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SUMMARY OF A NATIONAL RESEARCH STUDY | OCTOBER 2017 | A
CIVIL SOCIETY IN SOUTH AFRICA
FUNDING FEATURES & ECONOMIC CONTRIBUTION
SUMMARY OF A NATIONAL RESEARCH STUDY
O C T O B E R 2 0 1 7
Funded by the National Lottery Commission
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The Funding Practice Alliance acknowledges that the socio-economic and political context has shifted since the completion of the research. It further recognizes that, at a global and national level, civil society spaces are opened and closed, as and when necessary, by governments and this places additional stress on the sector. It is hoped that the research fi ndings stimulate debate and discussions that will lead to actions that strengthen the civil society sector and more importantly, strengthen the marginalized and excluded groups in our society that the sector serves.
The NLC relies on funds from the proceeds for the National Lottery. The Lotteries Act guides the way in which NLC funding may be allocated. The intention of NLC funding is to make a diff erence to the lives of all South Africans, especially those more vulnerable and to improve the sustainability of the benefi ciary organisations. Available funds are distributed to registered and qualifi ying non-profi t organisations in the fi elds of charities; arts, culture and national heritage; and sport and recreation. By placing its emphasis on areas of greatest need and potential, the NLC contributes to South Africa’s development.
Context
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Introduction 03
About the study 03
1. Key fi ndings – Funding sources and fl ows 04
1.1 About the sample 061.2 Income and expenditure 071.3 Funding sources and fl ows 121.4 Key fi ndings - Economic contribution 14
2. Some critical considerations 18
Appendix 1: The civil society sector in South Africa – Defi nitions and funding trends 19
Contents
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In 2014 The Funding Practice Alliance collaborated with Mthente Research and Consulting Services to conduct a research study on civil society in South Africa to better understand how the civil society sector is funded, and how it advances South African society through contributing to employment and to the economy. i The study was completed in 2016. The research was made possible by the proceeds from the NLDTF and commissioned by the National Lotteries Commission in partnership with the Funding Practice Alliance. The primary reasons for embarking on the research is that the value of civil society’s contribution to social change in South Africa is often understated, under-valued and there is insuffi cient data available on the amount of resources that fl ows to the civil society sector, what is supported and the number of individuals employed in the sector.
The primary research questions were:
• Where does funding to the civil society sector come from (i.e. funding source)?• Where does funding go to in terms of sectors and geography?• What is the civil society sector’s measurable contribution to both remunerated
and non-remunerated employment?• What is the civil society sector’s measurable contribution to the South African economy?
This document provides a summative overview - or snapshot - of selective fi ndings from the research study. For more on the methodology used, limitations of the research, source references, and the full set of fi ndings, see the Research Study on Civil Society in South Africa Report (available on request).
About the study
Size and scope of the sector
The regulation and registration of NPOs falls within the mandate of the Department of Social Development (DSD), which itself sometimes blurs the lines between NPOs and CSOs. In terms of the NPO Act (Act 71 of 1997), the DSD is tasked to maintain the national NPO register.
• In 2013 it was reported that of the approximately 85,000 registered NPOs, 35,217 were issued with non-compliance warnings and a further 36,513 had been deregistered altogether, leaving only 29,019 in good standing.
• In November 2014, the DSD register showed a list of more than 80,000 NPO’s. • In December 2014 the DSD website showed a total of 131,055 registered NPOs,
2,146 deregistered NPOs and 1,536 applications in progress. This fi gure increased to 133,879 registered NPOs in February 2015.
• DSD indicates that the numbers of registered NPOs increases daily, and stood at 145,152 in October 2015.
As the above fi gures indicate, the exact number of active NPOs is diffi cult to ascertain as accounts diff er.
Introduction
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Research conducted in 2001 concluded that there were 98,920 NPOs in South Africa at that time:
• More than half (53%) were CBOs staff ed primarily by volunteers. • The most popular areas of engagement were Social Services (22%), Development
& Housing (20%), and Culture & Recreation (20%), followed by Health (7%), Education (6%) and Environment (3%).
• NPOs were found to be a major employer, creating approximately 650,000 full-time positions, noting that only 50% of organisations were staff ed by full-time employees. ii
Based on an analysis of DSD data presented in the 2014/15 State of the South African NPO Register Report, the greatest number of registered NPOs is in the Social Services sector (39.9%) followed by Development & Housing (20.9%). The International Organisations category has the least number of registered NPOs. Furthermore, most registered organisations are from Gauteng (32%) and KwaZulu-Natal (19%), followed by Limpopo (10.4%) and the Western Cape (10.2%). The Northern Cape has the least number of registered NPOs (2%). The majority of NPOs are registered as a VAs in terms of common law (94.3%), followed by NPCs, incorporated in terms of the Company Act (3.9%), and Trusts in terms of the Trust Property Control Act (1.8%). A total of 62,146 (or 45.5%) of all registered NPOs were deemed compliant as at end March 2015. Most activities are concentrated in the area of Social Services and most registered NPOs are based in Gauteng. The sector is a signifi cant employer, although many full-time workers are voluntary, and there are no recent statistics on the number of employees.
