|Added: 9/7/97||Summary Brief||June 1997|
1. Introduction / Background
A report looking at the Structural Relationships between Government and Civil Society Organisations (CSOs) was released by the Office of the Deputy State President in April 1997. The report was compiled by the Advisory Committee established by Cabinet in April 1996. The Committee was to investigate and make recommendations to the Deputy State President and Cabinet on:
a) the functional relationship between government and CSOs, in order to build capacity for the implementation of the Reconstruction and Development Programme (RDP); and
b) a structure which would co-ordinate funding of CSOs, with the possibility of establishing a National Development Agency (NDA).
The Committee submitted its report in March 1997.
The report provides a comprehensive summary of the findings of the Committee in relation to the current development problems in the country, the scope of CSOs and funders of CSOs, as well as a brief discussion on international experiences of government and CSO relationships. The report also contains recommendations for a permanent funding mechanism for CSOs, and outlines two possible options for this mechanism.
2. The Need for a Structure to Coordinate funding of CSOs
Prior to the 1994 general elections, CSOs involved in development played a central role in providing services to communities who were officially denied resources by the apartheid government. Many CSOs who were aligned to the Mass Democratic Movement (also known as progressive CSOs) were able to access funds from international donors. After 1994, however, international donors undertook a change in policy, and sought to establish direct relations with the newly elected democratic government. Much of their funds were thus channelled directly to government programmes. In this changing context, CSOs are finding it difficult to access funds.
The role of the Independent Development Trust (IDT), as a funding institution for CSOs, has also been very contentious. The IDT was established by the National Government in 1990. Its purpose was to address the development backlogs in black communities, through funding CSOs and initiating development projects. However, the IDT did not have much credibility with progressive CSOs involved in development. The antagonism between IDT and CSOs still continue, and suggests a need for a new funding mechanism for CSOs.
3. The Process
The RDP identified the need for a framework guiding government and CSO relationships, and to involve CSOs in development initiatives. The newly elected Cabinet made this a priority when it took office in 1994. The Office of the Reconstruction and Development Programme was assigned the task of looking at how a relationship could be fostered between government and CSOs. Two complementary steps were decided upon at that stage: firstly, the establishment of an agency which would respond to the immediate needs of non-government organisations (NGOs) involved in development. This resulted in the establishment of the Transitional National Development Trust (TNDT) in October 1995. The TNDT Board included representatives of the major CSO funding institutions (the IDT and Kagiso Trust), the NGO Coalition and Nedlac. The TNDT was given a two-year lifespan, which ends in October this year.
The second step was to look at a more long-term institution which would co-ordinate funding of CSOs and promote a sustainable partnership between government and these organisations. This resulted in the establishment of the Advisory Committee, which was to make recommendations on such a structure and its functions. Both of these processes were moved to the Office of the Deputy President because of the reshuffling of Cabinet, and the closing of the RDP office.
The Advisory Committee consisted of 17 members who were knowledgeable in the field of NGO/CBO development, policy formulation and financing. Other members also included those with labour and business experience, and persons from international development organisations. The Committee consulted widely in order to gain an understanding of the situation in South Africa and international experiences of Government and CSOs relationships. The recommendations are based on an analysis of all this information.
4. Summary of Committee's Findings: The Present Environment
4.1 Development Problems
The RDP provides the framework for socio-economic development in South Africa. It identifies the basic development needs which government policies and programmes should address. The Committee noted that although the RDP is accepted as a framework, government does not as yet have a coherent and co-ordinated strategy of how to address these problems. In addition to this, it was noted that the government has been able to access funds from international donors and was able to redirect its resources through the RDP fund. However, government has found it difficult to use these resources because of a lack of management skills and infrastructure at various tiers of government.
CSOs have also experienced many difficulties since 1994. In addition to dealing with the funding crisis, many skilled personnel from this sector have been employed by the new government. CSOs are also unclear of what their role is in the changing development context, and are frustrated at not having "clear connecting points" with government.
4.2 The Scope of CSOs
The are different estimates of the number of CSOs in South Africa: the Development Resources Centre puts it at 54 000, while the Independent Media Services of South Africa puts it at 30 000. These discrepancies are due to different definitions of CSOs, and the concurrent diversity, as well as the overall the lack of information about this sector. The Committee recommends that we need to go beyond the current dichotomy between Community Based Organisations (CBOs), as membership-based organisations, and NGOs, as professional agencies. They argue that it is more appropriate to talk in terms of a spectrum of "civil society development organisations".
Due to the lack of information about CSOs, it was difficult for the Committee to assess the extent of these organisations' activities on development. However, it was found that CSOs are delivering in spheres where the government is presently weak, such as preschool education and literacy, and where the state has identified the need for a partnership, for example in rural water provision. Further, the quality of CSOs is regulated internally through competition for resources. However, the Committee notes that the present funding crisis as well as the lack of an enabling policy and legislative environment is distorting this process, resulting in the loss of vital development resources. Further, the need to include marginalised groups who did not have access to resources needs to be addressed.
