The great NGO funding crisis, Part III: Adapt or die

Rhodes>Perspective>2013 Archive

Respected political think-tank Idasa, the Institute for Democracy in Africa, has become the latest casualty of the funding problems hitting South African civil society.

In the same week, venerable gay film festival Out In Africa announced that it only had sufficient funding to run one more festival in the near future. But is the problem all to do with stonehearted donors, or is something awry within the NGO sector itself?

The announcement that Idasa was going under was greeted with sadness and surprise, despite some telltale signs: in 2011 it closed up shop at its Cape Town office due to a lack of funding. Although its raison d’etre might have seemed to be accomplished in 1994, former staffer Richard Calland noted in an obituary for the organisation that it survived “by reinventing itself under Wilmot James and – briefly – Mamphela Ramphele, with new programmes on budget process, public opinion and parliamentary monitoring”.

Idasa, Calland wrote, had a proud pedigree: the brainchild of former politicians Frederik Van Zyl Slabbert and Alex Boraine, the organisation was responsible for convening the Dakar meeting , held in Senegal in 1987, where ANC exiles met with mainly Afrikaans-speaking South Africans in a conference hailed as one of the stepping stones towards ending Apartheid.

“Idasa could pride itself for having served as a credible facilitator of difficult political dialogues among South Africans on both sides of the political spectrum, in exile and at home,” wrote the Sunday World .

But Idasa’s rich and important past couldn’t secure its future. After 27 years, the organisation is winding up its affairs. On Tuesday, a final liquidation order was granted in the North Gauteng High Court. Court papers revealed that by December 2012, Idasa had accumulated losses amounting to a staggering R26,266,137. Directors reportedly believed that the organisation would weather 2013 thanks to projected donations of R114,279,773, but these apparently did not come through in time.

In the same week, meanwhile, the 19-year-old Out in Africa gay film festival announced that it only has enough money to put on one more festival – its scheduled April programme – for the time being. Deputy director Sharon Jackson told the Daily Maverick on Tuesday that trouble had been brewing for a while. “The funding climate has changed dramatically in what feels like a very short space of time,” Jackson said.

“The arts funding that is available is being chased by hundreds of organisations. We have been aware for a couple of years now that our major funder, Atlantic Philanthropies, would be spending out its fund… We have a number of initiatives that may bear fruit but these are somewhat distant.”

A project like the Out in Africa festival faces particular funding difficulties due to its niche. “Arts and queer is a hard combination,” Jackson concedes. While they will keep other aspects of the company going, they cannot afford to put on another of their flagship film festivals beyond April. “We are going to downsize, regroup, rethink,” said Jackson.

“We will continue to apply for funding and retain the hope that a wonderful individual will step in with the R2 million per year we need to keep the festival alive.”

Idasa and Out in Africa are just two of the numerous local NGOs who have found themselves financially high and dry over the last few years. In many of these cases, the underlying culprit has been the global financial crisis, which saw overseas donors sometimes drastically cut their financial commitments to South African civil society.

Then there’s the issue of fickle donor appetites: certain causes become celebrated and then fall away. Yet both these reasons provide only a limited explanation. They are not sufficient on their own to adequately account for the troubles besetting the country’s NGO sector.

A civil society funding expert who spoke to the Daily Maverick on condition of anonymity said that it was her experience that the management of South African NGOs was often under-scrutinised. “We often just mourn an organisation’s closure while forgetting to look at their management,” she said. “We do it with companies, but often not with NGOs. There are major questions that should be asked about the way in which organisations are run, and their financial management, and their accountability.”

One of the quirks of the South African NGO set-up is that its origins in the Apartheid era have shaped the way NGOs continued to operate long after Apartheid’s end. In a paper written for Transformer in 2011, Noxolo Kabane points out that during Apartheid, many foreign donors channeled funds in a clandestine manner to NGOs aiming to promote democracy or support marginalised groups.

“Partly as a result of this hostile environment, the administration and expenditure of funds was not strictly controlled; few recipient organisations were required to keep books, undergo independent audits, or report back to donors on how their money had been spent, as it was believed this could expose those organisations to the attentions of the state,” Kabane writes. “Therefore, while some conditions were laid down, few donors took steps to ensure that their funds were efficiently used in practice, and had the intended impact.”