According to the 2013 Civil Society Organisation Sustainability Index (CSOSI) report, “there is no accurate data on the size and scope of the civil society sector in South Africa due to the lack of coordination among the several government agencies that register CSOs”.
The research study included:
• A scoping and desktop review of the civil society sector. See Appendix 1 for summary information on how civil society is defi ned, the size and scope of the sector, and its primary funding sources.
• A survey with 448 civil society organisations (CSOs).• 9 focus group discussions, comprising 77 CSOs across 8 provinces.• 6 stakeholder interviews.
The primary research fi ndings are based on the survey, which was conducted with a sample of CSOs drawn from the Department of Social Development’s (DSD) database of non-profi t organisations (NPOs). The CSOs in the sample are all
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registered South African NPOs and are funded by donors and/or private members. The sample excluded independent state-established institutions (such as “Chapter Nine” institutions), business and professional associations/unions, and religious institutions (as distinct from faith-based organisations, which were included). The sample frame was based on DSD’s classifi cations of NPOs, as follows:
Type of organisation
• Voluntary Associations, Trusts or Non-Profi t Companies
Sector
• Culture & Recreation• Development & Housing • Education • Environment • Health • International • Law, Advocacy & Politics • Philanthropic Intermediaries & Voluntarism Promotion • Religion (faith-based organisations)• Social services
Working on 132,773 eligible organisations from the DSD database, a random, yet purposive sample of 500 CSOs was extracted. The provincial spread of CSOs was proportionally representative. A total of 448 telephonic surveys were completed for analysis ensuring a less than 5% margin of error with a 95% confi dence interval.
The CSO survey provided the data for a cash fl ow analysis that determined the following:
• Sources of funding.• Flow of funding within the sector.• The extent to which the sector contributes to employment (both remunerated
and non- remunerated/voluntary work) in South Africa.• The extent of the sector’s contribution to the South African economy.
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1.1 About the sample
• Less than half (43%) have Section 18a status.• 19% have a Black Economic Empowerment (BEE) rating. • 4% are registered internationally. • 96.9% do their fundraising internally and don’t employ a professional fundraiser.• 17.4% have a reserve or endowment.• 34.7% own major assets, for example property, buildings, vehicles, equipment
and/or machinery.
Location
With regard to geographic location, the majority of CSOs use Gauteng (29%) as their base province, followed by KwaZulu-Natal (20%). The Northern Cape has the least number of CSOs headquartered in the province (2%). While a number of CSOs operate outside of their base province, very few operate in more than one to three additional provinces and under 5% work in countries other than South Africa.
Sectors
The majority of CSOs are classifi ed under Social Services (43%) and Development & Housing (28%). Welfare/Social Develop-ment, Youth, and Education, were high-lighted as key focus areas, accounting for more than one third of the sample (38.5%). Philanthropic Intermediary & Voluntarism Promotion, and Environment, are the least represented sectors. Although CSOs are classifi ed under a specifi c sector and sub-sector, they can potentially fi t within multi-ple sectors as they work with various focus area/s which are often cross-cutting.
1. Key fi ndings – Funding sources and fl ows
Gauteng
29%
KwaZulu-Natal
20%
N. Cape
2%
Other
<5%
30%
25%
20%
15%
10%
5%
0%
FIGURE 1: CSO geographic locations
Social Services
43%
Development and Housing
43%
Welfare/Social Development, Youth
and Educa�on
43%
50%45%40%35%30%25%20%15%10%
5%0%
FIGURE 2: CSO sectors
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Size
In terms of annual income, the sample was disaggregated by size and fi ve income ranges were identifi ed:
• There was a greater spread of diff erent sized CSOs in the Eastern Cape and Western Cape. These were also the two provinces with proportionately more Large and X-Large organisations.
• The more rural provinces of Limpopo, Free State, North West and KwaZulu-Natal have proportionately more Micro to Small CSOs.
Staffi ng
• Considering employment by province, the Eastern Cape, North West and Gauteng all have a higher than average number of Full-time employees and the Free State has a signifi cantly higher than average number of Volunteers.
• Consistent with income, Gauteng has the highest number of employees in all categories, followed by KwaZulu-Natal.
• There is a positive relationship between income and Full-time and Part-time employment (i.e. the higher the income the more employment).
