One of the world’s largest philanthropic organisations, the WK Kellogg Foundation, will close its doors in South Africa at the end of the month, seven months after it suspended its grant-making in South Africa due to financial irregularities. The office has been operating since 1986.
After the foundation discovered ”financial irregularities”, it announced in November last year that it would launch an investigation into alleged fraud at its regional office in Pretoria. The foundation estimates that several hundred thousand dollars may have been diverted illegally.
Despite the closure of the Pretoria office, funding in Southern Africa will continue.
The foundation denied that the probe was the reason for its closure. Instead, spokesperson for the foundation in South Africa Brian Gibson said the closure was driven by ”the continuing effects the global economic downturn has had on the foundation’s asset base”.
The foundation was adopting a more cost-effective delivery model to ”fulfil its philanthropic mission in Southern Africa”, he said.
”Following a significant review of its programme implementation model, the foundation determined the costs of maintaining a local office could be better utilised in funding beneficiaries in the region” Gibson said.
Kellogg, whose headquarters are in Michigan in the United States, had $8,4-billion in assets at the end of last year, making it one of the 10 wealthiest philanthropies in America.
Sterling Speirn, the CEO of the foundation, said the decision to close the office at this time is based on immediate budgetary constraints.
”We are trimming budgets in all regions given the reduction in our overall asset base,” he said.
But insiders said the fraud investigation, which still is not finished, had played a role, even though it might not have been the determining factor.
The investigation has already revealed wrongdoing. The foundation fired its regional director of Africa programmes in Pretoria, Mandivamba Rukuni, in January after a disciplinary hearing. Gibson said the charges against him arose as a result of information that was revealed by the investigation.
”But I must stress that they were unrelated to the financial irregularities that are the primary focus of the forensic audit,” he said. The investigation was still continuing, and would probably be ongoing for at least a few more months, he said.
After revealing the investigation in November, the foundation said former South African ambassador James Joseph would oversee the restructure of its programming in the region while the probe took place. As a result of the investigation, all financial transactions ceased and all assets were secured until the audit was completed.
The office in Pretoria oversaw projects funded by the foundation in Botswana, Lesotho, Malawi, Mozambique, South Africa, Swaziland and Zimbabwe
Gibson said the foundation also had to close other offices in the world due to budgetary constraints. These included offices in Jackson, Mississippi, in the US and São Paolo, Brazil, which will close in August.
”Going forward the foundation will allocate funds to non-profit organisations with a strong presence in the Southern Africa region, a proven track record, and philosophies that align with those of the foundation.” Speirn said.
When the new partnerships are in place, Speirn said, foundation funds will be deployed in the most efficient manner possible to serve vulnerable children, families and communities.
The foundation also remains committed to its current grantees. ”Existing commitments to beneficiaries who are fulfilling their commitments in the region will be honoured,” he said.
The Kellogg Foundation has awarded more than $350-million in grants to Southern Africa recipients since coming to the region. In the year to August 2008, $27-million was invested in the families and children of the region.
The foundation funds children, families and communities to strengthen and create conditions that empower them and help them to succeed.