Nonprofit organisations (NPOs) in the Western Cape are sounding the alarm about the impact of cuts in the Western Cape Department of Social Development’s (WCDSD) budget for the civil society sector. As the 2024 financial year looms, many are facing a reduction in funding from the department.

The decline in provincial state funding for NPOs is not a new phenomenon, according to Sue van der Linde, founder and chairperson of Iris House Children’s Hospice in Bellville, Cape Town. She estimates that her organisation has lost about R380,000 in WCDSD funding in real terms over the past three years. However, she warns that the latest cuts could be the “straw that breaks the camel’s back”.

“For the last two years, the cry was to ‘do more with less’. We’ve risen to that and we’ve done it. But we were already cutting our own throats to ‘do more with less’. What’s happened now is that the last bit that they’ve shaved off has just tipped us over the edge. And I’m saying to the DSD, we just can’t anymore,” said Van der Linde.

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Sue van der Linde, founder and chairperson of Iris House Children’s Hospice in Bellville, Cape Town, said that the Western Cape Department of Social Development’s funding for nonprofit organisations has been declining over the past three years. (Photo: Tamsin Metelerkamp)

Iris House provides free community-based respite care for special needs children and young adults in 62 communities throughout the Western Cape. A team of 35 trained carers visit homes to look after the children for up to six hours, allowing parents time to focus on their own needs. The organisation also runs a respite daycare centre where children can engage in activities such as equine therapy.

Van der Linde told Daily Maverick that Iris House has received funding from the WCDSD for the past 10 years. Shortly before Christmas last year, the care centre and many other NPOs were informed that the department could not guarantee continued funding for the organisations in the year to come.

In a letter signed by Charles Jordan, Chief Director for Children, Families and Vulnerable Groups in the WCDSD, on 8 December 2023, it was stated that economic pressures in the NPO sector were being compounded by the budget cuts announced by the National Treasury in the 2023 Medium-Term Budget Policy Statement.

“In an unprecedented move, national government has made significant cuts to our provincial budget in the current financial year of 2023/4. The provincial government has had its conditional grants from national government reduced by R642.2-million and has a shortfall in its wages budget of R1.1-billion in the current financial year. The cuts are largely due to the nationally determined wage increases and worsening economic environment,” stated the letter.

“These budget cuts will have an impact on the transfer allocations and number of NPOs that the department will be able to fund during the next funding cycle.”

Managing funding cuts

At Iris House, funding constraints have already led to the retrenchment of one staff member, while four other positions that became vacant over the past year have been left unfilled. The organisation expects to see further cuts in its WCDSD funding in the new financial year.

“We’re running on a skeleton [staff]. We’re doing four things at once. I want to know why DSD is not going through the same process. Yes, you’ve got the staff, you have to pay the increases. But… is there no way that can be streamlined, to assist the money to be passed on to where the real work is done?” said Van der Linde.

“We NPOs are referred to as partners. This partnership is very one-sided. There is a custodian of money and there’s us at the coalface. When that money dries up, the custodian is not affected. Only us.”

Nolubabalo Mbola has two children with autism and has received assistance from Iris House Children’s Hospice. She emphasised how important nonprofit services are for parents like herself. (Photo: Tamsin Metelerkamp)

The funding cuts could impact the ability of NPOs to assist vulnerable populations. Nolubabalo Mbola is a parent of four children, two of whom have autism, and became a beneficiary of Iris House over seven years ago. Today she is a care team lead at the organisation.

“Iris House helped me a lot, even to understand my children because at first, it was not easy for me to understand them… The support groups [at Iris House] have helped me a lot because I was just staying behind closed doors — I didn’t want to go outside with my children… At Iris House, I started becoming a mother first, then I became a carer, now I am a leader. I also do some training, to help me and other families,” she said.

Reduced funding for NPOs is a huge concern to parents and caregivers who rely on these organisations for information, counselling and support, continued Mbola.

“I think government fails us a lot because now, they don’t think about us… Why are they cutting [funding] because now if they cut, who’s going to suffer? It’s us,” she said.