• Health and Social Services are the most labour-intensive sectors.
1.2 Income and expenditure
Annual income and expenditure
• Total reported income for CSOs in 2014 amounted to R794,866,323 with an average income of R1,933,981 per organisation.
• In 2014 expenditure totaling R636,150,516 was reported, with an average expenditure of R1,594,362 per organisation.
Micro = annual income less than R 50,000
Small = annual income greater than or equal to R 50,000 but less than R 500,000
Medium = annual income greater than or equal to R 500,000 but less than R 2,000,000
Large = annual income greater than or equal to R 2,000,000 but less than R 20,000,000
X-Large = annual income greater than or equal to R 20,000,000
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Income growth over time
• A total of 184 CSOs (out of 411 CSOs who provided their income) reported income for the three-year period (i.e. 2012-2014). The mean income of these CSOs rose by 5% per annum, which is below infl ation for the period. Of the 184 organisations, 41% reported a year-on-year income rise over the 3 years, while 8% reported a year-on-year decline.
• A total of 289 CSOs reported income for a two-year period (i.e. 2013-2014). Over the 2 years, mean and median incomes rose 10% and 5% per annum respectively, whilst 70% of these CSOs saw a rise over the 2 years, whilst 18% saw a drop in income.
Size and growth
• In terms of the diff erent levels of growth by size of CSOs, Micro and Small CSOs tend to fare better.
• Medium CSOs experienced growth at the average rate, which was below infl ation over the period, whilst ‘Large’ CSOs experienced a good growth rate however this was not uniform across the sample.
• The X-Large CSOs experienced negative growth over the 3 year period. • Overall, the growth trend of all CSOs has been positive but uneven. Expenditure
for the larger CSOs was negative in relation to income – possibly due to slow growth in their income. Expenditure for the smaller CSOs was positive – possibly due to the increased growth in their income.
TABLE 1: Average income by size
“Micro”
“Small”
“Medium”
“Large”
“X-Large”
All CSOs
1
50,000
500,000
2,000,000
20,000,000
15,712
185,363
990,769
5,332,256
55,005,148
1,933,981
50,000
500,000
2,000,000
20,000,000
36%
28%
20%
14%
2%
100%
11,000
150,000
984,000
4,000,000
35,000,000
150,000
149
115
83
57
7
411
Income
greater than
or equal to
Average
income
Income less
than
% Median
Income
Sample sizeCategory
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Income across provinces
• Gauteng had the highest average income amongst provinces in 2014, followed by the Eastern Cape, Western Cape and Free State. A similar trend is seen in terms of expenditure.
• The average expenditures in Gauteng and Free State are much lower than the average incomes over the same period.
TABLE 2: Income growth by size (using data from CSOs that reported for all three years)
micro
small
medium
large
x-large
44
63
31
32
2
172
4,960,394
35,102,595
34,681,818
247,905,216
177,000,000
499,650,023
36
58
45
29
4
172
734,600
11,394,469
30,014,628
168,659,371
215,485,980
426,289,048
89%
46%
5%
14%
(6%)
5%
40
46
54
28
4
172
Number of
CSOs in
2012
Total income
2014
Number of
CSOs in
2013
Total income
2012
Implied
annual growth
rate
Number of
CSOs in
2014
Size
category
FIGURE 3: Average income in 2014 by province (Rand value)
Eastern Cape (EC)Free State (FS)Gauteng
KwaZulu-Natal (KZN)LimpopoMpumalanga
Northern Cape (NC)North West (NW)Western Cape (WC)
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Income and expenditure by sector
• Health has a higher average income than other sectors, followed by Education & Research. Health also has a signifi cantly higher average income than the sample average.
• The largest sector in terms of expenditure is Social Services. In 8 out of 9 provinces, Social Services expends either the highest or second highest sector of spend. In 5 provinces, Development and Housing expends either the highest or the second highest amount. In 2 provinces, Health expends the highest amount. These three sectors are not only the highest, they also dominate spend in the lowest income-raising provinces (Free State, Mpumalanga and North West).
• The higher income-raising provinces of Gauteng, Western Cape and KwaZulu-Natal have more diversifi cation of spending across sectors.
