staff members are going to be unemployed, and that is going to have a direct impact on the community. DSD has started to contact families of elderly persons as they have to go back to their families.

Mr Jordan noted Ms Windvogel’s question about red-flagged places. He responded to say that there are four and five red flagged: two children homes regarding sustainability. In the child protection sector, DSD had five NGOs closing branches that bring services to children because of lack of funding. “Your statutory work, adoptions, foster care placements – five of them closed. And there is more to follow because of lack of funds”, he added.

He noted that Ms Bakubaku-Vos asked about a unit of M&E officials. He responded that they have M&E officials in each programme: older persons, those with disabilities, and child protection programmes.

There was also a question regarding the constitution of the NPO in terms of appointing board Members. He responded that there is a two-tier process that the national Department is involved with in registering NGOs. The national Department is responsible for monitoring the constitution of that NPO in terms of how the board is compiled, and so on. The DSD receives the list of organisations that comply according to the national Department and DSD can consider them for funding. If there is non-compliance, it is because it slipped through the cracks at the national office.

The DSD cannot cancel the NPO registration on the provincial level, which is why the DSD cannot interfere with how the boards are appointed.

The DSD responded to the occupational health and safety issue. The Department is not funding health and safety issues, but it links NPOs with organisations that provide that training.

In response to Ms R Windvogel's question about on-site monitoring and quality assurance being conducted on a two- to three-year circle and not annually or quarterly basis, DSD said that it will monitor them more frequently, develop a plan for them, and rectify any kind of non-compliance or service delivery problems. However, for other NGOs that are doing well, DSD will not have to monitor them as frequently because it shows that they can function.

Dr Macdonald, on rapid assessments, said that that is something that is done where the risk is low, and the Department just does a check to make sure that all the vital signs for that NGO are working and are compliant. So, the Department does a more in-depth assessment – usually a multi-day assessment where it gets into the case files and starts looking at the quality. “We also do this with the higher-risk organisations, when we pick up problems”, he added.

Dr Macdonald said they would provide the answer to the question about NGOs red-flagged in the current year in writing.

In terms of the misuse of funds, DSD informed the Committee that they do report the cases to the South African Police Service (SAPS). There are current cases with SAPS that are being dealt with, and the Committee is briefed every year by the provincial forensic services on the status of those cases.

On the proposal by Ms Bakubaku-Vos – that DSD must employ graduates to assist with M&E - DSD responded that the Department does not have funds to pay salaries, particularly with the budget cut. 

There was also a question about NGOs not submitting their financial statements at the moment – whether the DSD has any such cases. DSD responded that NGOs all comply at the moment with financial statements.

On whether there is a limit to what can be spent on salaries: yes, DSD said that a certain amount can be used for salaries. Essentially, DSD does give guidelines as well about what the minimum salary should be to avoid staff being underpaid.

Have there been any cases of termination of contract due to human rights violations, and where can one report such cases? Dr Macdonald responded that one can report such cases to social development, and DSD will certainly investigate. The DSD inspectorate unit at social development investigates such cases, and programme offices investigate such cases themselves.

On whether NGOs had had their funds terminated due to human rights violations, he said that this had not happened recently. On the assistance that the DSD provides to unregistered NPOs, he said that the DSD has a unit NPO support desk at DSD and the local office assists NGOs get registered.

Dr Macdonald responded to the issues of qualifications that DSD staff has. DSD monitoring teams, the social workers, are qualified social workers and they registered with the South African Council for Social Workers. The monitoring officials have diplomas and degrees in public administration, finance and governance.

Ms Bans commented: “I must say that, from the side of the Department, I must welcome the interaction. From our visit to now, I can confidently say that I could feel the steps of the Department and their interventions. Things are happening.”

There were no further questions.

The Chairperson thanked the Department and asked them to exit the room.

[The Committee took a brief recess]

Committee resolutions/actions

The Chairperson requested resolutions from the Members regarding the issues arising from the presentation.

Ms Bakubaku-Vos said: “If DSD could identify the problem about budget… and I fear what they said about the decrease in the budget – that might impact on the functionality of some of our NGOs. The recommendation should be that the Department of Social Development management should use everything at their disposal to prevent budget cuts, and if they (DSD) do not get more money to fund organisations, they better not take new ones.”

[The Committee concluded its recommendations]

Committee Minutes

The Chairperson considered and adopted meeting minutes from 25 April 2023; 21 April 2023, and 23 May 2023.

Two Annual Activity Reports were also considered and adopted. 

The Chairperson submitted the Committee's final mandate report for the Fundraising Amendment Bill, 2020. The province supported the Bill.

The Committee adopted the report.

The meeting was adjourned.