Why donor funds don't reach NGO coffers

South African donors have funds, but fund-raisers are struggling to raise money for NGOs facing financial crises.

Studies have shown that grant funding has not decreased over recent years, yet NGOs are finding it increasingly difficult to raise money. It appears that donors choose to spend their money in different areas from those in which most NGOs function.

The argument is borne out by comparing information collected in interviews with three donors and information gleaned from a recent study by the Wits graduate school of public and development management, Johns Hopkins University in the United States and the Centre for Civil Society on the Size and Scope of the Non-profit Sector in South Africa.

Three donors were asked to clarify the rationale underpinning their grant programmes.
They mostly followed the lead taken by the government to prioritise areas of intervention for “poverty reduction”. The donors were satisfied with the way their programmes were implemented. The most common poverty-reduction areas they identified were education, health and economic development.

The Tshikululu Social Investment (TSI) Fund, headed by Margie Keeton, is one of the biggest corporate social investment programmes in South Africa. TSI manages social investment portfolios for AngloGold, De Beers, Anglo American and the First Rand Foundation. TSI funds come from contributions linked to the companies’ performance. The fund has collected R124-million in the past financial year.

Keeton says TSI complements the government’s development priorities, but its grant programmes also flow from the corporate identities of its members. They apply “merit with bias” to choose areas of development that match their wider corporate interests. For example, De Beers is concerned with social investment in the Northern Cape and Limpopo, because it mines diamonds in these provinces.

Bridget Masango, executive director of marketing and communications at the National Development Agency (NDA), the biggest government donor agency, says it is primarily a development agency and only secondarily a funding agency. Capacity building is its primary objective, followed by HIV/Aids and gender programmes.

The NDA aligns its grant-making programme closely with the government’s development priorities, with a special focus on “basic needs and vulnerable groups”.

The NDA has been operating since May 2000. It funds projects and programmes in the education, economic development and health sectors. Masango says that 40% of this year’s R96,7-million budget from the government has already been committed. The NDA also disburses more than R200-million from the European Union.

The agency has distributed more than R230-million to about 4000 projects since it started.

The European Commission (EC), the biggest overseas development agency operating in South Africa, and formulates three-year development programmes in consultation with the South African government.

The EC broadly supports development involving water and sanitation, social housing, health, local economic development, the NDA, human rights and justice, as well as regional cooperation and integration.

EC spokesperson Frank Oberholzer says grant funding provided by European taxpayers has grown in the past five years. This year’s allocation stands at R1,2-billion. He says some of the growth in the funding budget is the result of the rand’s poor performance in recent years.

Oberholzer says the EC’s development programme is mostly concerned with poverty reduction. It prefers to fund umbrella organisations.

The study found that many of South Africa’s 100 000 NGOs are most active in social services, culture and recreation, and development and housing. Together these projects employed 54,3% of people working in the non-profit sector. The study shows 53% of NGOs are voluntary associations that emerge in response to direct and immediate locally identified needs.

Given these statistics, it is evident that spontaneous development activities in poor communities are not necessarily tied to the government’s priority areas.

Fazila Farouk is a former director of the Citizen Base Initiative

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