FIGURE 4: Average expenditure in 2014 by province (Rand value)
Eastern Cape (EC)Free State (FS)Gauteng
KwaZulu-Natal (KZN)LimpopoMpumalanga
Northern Cape (NC)North West (NW)Western Cape (WC)
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FIGURE 5: Average expenditure in 2014 by sector (Rand value)
FIGURE 6: Expenditure of provinces by sector (% of total)
Culture and recrea onDevelopment and housingEduca on and research
EnvironmentHealthLaw, advocacy & poli cs
Philanthropic intermediaryReligionSocial Services
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1.3 Funding sources and fl ows
The proportionate contribution of diverse funding sources was grouped according to the following funding categories:
• International: includes international government donors, international organisations and international philanthropic organisations
• SA government: includes National, Provincial and Local government departments as well as government agencies
• National Lotteries Board (NLB)• Local citizenry: includes SA foundations and trusts (local philanthropy), other
NGOs, private individual donations and corporate support• Self: includes self-generating income projects/activities and membership fees
Funding received
• The total of combined funding reported from the various funding sources amounts to R668,960,887.
• International sources contributed the largest portion of total funds to CSOs in 2014 (40%), followed by the SA government (24%), and Local citizenry (23%). However, if one includes local sources - SA government and its agencies, the NLB, South African foundations/trusts and NGOs, corporates and private individuals (excluding ‘Self’) – then the total contribution locally is greater than International contributions (54% versus 40%).
Funding sources
• The top funding sources in terms of Rand value are: International Government Donors (23.5%), International Organisations (14.2%), and Provincial Government (12.2%), followed by Private Donations (9.5%) and National Government (8%).
• The Department of Social Development (DSD) was the most commonly cited government department providing funding to CSOs.
Value and proportion of funding per sector
• Social Services received the majority of funds in 2014 (36%), followed by Health (27%) and Development & Housing (18%).
• Funding is more likely to be driven by sector and geography than CSO size.
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Provincial features
• The Eastern Cape primarily raises funds from South African government sources, which is spent on Social Services and Development & Housing.
• 65% of Free State CSOs are Micro or Small and the dominant focus is on the provision of Social Services.
• Gauteng has the highest income, partly because it hosts the largest of the X-Large CSO in the sample. The largest X-Large CSOs appear to be completely dependent on international funding which explains the province’s dependence on that source. Generally, however, its other CSOs seem fairly diversifi ed in terms of funding sources.
• KwaZulu-Natal is diversifi ed in size of CSOs and spending across sectors. It is dependent on South African government sources for funding.
• Limpopo’s Large CSOs are dependent on international funding, and the primary sectors of spend are Social Services, Development & Housing and Health.
• Mpumalanga, the Northern Cape and the North West raise the lowest income by total and relative to their populations. Mpumalanga’s spend is dominated by Social Services. The Northern Cape’s focus is on Social Services followed by Religion, while the North West’s primary focus is Health.
• The Western Cape’s proportional income slightly exceeds its population. It is diversifi ed in terms of fundraising and spending.
Sector features
• Development and Housing is a signifi cant sector, ranking either fi rst or second in spend for 5 provinces. It is the second largest sector in terms of the number of CSOs. Its primary sources of funding are South African government, international donors and self-generated income.
• Environment is the smallest sector in terms of number of CSOs but has a much larger average income than many other sectors, attesting to its CSOs being larger in size.
• Health is a signifi cant sector funded by international and South African government sources. This sector is highly dependent on the few large CSOs and their international funders.
• Social Services is the most signifi cant sector in terms of number of CSOs, and size of funding and expenditure. Its primary sources of funding are the South African government, the NLB and local citizenry. It attracts little international funding in comparison to the other large sectors of Development & Housing and Health. It is a labour-intensive sector.
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1.4 Key fi ndings - Economic contribution
The calculation to determine and quantify the contribution of CSOs to employment in South Africa was based on the size of the target population and the average number of employees. Projections for likely employment and likely economic contribution utilised the following two assumptions:
1. Assuming that 100% of the population of 132,773 registered NPOs is active, use the sample average number of employees to project the likely population employment contribution.
2. Assuming that only 35% of the population of 132,773 registered NPOs is active, use the sample average number of employees to project the likely population employment contribution. This was determined during the fi eldwork phase of the research study, where only 35% of the sample database were contactable.
Civil society’s economic contribution (based on assumption 1 above)
• Total contribution is just short of 3.3 million remunerated and non-remunerated employment opportunities.
• The economic contribution is estimated as more than R256 billion, of which the sector is likely to expend over R211 billion.
• 1.3 million Full-time and one quarter of a million Part-time remunerated employment opportunities
• 45,000 Internship opportunities • 1.4 million non-remunerated Volunteer opportunities• 174,446 opportunities for Associates
Civil society’s economic contribution (based on assumption 2 above)
• Total contribution is just over 1.1 million in remunerated and non-remunerated employment opportunities.
• The economic contribution is estimated at almost R90 billion in terms of income, of which the sector is likely to expend R74 billion.