“If Iris House closes, where must we go now? We saw the improvement of our children because now, most of them [can] go to school because of our training. We train the parent and the parent can train the child, the child can go to school.”

Iris House has taken a three-pronged approach to addressing the impacts of budget cuts. In January, the organisation launched a petition calling on government representatives to reevaluate funding decisions that could impact the ability of the care centre and similar NPOs to provide services. They also started a GivenGain fundraising campaign for the hospice.

In the past month, Van der Linde has established a social enterprise, Carers at Home, that provides respite care for special needs children and young adults from families that are able to pay for the service. All profits from this enterprise are being diverted back to Iris House to supplement the provision of free care to those in need.

“Our long-term view is to become self-sustainable because, in my humble opinion, this is not the end. There’s going to be more [cuts]. I cannot be the one sitting here a year from now going, ‘Okay, we raised money on GivenGain but guess what, we’re back in the same boat again’… We have to become more self-sufficient,” said Van der Linde.

Panic in the sector

Ihata Care Group runs three elder care facilities and a shelter for abused women and children in the Cape Town region. In March, the organisation was informed that the WCDSD funding for its shelter was being cut completely, according to Nuraan Osman, COO of Ihata Care Group.

“During the Covid-19 pandemic, the president called gender-based violence the third pandemic. There was talk about establishing state-funded shelters, and now just post-Covid there’s no money for us as shelters,” said Osman.

“The funding dries up now… in the first and second week of April, and so they’re telling us almost 30 days before the time they’ve got no more money for us… I don’t want to be too critical of the department but I do think there are things that could be done better, because whilst the department is the funding partner our organisations on the ground — the NGOs, the community-based organisations, faith-based organisations — are the implementing partners. We are the ones looking after South African citizens.”

Osman told Daily Maverick that the looming funding cuts were causing panic and anxiety in the NPO sector. She is concerned about what will happen to those people who can no longer be assisted by civil society organisations due to programmes being reduced or cut.

“I want to appeal to the private sector and say please, with your corporate social investment funds, stick your neck out for gender-based violence [programmes]… because women are being killed in South Africa. They’re being raped. They’re been violated,” she said.

“If government can’t stand by those of us doing the work, then we want to appeal to the private sector to… support those of us who are willing to dig the trenches, work on the ground, help those who need help.”

Provincial funding constraints

According to the WCDSD, the department’s budget for NGOs has been nearly static since the “Covid-induced financial crisis”, going from R1.046-billion in 2021/22 to R1.034-billion in 2022/23, and then to R1.058-billion for 2023/24. The budget for NGOs in the next financial year stands at R1.005-billion, a R53-million cut from the 2023 allocation.

The WCDSD received a total allocation of R2.539-billion for the year ahead, which is a R50-million increase from R2.479-billion in the 2023 financial year.

“With inflation at approximately 5%, an inflationary increase would have been R125-million. Within this already constrained allocation a 7% wage increase to public servants, which was agreed nationally with unions, has to be accommodated within the department’s baseline budget,” the WCDSD told Daily Maverick.

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“The wage agreement alone will cost us around R82-million more for the year ahead, even with a number of posts frozen or put on hold in terms of the [Department of Public Service and Administration] directive. So, what looks like a R50-million increase to our budget is actually a R130-million decrease in real terms (adding inflation and wage increases).”

The reports that some NPOs have had to reduce their operations due to cuts in state funding are “a major concern for the department”, according to the WCDSD. “The department has prioritised at least sustaining funding to the most critical services to clients at the highest risk, for example statutory child protection services and residential facilities for children, older persons and persons with disabilities.”

The total number of NPOs that the department will fund in the 2024 financial year has yet to be determined. However, it stated that the only organisations it will cease funding are those that have not been compliant with their contractual requirements during the current financial year and those that are in the process of closing. It acknowledged that some NPOs might be closing due to financial constraints.

“We have tried as far as possible to mitigate this by minimising reductions of funding but in some instances, it may be unavoidable,” it said. DM