Opinionista Shelagh Gastrow 19 April 2020

SA can ill-afford to overlook the non-profit sector in its response to Covid-19

The networks provided by non-profit organisations reach deeply into communities. In the ‘new world’ in which we will find ourselves, we will need the NPO sector even more to ensure that vulnerable people and all communities receive the support they need.

The UK government has announced that the charity sector in that country will receive a £750-million bailout to ensure that they can continue to operate during the Covid-19 pandemic. Of that, £360-million will be allocated to organisations that provide “key services”, including victims’ services, citizens’ advisory offices and hospices, while the balance will support smaller organisations, including funds from their lotteries. In addition, the UK government will match donations from the public towards the independent National Emergencies Trust that is fundraising and distributing funds to charities during this crisis.  

All the above is in recognition of the fact that charities play a “crucial role in the national fight against Covid-19, supporting those who are most in need”. Rishi Sunak, Chancellor of the Exchequer, said: “For them, shutting up shop at this moment would be to contravene their very purpose, their entire reason to exist. Those charities have never been more needed than they are now, and they’ve never faced such a sudden fall in their funding.”

In South Africa, we do not have reliable statistics on the size and scope of the non-profit sector. There are just under 250,000 registered with the Non-Profit Directorate in the Department of Social Development, but as this is voluntary, there are probably many unregistered organisations. 

Our non-profits function in almost every sector imaginable, and in this current crisis, they have innovated and adapted to ensure services for the most vulnerable, while monitoring human rights. In fact, the country cannot do without them. While funds for welfare and food have been made available by the government, business and the donor community, it is the non-profit sector that is at the front line. Community-based organisations know their communities, they know who needs help, where the child-headed households are and they usually have a level of credibility and trust.  

For example, the HCI Foundation recently raised over R4-million through the eMedia Covid-19 Relief Fund, which was publicised and campaigned for on eNews. They will be partnering with their network of non-profits to ensure distribution of food.  

The networks provided by non-profit organisations reach deeply into communities and in the “new world” in which we will find ourselves, we will need the NPO sector even more to ensure that vulnerable people and all communities receive the support they need.

 

The Solidarity Fund is partnering with the Social Change Assistance Trust to distribute food in rural areas in the Eastern Cape. It is far more difficult, for example, for business to arrive in informal settlements to provide food. This is not just a short-term function during lockdown.  

The networks provided by non-profit organisations reach deeply into communities and in the “new world” in which we will find ourselves, we will need the NPO sector even more to ensure that vulnerable people and all communities receive the support they need. 

This can relate to food and health, but also to gender-based violence, education, child care and issues pertaining to community needs such as water, sanitation, shelter and of course, access to legal aid clinics and legal support if required. 

Importantly, the civil society sector should be part of engagement with the government around new developmental and economic policies. We should actually be quantifying what non-profits save the state and the taxpayer by providing the services that they do.

Yet, despite the critical role this sector is playing, the substantial funds that have been established to see SMMEs through this crisis do not include the non-profit sector. There is somewhat of a misplaced idea that charities (a sad word to describe what our non-profits do), don’t deserve to be supported, that they are as needy as the people they help and should operate on a shoestring.  

How many people or companies providing funds for food have considered the cost for organisations to do the distribution? The personnel, the transport, the protective gear, the communications costs, the financial accountability involved are not necessarily catered for.  Somehow, they must just find these resources. Who is providing support to non-profit staff who are at home, who may be retrenched?  

Nobody seems to be thinking about what it would mean to this country if thousands of non-profits floundered and closed. We don’t know how many people they employ, but it is substantial, and yet it is a sector that is totally overlooked. 

Currently, most non-profits do not have reserves on which to rely. They cannot withhold dividends as this is not part of their financial model.  Many donors do not like the idea of reserves and occasionally don’t fund organisations that have them. This crisis has been a lesson in terms of non-profit financial modelling that reserves are essential, especially as it is this sector that is at the coalface of crises and needs to be flexible if necessary.

While the philanthropy sector has been extremely accommodating with grants already made to non-profits by agreeing that their restricted programmatic funds can be used for general purposes, this is not enough to sustain them. It is extremely difficult to fundraise in the current climate and donors are inundated with requests for support. Corporates are tightening their social investment budgets as the stock market has fallen dramatically and many companies are under lockdown. There is therefore no fat in their budgets going forward. Small businesses are collapsing, and many individuals no longer have extra money to donate.  

There is no doubt that some key organisations will be closing as the economic downturn will mean a decline in funding. According to Richard Hebditch, Director of External Affairs for the Association of Charitable Foundations in the UK, “a financial and operational risk burden” is falling “disproportionately on NGOs and other implementing partners”.

When it comes to government funding for non-profits providing services such as those dealing with welfare, the government should be taking care to ensure that funds are paid on time to avoid inefficiency or delays. There is no indication on the lotteries website that it is open for business, but this should be a key player in sustaining organisations and by now should have put out an urgent call to fund organisations assisting in Covid-19 service delivery. The requirements of our communities are no doubt going to escalate and at this time, we simply cannot afford to lose our active non-profit sector which is front and centre of the humanitarian response.

This then appears to be placing the burden on everyone to keep the sector open. When exploring the support for SMMEs, there seems to be a lack of understanding that non-profits are SMMEs, with a different financial model. This model means that any profits are not paid out to shareholders, but go back into the organisation for social good. Many NPOs are highly professional and are run as well as any business. They are registered, they have governing boards, they are audited, they employ people, they are accountable to their stakeholders and increasingly generate their own income through services, reducing reliance on the donor community. 

They are entrepreneurial and founders take the same risks as anyone establishing a company. They comply with labour legislation and other government requirements. Why their lack of profit-seeking precludes these entities from financial support is anathema to me. We know business cannot save the world and care should be taken not to sideline organisations that play a social role as we now see how indispensable they are in times of crisis. Without the Treatment Action Campaign, the HIV crisis would have resulted in many more deaths. And so it is now that our non-profits continue to play a key role.

The only fund that has taken note of the quandary that nonprofits find themselves in is the emergency fund established by the Charities Aid Foundation Southern Africa (CAFSA). This has been set up to support local organisations and has been supported by Oppenheimer Generations. A call for proposals from organisations that are distributing food has been made. Yet we need to go further and understand how important the viability of this sector is going forward and how it can communicate with government and the public at large about how it plays a critical role in our survival as a people and a country. DM

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