• Half a million Full-time • 88,000 Part-time employment opportunities• 15,000 Internship opportunities • Half a million Volunteering opportunities • 61,000 opportunities for Associates
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Dominant themes 1
TABLE 3: List of key themes from focus group discussions
Funding environment
Challenges Encountered
Support Requirements
Solutions/Resolutions
Negative perceptions
Changing nature
Funding models
Fundraising
Budgets
Governance and resources
Government Support
Capacity-building
Cooperation
Applications
Improved relationships with donors
Greater collaboration
Diversifi cation
Changed for the worse; adverse; top-down approach; navigate; funding diffi cult to bias
From charity to impact-driven; decrease in international funds; “growing fatigue” of the private sector; increased competition for limited funds; decrease in impact of CSOs; insuffi cient support from local sources; gifts-in-kind
Lack of innovation; lack of diversifi cation; multiple income streams; high dependence on single sources
Lack of suffi cient funds available; increased competition for limited funds; lack of suffi cient fundraising skills; time-consuming; lack of information and awareness
Too restricted; lack of fl exibility; do not cover operational costs; cash-fl ow issues; uncompetitive remuneration
Lack of skilled staff ; poor organisational governance; lack of administrative skills
Lack of administrative support; lack of response/feedback; poor communication; delayed payment of tranches; funding bias
Organisational development initiatives; assistance with application procedures; M&E and reporting mechanisms; fi nancial management; strategic planning
Collaboration; long-term, sustainable funding partnerships; strategic partnerships; networking platforms; skills transfer
Improved feedback and response; improved M&E; lenience of donor requirements
Based on trust; Increased accountability; negotiation; increased fl exibility
Networking and sharing of resources and skills; increased value and impact achieved; facilitation of long-term, sustainable partnerships between government, private sector and CSOs
Multiple and diverse income sources; improved cash-fl ow; decreased
Themes Sub-themesNode
1 Key themes emerged from the 9 focus groups (with 77 CSOs across 8 provinces) are summarised in the table above.
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Emerging themes 2
TABLE 4: List of key fi ndings from identifi ed stakeholder groups
Changing funding environment
Majority of CSOs are Micro/Small and newly established
Lack of adequate skills within the sector
• Increasing need for Government sources to support the sector.
• Amidst increasing registration of new NPOs, and decreasing International funds, there will be more pressure on Government sources to allocate a greater proportion of annual budgets to NPIs in
key sectors.
• Many CSOs are newly established and small in terms of employees and income.
• Arguably the survival rate of CSOs could be similar to that of SMMEs, who struggle to survive past the fi rst two years of operation. Much greater Government support for the sector – especially non-fi nancial support in terms of capacity-building and skills development –
is required.
• Compliance and other administrative requirements expected of CSOs should be simplifi ed and greater emphasis placed on organisational development initiatives, ensuring that CSOs are equipped with the resources required to remain sustainable.
• Need for multiple and diverse sources of income and less dependence on a single source of funds, as this could potentially create cash fl ow problems and impact on sustainability.
• Potential for smaller CSOs to collaborate more eff ectively with larger CSOs as well as
with donors. • CSOs need to be more
strategic in their planning, ensure they have strong governance systems in place and also be more accountable to both donors and the communities they serve if they wish to remain sustainable.
Greater collaboration/co-operation between larger and smaller CSOs, with the former providing invaluable mentorship and skills transfer (and potentially also sharing resources) with
smaller CSOs.
• Decrease in International funds means that local donors will be required to step in and provide greater support for CSOs – in particular, CSOs will look to SA government and Corporate sources
for support.
• The smaller CSOs are often not suffi ciently equipped with requisite skills to ensure they can remain sustainable. Funds should therefore be accompanied by capacity-building; these two aspects should not occur in isolation from
one another.
• Attracting and retaining skilled staff is often a challenge for CSOs who are unable to off er competitive remuneration.
• Greater fl exibility and less restrictive budgets could assist in this regard. Furthermore, as already mentioned, donors should ensure that funds are accompanied by capacity- building initiatives.
Government Civil societyDonorsKey Finding
2 Based on discussions with identifi ed stakeholder groups (namely, government, donors and civil society.
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Lack of information and awareness
Lack of accountability
• Greater awareness/promotion of the various sources of Government funds, specifi c sectors/focus areas funded, as well as where/how to apply for these funds is required, as is feedback and response to applications.
• Robust monitoring and reporting procedures will ensure greater accountability, and should be strictly enforced.
• Government sources too should better monitored and report the impact of organisations/projects supported.
• CSOs should create networking platforms through which they can share information and assist one another to identify funding sources, but also to share skills and other resources.
• Strong governance structures and reporting ability should be staple features of any organisation.
• Accountability leads to trust and better relationships with donors, which in turn could potentially create space for negotiation and greater fl exibility in budgets. Accountability goes both ways however, and CSOs need to ensure that their donors also remain accountable.
