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January – June 2018

NPO accountability in a disconnected and divided South Africa

NPO
  • Professor André Rouw
  • MAY 2018
  • Tags Reports, Strategic management
11 minutes to read

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Article written by Commissioner Prof Ronelle Burger, Prof Marc Jegers, Dineo Seabe, Prof Trudy Owens, Prof Annabel Vanroose, Frederik Claeye, Nwabisa Makaluza and Ncedo Mngqibisa

Why this study?
Non-profit organisations (NPOs) have been part of the South African landscape for many years. Formally registered with the Department of Social Development (DSD) in terms of the Non-Profit Organisations Act (No. 71 of 1997), NPOs are located in all nine provinces and offer a range of services in fields as diverse as education, health, housing, culture and recreation, and religion. In addition, they often play an advocacy role for the communities that they serve. Yet NPOs are feeling the pressure as funding becomes increasingly scarce and the country faces a fraught socio-economic climate.

With South Africa having been wracked by state capture and other corruption scandals in recent years, it is not surprising that NPO stakeholders – that is, the government, donors, staff, beneficiaries and the broader members of society ‒ are preoccupied with the need for transparency and accountability. NPOs are, after all, public organisations with a duty to serve their communities in an ethical and cost-efficient manner. Although the term accountability is liberally tossed around these days, many (including smaller, less experienced NPOs) do not fully grasp its meaning and significance.

This paper supplements the limited literature on the South African NPO sector by identifying the different entities to which NPOs are accountable and by exploring the nature and impact of these relationships.

Rather than merely reflecting the brokenness in South African society, the NPO community should now … be given the opportunity to lead a process of change.

Research methodology
The research was conducted during the course of a four-year study (2014 to 2017) which focused on community-based NPOs in the Eastern Cape and Western Cape. These two provinces were chosen on the basis that they were broadly representative of the variety of communities and NPOs in South Africa. A random sample of communities was selected, with data drawn from the 2011 Census. For each selected community a sampling frame of registered NPOs was compiled, using a snowballing process. Interviews were conducted with a total of 195 NPOs. The interviews were supported by focus group discussions aimed at eliciting community perspectives on the NPOs in question. Given the protracted and complex nature of the survey, the analytical process has not yet been completed. The authors’ report therefore conveys the key findings from the survey.

What did the research find?
Accountability refers to an organisation’s obligation to keep stakeholders (particularly funders) informed of major activities and decisions. This is generally ‘upward accountability’. However, ‘downward accountability’ (to communities and other beneficiaries) has also been gaining traction in recent years, although it tends to be a less formal activity.

For many years the NPO sector in South Africa has had a divided character, shaped by the schisms in society. During apartheid, the sector was split into welfare organisations, which were subsidised by the government and largely catered to white communities, and other entities opposing the apartheid system which focused on helping black communities to survive in the face of an extremely oppressive regime. Although the dawning of democracy in South Africa dissolved the antagonism between the government and many NPOs, the sector faced new challenges. For example, some of the international funding that had traditionally been allocated to NPOs was redirected at the new government to support its development drive. Funding that was available to the NPO community often had stricter conditions attached, such as having to provide evidence of good governance, economic impact and accountability. These new demands unfortunately prompted a significant exodus of skills from the NPO sector.

… as the government is also the primary regulator of the NPO sector, NPOs could be under pressure to pursue a government-driven and possibly politicised agenda.

More recently, the numbers of registered (often informally structured) NPOs in South Africa have again started to climb. However, funding has become increasingly scarce, leaving many NPOs under-resourced and relatively ineffectual. Where international donor funding is available, it tends to be awarded to large and well-resourced NPOs which are perceived to have higher skills and are more likely to run sustainable operations. Smaller, less experienced NPOs are frequently side-lined. The fall-off in donor funding, which is a global trend and not just a South African phenomenon, has forced NPOs to turn more and more to the government for support. While constituting an economic lifeline for many, the drawback of this arrangement is that as the government is also the primary regulator of the NPO sector, NPOs could be under pressure to pursue a government-driven and possibly politicised agenda.

Today the NPO sector in South Africa is seriously fragmented – with small, under-resourced organisations pitted against larger, formally structured entities. Not surprisingly, the smaller outfits find it much more difficult and expensive to comply with assorted stakeholders’ auditing requirements, particularly in the area of financial reporting. In addition, demonstrating their economic impact is a major challenge. Another problem is that more affluent regions (such as the Western Cape and Gauteng) generally attract more NPOs than poorer regions (such as the Eastern Cape, North West and Mpumalanga), and therefore enjoy better representation at the community level. Not surprisingly, the disconnectedness in the NPO sector has complicated the policy-making process.

To help NPOs become more effective … the funding community and regulators need to make compliance criteria more accessible and harmonious.

The value of the research
This study lifts the lid on the dynamics in the NPO sector in South Africa and the challenges NPOs face in serving their respective communities. At the heart of these challenges is a lack of resources (human, physical and financial) which has forced organisations to follow funders’ agendas rather than concentrate on community-related priorities. Linked to this is a lack of professionalism in many NPOs, which has dented their credibility. These factors have conspired to weaken development efforts in needy areas. The literature shows that strong performance and accountability are intertwined. The complexities surrounding accountability and the measurement thereof have not been given particularly robust attention up until now and here the study makes an important contribution. To help NPOs become more effective and for their efforts to be felt across a greater geographical area, the funding community and regulators need to make compliance criteria more accessible and harmonious. To this end the results of the study, once fully completed, will be particularly valuable. Rather than merely reflecting the brokenness in South African society, the NPO community should now (with the necessary support) be given the opportunity to lead a process of change.

Click here for the full report: NPO accountability in a disconnected and divided South Africa

This research was conducted by Prof Ronelle Burger, Prof Marc Jegers, Dineo Seabe, Prof Trudy Owens, Prof Annabel Vanroose, Frederik Claeye, Nwabisa Makaluza and Ncedo Mngqibisa. Prof Annabel Vanroose lectured in Development Finance at the University of Stellenbosch Business School.

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