Cape Town - Non-government and non-profit organisations are facing such a severe financial crisis that more than three out of 10 shut down last year.
An estimated 36 000 of the country’s 122 000 NGOs and NPOs had to be deregistered thanks to growing financial shortages, huge pressure on fundraising, and non-compliance with legal requirements.
The South African NGO Network (Sangonet) said the global financial crisis negatively affected a significant number of overseas donations. Mismanagement and corruption had also tainted the image of NPOs in general, making it more difficult for donors to trust them.
Lizelle van Wyk, chief executive of the Cape Town Society for the Blind, said its recent research into the NGO and NPO sector led to several alarming discoveries.
While most organisations had the best intentions, they lacked the skills and experience to run their operations like a business.
“The organisations don’t have the necessary staff to run their programmes. They may have the funding but without guidance, that money may often go to waste. NGOs unfortunately cannot rely solely on donors and need to be able to generate their own funding through their own initiatives,” she said.
The Lottery Board, one of the major donors to organisations, had also had its fair share of problems internally, and its decision to tighten up criteria was not incorrect.
“It once again highlights the need for managerial training and regular checks. This will boost trust for donors and help secure the much-needed financing,” Van Wyk said.
On the issue of donors’ fears of corruption, Butjwana Seoko, spokesman for Sangonet, said the sector had been tarnished by corruption, although only a minority were corrupt.
“Sadly, the majority of donors are not based in South Africa. There are individuals that enter the sector to mismanage donor funds while communities remain trapped in abject poverty. Some NGOs are just serving as cash cows for these elements. The reality is that while they continue to mismanage funding aimed at the poor, the conditions in which the poor live worsen.”
Kathleen Dey, director of Rape Crisis, said
: “Foreign businesses that donate are dependent on how well their businesses are doing, and the recession has cut their income – and therefore money they can allocate to NPOs.
“The same applies to local businesses. The Development Assistance Committee reclassi-fied South Africa as a middle-income country because of the GDP, but the wealth gap was not taken into account. Foreign donors would then look at other countries considered low-income as opposed to South Africa.”
Sihle Ngobese, spokesman for the provincial Social Development department, said strict controls on NGOs had to be enforced.
“About 68 percent of the department’s budget is placed in the hands of NGOs, more than any of its other provincial counterparts. We have to account for every rand spent.”
In many cases, simple things like late submissions could delay funding, “but we also deal with cases of fraudulent financial figures so stringent checks are a necessity”.
“We do regular checks on all registered NGOs to ensure the money is used to the benefit of those who need it most,” he said.