• Donors should communicate more eff ectively amongst themselves, working together to ensure greater impact is achieved.
• Referrals or recommendations should be made more frequently, enabling more CSOs to receive support and from the correct source.
• Greater accountability must be insisted upon, and CSOs should be expected to report how budgets were spent and the impact achieved through the projects/activities funded by these donor funds.
Government Civil societyDonorsKey Finding
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The research process and fi ndings raise a number of key considerations for civil society going forward. These include, amongst many others:
• If Social Services receive the majority of funding, what does this mean for the role of the state in providing such services?
• What does the fact that international sources of funding are higher than domestic sources say about the state of philanthropy in SA?
• In regard to the concentration of CSOs in urban centres, what is the eff ect on grant making to CSOs in ‘needier’ provinces?
• The role of volunteers/unpaid staff in civil society.• How the civil society sector is defi ned and categorised for the purpose of
producing meaningful and disaggregated statistics related to funding.• How the emerging body of research on funding sources and fl ows is best shared,
and how collective engagement might be enhanced in the setting of future research agendas.
• How the sector’s economic and social contribution can be best understood and measured.�
2. Some critical considerations
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Appendix 1: The civil society sector in South Africa –
Defi nitions and funding trends
Below is key information from the scoping and desktop review that formed part of the research study.
Defi ning the civil society sector
Internationally, there is general consensus that civil society is a sphere of social life outside of government and private households where people come together to take collective action – for various periods and in formations of diff ering degrees of formality – on a voluntary basis, and in the public interest. Given it’s voluntary associational nature, civil society is broadly defi ned as:
• Voluntary collective actions around shared interests, purposes and values distinct from families, state and profi t-seeking institutions.
• A social sphere separate from both the state and the market that includes organisations that are non-state, not- for-profi t, and/or voluntarily formed by people in that social sphere.
In South Africa, the Coalition on Civil Society Resource Mobilisation iii defi nes civil society as occupying the space between the state, the market and the family, acknowledging that defi nitions of civil society remain contested. Similarly, the National Development Agency (NDA) describes civil society as those organisations and groups, or formations of people, operating in the space between family and state, which are independent, voluntary and established to protect or enhance the interests and values of their members/founders. Emphasising the exclusion of the market, there is general consensus that civil society precludes political parties and organisations as well as economic organisations such as fi rms, cooperatives and partnerships.
Three useful criteria for defi ning and characterising CSOs are that they:
• Receive the predominant portion of its revenue from private contributions, not from market transactions or government support.
• Take a particular legal form (for example, an association or a foundation) that is exempted from some or all of a country’s taxes.
• Promote the public good, encourage empowerment and participation, or seek to address the structural roots of poverty and distress. iv
Groups operating within civil society share the common features of being voluntary/non-coercive and not-for-profi t, although there may be signifi cant diversity in their
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20 | CIVIL SOCIETY IN SOUTH AFRICA | FUNDING FEATURES & ECONOMIC CONTRIBUTION
purposes, levels of establishment and organisational forms. Both in South Africa and internationally, there is wide variety of types of CSOs. These include registered charities, development non-governmental organisations, community groups, women’s organisations, faith-based organisations, professional associations, trade unions, self-help groups, social movements, business associations, coalitions and advocacy groups. Many other types of organisations are also active in the space, and refer to themselves by diff erent names and with diff erent purposes, such as coalitions, councils, civic organisations, think tanks, and networks.
Three blocs of South African CSOs that have emerged in the post-apartheid period are described as follows:
• An increasing number of informal, survivalist community- based organisations, networks, and associations that enable poor and marginalised communities to simply survive the daily ravages of neoliberalism.
• A wide range of organisations sometimes described as social movements that are characterised by formal community-based structures, distinct leadership and membership, and political motives.
• A powerful set of formal service-related NGOs that, as a result of the more enabling environment created by the democratic regime, have entered into partnerships with or subcontracted to the state. v
There is some debate over whether registered non-profi ts that do not serve the public interest should also be considered CSOs. Such organisations include professional associations, political parties, trade unions, civics, school governing bodies, non-profi t academic and health institutions, sports and social clubs, stokvels and cooperatives, among others.
It is often the case that the term CSO is used interchangeably with the term NPO. One of the key distinctions made between NPOs and CSOs is that the latter exist for public benefi t although there may not always be consensus among actors about this benefi t. This is in addition to other key characteristics, as described by the NDA, which include:
• Having a common purpose, usually (but not exclusively) around service delivery, social watch, advocacy, research or education.
• Being private, in terms of occupying space outside of both the state and market.• Being self-governing. • Not distributing profi t.
