Court gives Gauteng government deadline to resolve nonprofit funding blunders

18 Nov 2024

Dozens of nonprofit organisations have not been paid by the provincial social development department.

While the majority of nonprofit organisations funded by the Gauteng Department of Social Development have now received their funding, dozens of organisations have still not been paid.

In a case brought by the Gauteng Care Crisis Committee, a voluntary association representing nonprofit organisations, Judge Ingrid Opperman of the High Court in Johannesburg ordered the department on Friday to resolve the matter within the next three weeks.

Among the unpaid organisations are 26 that have signed service-level agreements but have not been paid because the department has run out of money. The organisations had not previously received funding from the department. Two additional organisations have signed service-level agreements but only received a portion of their subsidies.

The Gauteng treasury originally allocated R1.9-billion for the department to transfer to nonprofit organisations. This was R223-million less than last year.

Premier Panyaza Lesufi promised in May to increase the budget to R2.4-billion, after a bungled adjudication process left hundreds of organisations without subsidies for more than two months.

In July, Gauteng finance MEC Lebogang Maile committed to increasing the budget to R2.1-billion, but it is unclear whether this has been done.

On Friday, Judge Opperman ordered the department to review the agreements and issue a report by 2 December on whether additional funds have been secured from the Gauteng treasury to pay the organisations. The two organisations who have only received part of their subsidies must be paid the balance by 29 November, Opperman ruled.

Eleven additional organisations are yet to receive the outcomes of the funding applications for all programmes they applied for. The department is ordered to communicate the outcomes by Friday, 22 November, give reasons for any rejections by 30 November, and pay successful organisations by 2 December.

After a briefing by social development MEC Faith Mazibuko last week, members of Parliament’s Portfolio Committee on Social Development called on National Treasury to increase funding for Gauteng nonprofits and to consider increases for other provinces.

Forensic audits

The department’s funding allocation process collapsed earlier this year, after it decided to act on the recommendations of forensic audits conducted in 2018 and an additional forensic audit in 2023.

The department suspended 13 department officials at the start of the year. The officials have since returned to work because no disciplinary hearings were held.

The department also centralised the funding process and appointed adjudication panels to decide which organisations would receive funding. This caused catastrophic delays in payments to hundreds of organisations, some of which had to close.

Organisations complained that assessment site visits were conducted by inexperienced members of the department’s youth employment programme, rather than social workers with knowledge of the programmes. Communication between organisations and the department broke down as regional officials were cut out of the loop.

Dozens of organisations were then told they would not receive funding due to the findings of the 2023 forensic audits. Almost all organisations who had findings against them have successfully appealed the decision and have since received funding.

But at least two organisations implicated in the 2018 forensic audits have not received funding and say they have not been able to get information from the department on the charges against them. They have been told by the department that the matter is the subject of a Hawks investigation but received no further details.

Opperman ordered the department to substantiate why the two organisations have been investigated by providing the full charges and allegations against them.

The judge also ruled that the department must provide a detailed list of all organisations that applied for funding in 2024, with reasons for rejecting funding applications. DM

First published by GroundUp.

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Forensic audits