NPO's going under as the Gauteng Department of Social Development insists on "unreasonable" compliance process
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A non-governmental organisation (NGO) that has still not received its subsidy from the Gauteng Department of Social Development has told how one of its offices has racked up an overdraft of R400 000 to cover the cost of its services to poor and vulnerable communities, transport, salaries and administration.
This is contained in a recent letter written by the Gauteng provincial committee of the the SA Vroue Federasie (SAVF), about the "current unsustainable, ineffective and inconsistent financial partnership between us as an NGO and the DSD Gauteng".
In May, the department announced it had begun a rigorous compliance process with all funded organisations in Gauteng to ensure they complied with the terms and regulations in their signed Service Level Agreements (SLAs), delaying subsidy payments to NPOs.
On June 20, in its last statement on the matter, it said 92% of the province's subsidised NPOs had received their funding.
“We can confirm that 2 187 SLAs earmarked for service subsidy have been signed, and 193 remain unsigned. A total of 2 064 NPOs have been paid and 316 still unpaid."
The department did not respond to queries by the Saturday Star in the past two weeks.
The SAVF Gauteng said its offices in Pretoria, Hermanstad, Pretoria-North, Soshanguve and Mamelodi rendered services to 2 331 children through 18 ECD Centres; to 1021 older persons in seven homes for the aged and luncheon clubs.
"We have two shelters for destitute people; in Mamelodi we feed 250 children daily and supported the community during the last nature disaster.
"We have 36 social workers employed, rendering integrated services to 119 820 people," wrote Marieta Kemp, the organisation's director of social services, in the letter.
In the financial year 2017/18 SAVF Gauteng’s income was R118 815 809 and its expenditure stood at R119 339 588.
"DSD’s contribution to our services varies between 20% and 70% of our cost expenditure. We do accept we have a responsibility towards fundraising and income-generation, but we also accept that DSD as a co-financial partner in our social service practice need to uphold its responsibility towards the poor and vulnerable.
"Historically, we have signed SLAs in April and received our subsidies in May. A few SLAs have been signed and a few have received their subsidy ... We know that we need to adhere to good governance principles and comply with legislation.
"However, taken into account that these persons are doing their work voluntarily and without any remuneration, the expectations from DSD without proper consultation and time provision, is unacceptable and unfair."
The greatest challenge to its NGOs was the registration to now comply with the Central Supplier Database (CSD).
"Staff have been running around and spent hours to get hold of different certificates, changed bank accounts, had to change signatories; even had to re-change bank account numbers to adhere to the provincial treasury expectations."
She cited how, in a recent email response to Lisa Vetten, a researcher at Wits Institute for Social Economic Research, Yusuf Mayet, of the health and social development public finance division at National Treasury, stated there was no requirement from National Treasury requiring NGOs to register on the CSD.
"The instruction issued by National Treasury does not compel NGOs to register on CSD for the purpose of receiving grants," stated Mayet in his email to Vetten.
"CSD registration is mandatory for suppliers (transactions that goes through the supply chain management process). Organs of state can decide on their own on whether they want to have NGOs register on CSD for the purpose of streamlining their internal processes.
"So if provincial departments are requiring NGOs to register on the CSD then this is completely their own requirement and cannot be attributed to Treasury.
"That said I think it is completely unreasonable to impose the same requirements of profit-making suppliers of government on NGOs delivering services to vulnerable individuals," said Mayet.
"NGOs are not government suppliers, they are not providing a service to government and therefore should not be subjected to normal supply chain procedures. Nonetheless, if provincial departments are requiring NGOs to register on the CSD, then yes the onus is on them to provide the necessary support," Mayet said.
The SAVF, said Kemp, had urged the department to "intervene in this process of non- payments, unclear administrative processes and poor communication.
"The children and the vulnerable cannot be sacrificed because of an ineffective system."
Vetten said NGOs were being made to jump through unnecessary loops. "I've heard stories of staff who have had their electricity cut, or had no electricity on the coldest weekend of the year, of people who cannot come to work because they don't have money or of people sleeping at work to provide services ... People who have gone unpaid for three months and have lost their medical aid and insurance because they've missed payments.
"It's a disaster that has been a long-standing problem. For me, it's remarkable that everyone in government makes sure they are paid on the dot every month but with NGOs, they can't get that right."
Last week, the MEC for Social Development Nandi Mayathula-Khoza, in her department's budget vote, said the department "appreciated the invaluable work" done by NPO's as an extension of social development services.
"By the end of this current political term, we would have invested R11 billion in the Gauteng NPO sector ... Our NPO budget remains the biggest at 56% of our R4 9 billion budget.
"We however would like all NPO's to take the compliance requirement very seriously to ensure that our vulnerable groups of people are taken good care of and that all audit risks are minimised."
But Vetten responded: "I suppose the question for the MEC is why they woke up to the sudden urgency of registering NPOs after the financial year started, thus delaying payment to NGOs and putting their vulnerable groups of people at risk (who don't actually belong to the department, by the way)?
"The second question to the MEC is for a list of all NGOs that have not taken their compliance requirements seriously - how big is the problem and what exactly is the problem, ie what are they not complying with?
"'Audit risks' is a very vague phrase. What is wrong with the NGO database that the DSD requires all NGOs to register on? Are they saying there's something wrong with the way it's working that they now have to rely on the CSD?"
Les Sanabria, of Operation Compassion SA, told how one of its projects situated in Brakpan, the Ebenhaeser Old Age Home, in a "desperate and ignorant" bid to comply "went and registered themselves as an NPO independent of us just to please the DSD and get the subsidy.
"Now they are an organisation on their own using our property and equipment ... basically we have been hijacked and the property undermined. Many homes have not received their subsidies."