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DSD categorises NPOs into three main types:
• Voluntary associations (VA), which refer to groups of three or more individuals who form an organisation to achieve a non-profi t objective, and are governed by a written agreement or founding document (constitution).
• Trusts, which are arrangements set out in trust deeds in which an owner hands over property and/or funds to a group of people (trustees) for administration for the benefi t of other people (benefi ciaries) for a stated objective.
• Not-for-profi t companies (NPCs), which are associations that are incorporated but not for gain, and are governed by the Companies Act of 2008, and referred to as Section 21 companies (2008).
In 2010/2011, Stats SA developed the South African Non-profi t Institution Classifi cation System (SANPIC). According to this, the 11 main classifi catory groups for non-profi t institutions (NPIs) are: culture and recreation; education; health; social services; the environment; development and housing; law, advocacy and politics; philanthropic intermediaries and voluntarism promotion; international; religion; business and professional associations; and unions.
Trends in civil society funding
The DSD estimates that in 1998, the NPO sector was worth R13.2 billion, including cash and in kind payments, with the following specifi c contributions to Gross Domestic Product (GDP):
• Volunteer labour – R5.1 billion • The private sector - R3.5 billion• Self-generated income projects - R4.6 billion
The DSD estimates that in 2007, total NPO income in South Africa was R12.5 billion.
According to Stats SA, in 2010, 39.8% of the total income of South African NPIs in 2010 was sourced from government subsidies, 19,5% from local donations, 16.7% from fund raising collections, and 14.6% from membership fees. While this provides an overall picture of NPI income, it is not clear how other sources such as corporate social investment (CSI), international organisations, UN agencies, formal philanthropic organisations, and state and country aid agencies are incorporated.
Foreign aid
Between 1994 and 1999 the US was the largest overall foreign donor to South Africa providing around US $530 million, followed by the European Union Programme for
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22 | CIVIL SOCIETY IN SOUTH AFRICA | FUNDING FEATURES & ECONOMIC CONTRIBUTION
Reconstruction and Development (EUPRD) at US $420 million. Other signifi cant country donors included the Netherlands, the Nordic countries, Germany and the UK, which together provided between an estimated US $15 million and US $45 million annually between 1994 and 2000.
Government funding
A review of DSD annual reports from 2009 to 2014 highlights that only a small percentage of overall annual departmental expenditure goes to non-profi t institutions (NPIs). The majority of the expenditure is transferred to the South African Social Security Agency (SASSA) for social security grants. There are a number of other government departments that report transfers/subsidies to NPIs, some of which are outlined below.
• The Department of Arts and Culture (DAC) transferred 3.71% of its annual expenditure for 2013/2014 to NPIs, totalling R102.2 million.
• The Department of Sports and Recreation (SRSA) transfers the greatest proportion of its annual expenditure to NPIs. This amounted to 21% (R221.2 million) in 2012/2013 and 16.28% (R174.6 million) in 2013/2014.
• The Department of Public Works (DPW) transferred 7.45% (R448.6 million) of its total annual expenditure in the 2013/2014 fi nancial year. This was a massive increase from the previous fi nancial year 2012/2013 when it transferred 4.06% (R292.6 million).
• The Department of Health (DoH) transfers a very small proportion of its budget to NPIs. In 2013/2014, a total of 0.7% (R209.6 million) of the DOH annual expenditure was recorded as transfers to NPIs.
• The Department of Labour transferred 4.33% (or R88 million) in 2012/2013 and 5.38% (or R127.7 million) in 2013/2014.
• The Department of Science and Technology (DST) transferred 1.37% (or R84.7 million) to NPIs in 2013/2014.
• The Department of Higher Education and Training (DHET), which has not been a signifi cant funder to the NPI sector, transferred approximately 6.51% (or R3 billion) to NPIs in 2013/2014. This was a signifi cant increase from the 0.01% (or R5 million) of the previous fi nancial year.
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Offi cial Development Aid (ODA)
The international aid environment has changed signifi cantly over the past few years, with organisations such as the United States President’s Emergency Plan for AIDS Relief (PEPFAR) and the UK Department for International Development (DfID) scaling down on direct fi nancial support to middle income countries. In 2013, DfID announced that it would end its bilateral Offi cial Development Aid (ODA) programme to South Africa by 2015. USAID decreased its planned funding to South Africa from US$438.1 million in 2015 to US$374.2 million in 2016. South Africa continues to receive support from the Global Fund to Fight AIDS, Tuberculosis and Malaria. Between 2002 and 2016, 56 donor governments pledged US$42 billion through the Global Fund to South Africa. The European Union (EU) annually commits over R6 billion to South Africa in grants and loans to economic and social development, as well as governance programmes. ODA to South Africa between 2009 and 2013 remained relatively constant.