Since 1994, CSOs which work in specific sectors, particularly health and education, have been involved in contracting with national government departments. Contracting with provincial government and local government has also been an option for some organisations. This has been seen as a source of funds for organisations. However, many organisations, particularly the smaller CSOs, see the tendering process being problematic. As a result, only a small proportion of CSOs have been able to secure government contract work.
 This situation is currently being addressed, and a policy looking at providing a more enabling legislative environment has recently been drafted. See the "Legislation Addressing the Not-for-profit Sector: Policy Document" released by Department of Welfare in April 1997.
 The tendering process is currently being reformed. The "Public Procurement Reform Green Paper" was released in April 1997 (Government Gazette # 17928).
4.3 CSO Funders
During the apartheid years, especially in the 1980s, various organisations were established in order to act as channels for development funds coming from international donors. The well known organisations are Kagiso Trust (KT), South African Council of Churches and the South African Catholic Bishops Conference. These funds were directed to anti-apartheid and progressive development NGOs and CBOs.
In 1990, the government established the Independent Development Trust (IDT), which was to address the development backlogs in black communities. The IDT currently has in excess of R1.4 billion of state resources, and generates about R140 million per annum from investments. Further, it was noted that the IDT and Kagiso Trust, the two main funding institutions, are presently moving away from their funder-roles into development facilitation and implementation roles.
Other funders of CSOs are foreign donors and the corporate sector. Foreign funding for CSOs still continues, but is set to decline further in 1999. Foreign donors include governments, NGOs and philanthropic foundations. In addition, the corporate sector grants vary in size. Although the total corporate amount looks sizable (R1 billion), only about 16% of this sum is channelled to development CSOs. The remainder goes to company programmes (60%) and to educational projects.
Table 1  shows the estimated annual allocations made towards development funding from each of these sectors.
R 1 billion
Foreign Funding of CSOs (via government and direct)
R 700 million
Independent Development Trust
R 351 million
R 250 million
Transitional National Development Trust (so far)
It should be noted that the TNDT was funded with R50m from government and a matching R75m from the European Union, but has only been able to disburse R16,5 million due to conflicts of interests within its decision-making structures, as well as problems in getting the structure set up. The Board of the TNDT, which made decisions on who would receive funding, included representatives of organisations who were applying for such funds. This arrangement was a fundamental flaw in the TNDT, and also relates to the present sceptism of CSOs towards the TNDT.
 Taken from the Report by the Advisory Committee, March 1997.
4. Summary of the Advisory Committee's Recommendations
4.1 A New Funding Mechanism
The Committee recommends that the roles of funding and implementation needs to be separated. This is proposed based on South African and international experience, which show that combining these two roles undermines development.
It recommends that a new institutional mechanism for funding of CSOs by government should be established. A new structure is recommended, so that it will not inherit the credibility problems of the existing institutions. This funding mechanism should also be consistent with and promote the objectives of the RDP.
The following two options relating to the structure and functions of this mechanism are proposed.
Option 1: Establish a funding unit in the Ministry of Finance, which:
Option 2: Establish a funding statutory body or National Development Agency:
The Committee strongly recommends that Option 2 be accepted because it provides the greatest degree of independence, while still operating within a government framework. It can be established using current RDP budget savings, TNDT resources, and IDT unallocated investments. In addition, the Committee proposes that financing of the new funding structure could come from government, a state lottery, and other donors.
4.2 The existing funding mechanisms (IDT, TNDT and Departments)
The Committee recommends that the IDT should be transformed into a government development agency. It should cease to be a CSO, an independent agency or a funding agency. The IDT should act as a statutory body responsible for implementing projects commissioned by government departments. The Board of the IDT should be appointed by Governments. Further, the IDT must be requested to contribute some of its invested capital towards the establishment of the proposed new funding structure.
The Committee also recommends that the TNDT should be phased out and all its assets should be transferred to the new funding mechanism.
Contracting of CSOs by government departments should be maintained. Further, local governments should be encouraged and enabled to work with CSOs to provide services.
4.3 The Relationship Between Government and CSOs
In recognition of the vital role which CSOs play in democracies, the Committee recommends that an environment in which CSOs can flourish be created. Further, strengthening the relationship between government and CSOs is necessary in order to meet the development needs of South Africa. In order for this relationship to be effective and efficient, there is a need for a clear policy framework to guide it; and there needs to be a clear channel of communication between government and CSOs. The Committee recommends that any relationship between government and CSOs should not diminish the autonomy of either party. CSOs should also retain their advocacy role in order to ensure that development needs are being met by government.
5. Some issues raised by the report
6. The Way Forward
The Report includes a timeframe for the establishment of the new funding institution. According to this, legislation is due to be tabled in parliament by June 1997, with the nomination process for the governing board beginning in August.
For more information, please contact Carnita Ernest at (021) 696-4954, by fax at (021) 696-9308, or by e-mail at: firstname.lastname@example.org
PHILA is funded by grant from the Henry J. Kaiser Family Foundation.
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