Counselling organisation LifeLine says the slow release of funds from the National Lottery has left it dangerously in the red and may have to close.
The National Lotteries Board’s glacial pace of charity funding is threatening yet another critical humanitarian service. The long-serving LifeLine Johannesburg announced this week that it may be forced to close because the organisation urgently needed funding.
The non-profit offers services ranging from 24-hour crisis counselling to HIV/Aids prevention.
It serves townships and urban areas.
Thousands of people suffering the effects of domestic violence, rape, hijackings and other forms of trauma use LifeLine’s free counselling services annually. The majority cannot afford to access these services privately.
LifeLine has received funding from the National Lotteries Distribution Trust Fund since 2001. But the acting director and treasurer, Janet King, said the Johannesburg branch was facing a financial crisis that threatened its existence mainly because of the absence of funding from the trust.
“Lotto money was last received for 2009 and we have not yet received funding for 2010,” she said.
“We don’t even know if our 2010 application will be successful. Other non-governmental organisations find themselves in the same position. Lotto has not invited applications for 2011, so we assume that there will be no funding.
We are now facing an R800 000 loss for the year to March 2012 and need a further R1.5-million committed for the coming financial year.”
King said the trust had been the main funder of the counselling and overhead costs that kept the organisation’s centres operational. It had always been an effective funder of the organisation—from 2001 until 2009, LifeLine had successfully applied for Lotto funding annually.
When LifeLine enquired about when funding applications could be submitted for 2011, King said, the lotteries trust responded that this would occur only once the applications for the previous year had been adjudicated.
LifeLine is feeling the effects of its dwindling resources, said King. Although the organisation had not retrenched staff, it was a real possibility if funding was not secured soon. Staff that resigned were not being replaced and the organisation was relying on volunteers to assist in the absence of staff.
“We are cutting back on as many services and expenses as we can without harming our community. We have reserves that will soon run out.”
King said that despite sustainability projects in which the organisation sells services such as training and facilitates employee-wellness programmes for corporates, it was not sufficient to keep it operational. She added that all LifeLine branches nationally were struggling to access funding from the lotteries trust.
A reputation for not delivering
Over the past 14 months, the National Lotteries Board and the National Lotteries Distribution Trust Fund have been severely criticised for inefficiencies in funding distribution.
In March last year, the Funding Practice Alliance, an advocacy group consisting of non-profits, released damning research following a study of the lotteries trust fund’s funding distribution process. The report stated that the entire funding process, from submission of application to receipt of funding, could last as long as two years—and that was if the application was successful. Delays in disbursing funds to organisations in some cases threatened their existence.
In September 2011, the Supreme Court of Appeal ruled in favour of two non-governmental organisations that had taken the National Lotteries Board to court to force it to reconsider previously unsuccessful funding applications.
The two organisations, Sikhula Sonke and the South African Education and Environment Project, both of which work in early childhood development, could pursue the case only because they received pro-bono representation from a legal firm.
The organisations originally won their case in the Western Cape High Court in August 2010. In his ruling, Judge Pat Gamble criticised the National Lotteries Board for its rigid application of funding guidelines. He ordered the board to reconsider the applications. The board appealed but, in a final judgment by the court, Justice JA Cachalia upheld the high court ruling.
In November 2011, City Press reported that Makhaya Arts and Culture was awarded R41-million by the National Lotteries Board. Murendwa Nevhutanda is an employee at Makhaya and the daughter of the board’s chairperson, Professor Alfred Nevhutanda. This followed less than a year after the National Youth Development Agency was awarded R40-million to host the World Youth Festival in December 2010.
The maximum amount ever received by LifeLine was R1.7-million.
Taken to court
In February 2012, the Molteno Language and Literacy Institute had to take the National Lotteries Board to court to force it to honour its agreement to grant the organisation R20.4-million. About two months after allocation in June 2011, the board withdrew the grant, citing budgetary constraints. Shortly after the organisation filed court papers, the board settled the matter out of court and agreed to pay the grant.
On January 27, 450 non-governmental organisations marched to the National Lotteries Board offices in Pretoria in protest against “years of maladministration and questionable decisions”.
On February 9, the Coalition on Civil Society Resource Mobilisation—an alliance advocating for a more enabling environment for non-profits—called on the public protector to investigate the National Lotteries Distribution Trust Fund to establish whether or not it had failed in its legislative obligations to support non-profits.
In a seemingly unrelated move, public protector Thuli Madonsela announced in the same week that her office would probe the National Lotteries Board.
The Sunday Independent reported that the probe followed complaints of alleged nepotism, corruption and withdrawal of funding previously approved for allocation to non-profits.
On April 1, the chief executive of the National Lotteries Board, Professor Vevek Ram, officially went into early retirement.
National Lotteries Board spokesperson Sershan Naidoo could not be reached for comment at the time of going to print.
Heidi Swart is the Eugene Saldanha Fellow in social justice reporting, sponsored by the Charities Aid Foundation, Southern Africa
Earth to Lotto: Is there anybody out there?
LifeLine Johannesburg’s finance manager, Kim Allan, has been phoning the National Lotteries Distribution Trust Fund every month. She is hoping for an answer to the million-rand question asked by so many other organisations that apply for funding: “How far are you in processing our application?”
Because there is a backlog in the evaluation of funding applications, LifeLine submitted its funding proposal for 2010 on March 25 2011. The outcome of this application is not yet known.
The organisation’s funding for 2009 was paid out only on January 25 2011. Looking at the organisation’s records, it appears that in each instance in which money was allocated, the trust, on average, took 12 to 24 months from the date of submission of the application to payout of funds.
Allan keeps a careful record of the many times she fruitlessly makes contact with the trust. “Their standard response is that we are still being processed and I must phone back, which they say I’m welcome to do next month.”
On April 10, Allan called the trust again. She told the operator that the organisation was in financial trouble: “I said: ‘We are threatening to close.’ A big organisation like LifeLine and you get a different person every time.” At Allan’s insistence on a more comprehensive response, the operator told her that the trust was undertaking a “pre-adjudication assessment” and that a co-ordinator was busy with “quality checks”. The operator was unable to tell Allan how long this assessment would take.
However, he did say that the co-ordinator was preparing LifeLine’s file for a “board meeting”. When Allan asked him what meeting he was referring to, the operator could not answer, save that the meeting occurred on a monthly basis. Allan then requested to speak to the co-ordinator directly, but the operator denied the request.—Heidi Swart