International private donors
In 2012, Africa accounted for 25% of international grant dollars, up from 14% in 2002. This increase was largely driven by The Gates Foundation. Africa-focused giving by other foundations increased by more than 90%, however this growth has not been linear. Health captures the largest share (51.8%) of Africa-focused giving, followed by International Development & Relief (31.8%), Children & Youth (35%), and then Women & Girls (20%).
Local private giving
The Nedbank Private Wealth Giving Report II indicates that 91 % of High-Net Worth Individuals (HNWIs) gave money, time or goods to social causes in 2012, down slightly from 2010 (94%). The report also shows a slight decrease in the value given, with 63% giving less then R 25,000 (up from 50% in 2010). Giving was most commonly targeted at Social and Community Development causes, such as hospices, children’s homes and support for the aged. NPOs were the most popular benefi ciary type. The most common form of giving other than cash was volunteering time to NPOs (43% of non-cash givers), followed by donations of essential items to individuals and NPOs. The report also highlights the limited use of formal giving structures as only 4% of respondents use a trust or foundation for their giving.
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24 | CIVIL SOCIETY IN SOUTH AFRICA | FUNDING FEATURES & ECONOMIC CONTRIBUTION
Corporate social investment
Trialogue (2014) reported a total estimated CSI expenditure of R8.2 billionvi in 2013/2014, and that:
• The growth of corporate CSI expenditure has been a fl attening over the last 10 years.• The largest proportion of CSI goes to Education. • Corporates are the top income source for NPOs (20%), followed by private individuals
(15-16%), self-generated (10-13%), and foreign independent donors (11-12%).• SA government support dropped from 15% in 2013 to 11% in 2014, whilst foreign
state donors declined from 7% to 4% and NLB funding decreased from 8% to 7%.
Endnotes
i The research study was conducted by Mthente Research and Consulting Services.
ii The Size and Scope of the Non-profi t Sector in South Africa (Swilling and Russell, 2002). Although outdated,
particularly given recent changes in terms of NPO deregistration and the impact of the global recession, this is
the most frequently cited study on scope conducted to date.
iii The Coalition comprises the Charities Aid Foundation, Southern Africa (CAF), CIVICUS, the Cooperative for
Research and Education (CORE), the Legal Resources Centre (LRC), the National Welfare Forum (NWF) and
SANGONeT.
iv Salamon et al (2003).
v Habib (2005).
vi This fi gure represents a growth of 4% in nominal terms or a negative growth of 2% in real terms.
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The majority of CSOs are ‘Micro’ to ‘Small’ with an annual income of less than R500,000
The greatest proportion of funds (in Rand value) comes from international sources
n Micro n Small n Medium n Large n X-Large n International (40%) n SA Government (24%)
n Local Citizenry (23%) n NLB (7%) n Self-generated (7%)
36%
SOCIAL SERVICES
42%
GAU
27%
HEALTH
13%
WC
18%
DEVELOPMENT & HOUSING
12%
KZN
KEY FINDINGS
WHERE THE FUNDS GO
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b | CIVIL SOCIETY IN SOUTH AFRICA | FUNDING FEATURES & ECONOMIC CONTRIBUTION
WHAT FUNDERS FUND
EMPLOYMENT CONTRIBUTION
ECONOMIC CONTRIBUTION
International
n Health n Development & Housing n Law, Advocacy & Politics n Social Services
SA Government
n Social Services n Development & Housing n Health n Culture & Recreation
National Lotteries
n Social Servicesn Culture & Recreation n Education & Research n Development & Housingn Health
Local Citizenry
n Social Services n Environment n Development & Housing n Education & Research
SA Government
n Social Services n Development & Housing
3.3 million3 million
3.6 million
3
2
1
0Lower Likely Upper
n Million
Likely Population Employment RangeSCENARIO 1
1 million1.1 million
1.2 million
2
1
0Lower Likely Upper
n Million
Likely Population Employment RangeSCENARIO 2
n Billion
256.8 billion
358 billion
400
300
200
100
0Lower Likely Upper
155.6 billion
Likely Population IncomeSCENARIO 1
n Billion
90 billion
125.3 billion150
100
50
0Lower Likely Upper
54.5 billion
Likely Population IncomeSCENARIO 2
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Inyathelo: The South African
Institute for Advancement
www.inyathelo.org.za
Inyathelo: The South African
Institute for Advancement
www.inyathelo.org.za
Community Development
Resource Association (CDRA)
www.cdra.org.za
We work to transform
the relationship between civil society
and funding agencies (private, business and state)
in order to support and strengthen
a vibrant civil society.
The Social Change
Assistance Trust (SCAT)
www.scat.org.za
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