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Budget cuts could be the last straw for struggling NPOs

The most vulnerable, the elderly and children, will be hit by the collapse welfare organisations due to government’s failure to act effectively and timeously.

The most vulnerable, the elderly and children, will be hit by the collapse welfare organisations due to government’s failure to act effectively and timeously.

Published Nov 20, 2023


Riedewhaan Allie and Sharon Follentine

Over the past few years non-profit organisations (NPOs) have felt the cumulative effects of decreased donor funding as well as transfer funding from government departments to render much-needed social welfare and development services.

This has been exacerbated by several provincial Departments of Social Development (DSDs) which have failed to ensure that the funding subsidies increase in line with inflation and, moreover, in many instances they have reduced them.

The already dire situation has been aggravated by poor management and late payment of the transfers. Media reports of the failure of provincial DSDs in the Eastern Cape, Free State, KwaZulu-Natal and Gauteng to pay NPOs, citing a string of excuses for late or non-payment, have put organisations under pressure.

This trend has been going on since 2010 when welfare organisations decided to take the Free State DSD to court. The situation was compounded during the Covid pandemic when government departments withheld payments to welfare organisations. As a result, most NPOs were becoming increasingly cash-strapped, and many have been forced to sell off assets in order to sustain service, or when that fails, to either retrench staff or close down, leading to cutbacks in service delivery. The loss of infrastructure and professional expertise built up over decades cannot easily be clawed back.

The court judgment in the National Association of Welfare NGOs and the Free State DSD between 2010 and 2014 made it clear that welfare organisations were delivering a range of care services and fulfilling the constitutional and statutory obligations of the provincial DSD.

The court findings therefore underlined that NGOs and welfare organisations should be paid and compensated for doing what is essentially the responsibility of the government.

With regard to delays and non-payments to NGOs, the court said: “The DSD fails to recognise, as a fundamental principle of funding, that NPOs that provide care to children, older persons and vulnerable persons in need, as well as statutory services, fulfil the constitutional and statutory obligations of the department.”

The courts also found that when a provincial DSD is planning the delivery of social welfare services, subsidising NPOs to provide services places a burden on NPOs to fund the shortfall.

Instead, the DSD should fund NPOs fully, to provide the services on its behalf.

With all the speculation about drastic budget cuts and Finance Minister Enoch Godongwana announcing that South Africa’s budget deficit increased by R54.7 billion compared with the 2023 Budget estimates, the anticipated reduction in social welfare budgets for the new year will most certainly have dire consequences for organisations providing social services and programmes to vulnerable families in poor communities.

On Monday, November 6, more than 50 organisations in the Western Cape met physically and virtually to contemplate the state of Western Cape welfare organisations. Many operated children’s homes, services for children and families, the aged and shelters for women affected by GBV, and all indicated that the current funding is inadequate and does not lend itself to effective and efficient services to vulnerable children, families, women and seniors in our poorest communities.

NPO directors lamented the fact that they are expected to provide meals to seniors with less than R5 per person, that buying bread has become unaffordable at about R17 a loaf.

Organisations, however, welcomed the fact that the government will continue to provide the R350 social relief of distress grant to nearly 7 million unemployed people, but realised that this was not going to make a significant difference for families and households who are expected to make ends meet when basic food supplies are priced out of the reach of poor people.

In this regard, the Pietermaritzburg Economic Justice and Dignity Group, which has been monitoring the costs of basic household food items for more than 10 years, indicated that a current basket of basic household food for an average family costs about R5 124.

NGO partners who spoke at the Cape Town meeting, including those operating under the umbrella of the KZN NPO Network Task Team and the Gauteng Care Crisis Committee, reported that welfare organisations in their provinces were forced to close their offices due to the often chaotic and erratic administration of the subsidy payment system and frequent delays in grant payments from the DSD.

This placed a burden on the resources of organisations, who were expected to pay social work and staff salaries from regular loans and overdrafts. What was supposed to be a trusting relationship and partnership between NPOs and provincial DSDs has now broken down completely.

Cash-strapped organisations are now forced to consider closing down services in some communities and even reducing staff. This uncertainty for staff with debit orders also created anxiety and stress, as well as the added burden of penalties from banks and financial institutions. Although there were promises of quarterly tranche payments that were going to be effective from September, these didn’t materialise.

After the Cape Town meeting on November 6, KZN organisations protested outside the Durban DSD head office on November 8 with a letter of demand that was received by the DSD director of Supply Chain Management.

Across the provinces we find that different approaches are applied by the various DSD offices, where NPOs are sometimes expected to register on the central supplier database and expected to follow a tender process to access or qualify for funding.

In other provinces the subsidy approach still remains the dominant mode of funding. The subsidy mode unfortunately expects NPOs to raise the shortfall in their funding. Organisations indicated that social work subsidies remain at the entry level, irrespective of the experience or qualifications of the social workers.

Many NPOs that provide a broad range of welfare services fulfil the constitutional and statutory obligations of the DSD and, by extension, the state.

However, in the current economic crisis and uncertainty of budget cuts and government funding for welfare organisations, an important vehicle for government service delivery to poor and vulnerable communities will be lost as more NPOs are forced to shut their doors or drastically curtail their services.

The government and Treasury need to understand that pursuing austerity measures in the midst of a growing poverty and hunger pandemic among South Africa’s poorest communities is not going to help the millions of people who go to bed hungry every night.

Activists and academics are cautioning that budget cuts will be most severely experienced by our country’s women, as primary caregivers and their young children.

When nearly 12 million people are unemployed and only 7 million are receiving emergency relief grants of R350, the masses are already walking a tightrope, and will face further despair when NPOs that are serving as their beacons of hope have to shut their doors and turn people away.

While the Western Cape government appears to show greater commitment to its NPO partners who operate at the coalface to make a difference in poor communities, organisations are already struggling to remain viable and sustainable, and the planned budget cuts could be the last straw on the camel’s back for many organisations and service providers who depend on their lifeline from the provincial government departments.

The question is, “Can the Western Cape government afford to turn its back on organisations who serve their poorest and most vulnerable citizens, and who render statutory and constitutionally mandated services on their behalf?”

Dr Allie and Follentine are Western Cape Association for Social Work exco members

Cape Times