Early childhood development programmes no longer require nonprofit registration to access state subsidy

30 Jan 2023

The Department of Basic Education has announced that early childhood development (ECD) centres will no longer need nonprofit registration to be eligible for the ECD subsidy. This is largely seen as a ‘progressive move’ that will reduce the red tape facing centres in need of funding.

The Department of Basic Education (DBE) has changed the eligibility criteria for the state’s early childhood development (ECD) subsidy. ECD centres will no longer be required to register as nonprofit organisations (NPOs) in order to qualify for the funding.

This is a “progressive move” by the DBE, according to Laura Brooks, an economist at Ilifa Labantwana, an organisation working to secure universal access to quality early childhood development for children in South Africa.

“It’s a bold statement that they’re making, to act to remove red tape,” she said. “I think it signals … that they want to work with the [ECD] sector, and their ambition to expand access to services for poor children.”

The DBE anticipates that the change in eligibility requirements will “bring immediate relief to the overly burdensome bureaucratic processes in the ECD sector”, while also allowing an increase in access to the subsidy for vulnerable children, according to a department statement issued on 26 January.

“NPO registration does not add additional assurances regarding the use of the subsidy, and it is obstructive to the goal of expanding towards universal access to ECD, especially for the poorest children,” stated the DBE.

Here’s the latest on the Early Childhood Development centres and programmes. #ECD @Angie_Motshekga @HubertMweli @dbetvnews @ElijahMhlanga pic.twitter.com/cLBTOOJPuZ

— Dep. Basic Education (@DBE_SA) January 26, 2023

The 2021 ECD census identified 9,100 programmes serving more than 190,000 poor children that were not registered as NPOs, according to Brooks. If all these programmes were subsidised, it would constitute a 25% increase in the number of children benefiting from the subsidy.

“Of course, we don’t know if they meet the other [ECD] registration requirements, which would need to be in place for them to receive a subsidy, but that’s the group that is affected by this change,” said Brooks.

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Removing a barrier to the subsidy

The ECD function was overseen by the Department of Social Development (DSD) until April 2022, when it was handed over to the DBE. The core mandate of the DSD was the delivery of social welfare services, which was often done through the NPO model of provisioning, said Zaheera Mohamed, the CEO of Ilifa Labantwana.

However, Ilifa Labantwana maintained that ECD was not a welfare service. The function went beyond basic childcare to the development of the child, said Mohamed.

“The legal framework, the actual law itself, says any individual or organisation can register to provide the ECD service,” she continued. “The law doesn’t require you to be an NPO to provide the service itself … it was only the funding requirements [that stipulated this].”

The NPO registration requirement was a barrier to accessing the subsidy for those seeking to earn a sustainable income as ECD providers, said Mohamed.

“The main aim [of ECD] is development of children, but look at who’s providing the service. These are mostly women... starting something small because there’s a need in the community, and earning a sustainable livelihood through that,” she told Maverick Citizen.

“It makes no sense for somebody earning, providing that model… to formalise as a nonprofit organisation because the rules of nonprofit organisations around assets and all of that are quite stringent.”

Eric Atmore, extraordinary associate professor in education policy studies at Stellenbosch University and director of the Centre for Early Childhood Development, noted that private owners of ECD centres could not apply to become nonprofits as they were private businesses. Without NPO status, they could not apply for the subsidy.

“Linked to that, community ECD centres, which were not private businesses in the profit-making sense, could not meet the bureaucratic requirements of the NPO Act and of the regulations — it was too cumbersome to apply,” he said.

While the removal of the NPO registration requirement meant there was one less administrative task facing ECD centres, it did not necessarily mean centres without nonprofit status would now get the subsidy, Atmore said.

“Fewer than 40% of ECD centres get the subsidy. I would rather that the Department of [Basic] Education increased the subsidy from R17 per child per [day], by at least four times, and that more centres [were] put on the budget in order to get the subsidy,” he said.

However, Mohamed described the change as a “step in the right direction”, even if there were many reforms still needed to ensure that money was channelled towards ECD providers.

“It’s good that [the DBE is] unblocking the hurdles to access funding,” she said.

“The next big thing that I think we should tackle is the actual registration to provide an ECD service, because that is also … a significant blockage in the system.” DM/MC

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Removing a barrier to the subsidy