She notes further that “the European Commission’s ‘easy and flexible’ approach to funding South African CSOs [civil society organisations] meant that the latter were exempted from the cumbersome and time-consuming procedures surrounding funding applications, project proposals, and the monitoring of funded projects applicable in other countries.”

As such, an extremely unusual situation developed, characterised by donors accepting far less rigorous systems and controls that would be expected of other countries. Post-democracy, of course, there’s no justification for this; and some NGOs seem to have come unstuck in the transition.

The civil society funding expert made the point to the Daily Maverick that a common sentiment when NGOs face closure seems to be along the lines of: “But these organisations shouldn’t have to close, they do such good work.” Of course, nobody disputes the vital work carried out by NGOs in South Africa. But she points out that this kind of thinking “often blinds us from self-reflection and interrogation of effectiveness”.

In other words: is this organisation really closing because of the capriciousness of donors, and their shifting agendas? Or is it because the organisation is “unfundable”, either due to a lack of financial transparency, mismanagement, or simply a failure to keep up with changing times?

“A lot of organisations have been in the media spotlight recently for being close to closing down,” she said. “There’s got to be room to change within the times and critically examine the models being implemented.”

This is not to underplay the challenges faced by NGOs in this country, or to undermine the importance of their work. Indeed, it is precisely because of the importance of their work that issues like management and transparency should be taken as seriously in the NGO world as it is in the corporate world. This is particularly the case given that South African NGOs often carry out work which is traditionally the burden of the government, at least in socialist countries.

“The state has essentially outsourced many statutory services to NGOs,” the funding expert confirmed. (We have noted before, for instance, how an NGO like Rape Crisis provides a service to Cape Town for which government offers no satisfactory replacement.) This in itself isn’t necessarily a terrible idea – as long as the relevant NGOs are then funded by the government both adequately and consistently. “You have to have the relevant funding mechanisms up and running, and policy clarity to support rather than hinder the work of these organisations,” she said.

One idea being voiced repeatedly in recent times is that local NGOs need to become less reliant on foreign donors. Even setting aside the financial crisis, international funds have been dwindling ever since South Africa was re-classified as a middle-income country and deemed able to carry more of its own financial burden. There’s also the fact that South Africa is not viewed as messed up enough to warrant throwing money at for things like democracy projects any more.

“There’s been a shift away from funding democracy work because we’ve had four successful elections and our institutions are reasonably strong, so we’re not on a crisis watch list in this regard,” said the funding expert.

But of course, it’s far easier said than done to suggest that NGOs shift their targets away from international funders. Where will the funds come from to replace these? The South African government does fund NGOs, but it generally gives preference to certain specific issues which fit within a wider agenda: currently, early childhood development, for instance. (In a tacit acknowledgement of the debt it owes NGOs, however, this year the Western Cape social development department announced that the lion’s share of its budget would go to NGOs: almost R900 million.) The Lotto disburses more money in South Africa than any individual donor, but tales of administrative breakdowns and bureaucratic nightmares are routine.

Then there’s the private sector. The B-BBEE Code of Good Practice suggests that businesses making over R5 million turnover a year should be contributing 1% of their net profit after tax to “socio-economic development”. In practice, this creates a pot of about R7 billion annually, estimates the funding expert. She thinks that more pressing questions should be asked about what wealthy elite individuals (Patrice Motsepe aside) are doing with their money.

One of the points made in the 2007 publication Giving & Solidarity – Resource flows for poverty alleviation and development in South Africa (edited by Adam Habib and Brij Maharaj) was that proportionally, poor people give more to charity than the rich. Another was that a majority of charitable donations are made to religious institutions, which are notoriously non-transparent when it comes to revealing how their money is being spent.

But, as we’ve noted, availability of funds is only part of the problem.

However vital their work on the streets, NGOs do not make for attractive funding targets if they are poorly administrated in the office, or perceived to have an outdated mandate. The funding expert advises South African NGOs to take a long, hard look inwards. She says: “Organisations need to start considering: What about our model is essential? What can we not afford to stop doing? What is the systemic impact of our work? And what can we become more creative about?”

Photo: Zululand hospice workers visit Nelson Ngobeni at his home in Esikhawini township, near Empangani, in South Africas Kwa-Zulu Natal province October 13, 2005.

Photo source: REUTERS/Mike Hutchings


Rebecca Davis studied at Rhodes University and Oxford before working in lexicography at the Oxford English Dictionary.


Article Source: The Daily Maverick




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