SOCIAL DEVELOPMENT FUNDING OF WELFARE SERVICES 01 NOVEMBER 2017 PORTIFOLIO COMMITTEE CAPE TOWN

Presentation Outline Purpose Background Funding for welfare Services Disparities in the funding of welfares in NPOs Gauteng funding issues Conclusion

Purpose To brief the Portfolio committee on the funding of welfare services and funding of NPOs

Background Historically, social services have been the joint responsibility of DSD and the NPO sector The critical role that the NPO sector has played over the years in service provision is acknowledged by DSD. The importance of the partnership between DSD and the sector is informed by the constitutional, legal and international obligations as well as policies and programmes that are central to the mandate of the department. These, collectively contribute immensely towards the creation of an enabling environment for the effective delivery of developmental social services.

Background ( Cont.….) DSD policies and legislative frameworks has created a conducive climate for the Department of Social Development to achieve its mission, particularly regarding the equitable distribution of resources. The White Paper for Social Welfare (1997), continues to serve as an overall guide for the delivery of developmental social welfare services that are accessible and equitable for all South Africans and central to this, is the an effective partnership between DSD and the NPO sector. This partnership remains critical towards the realization of the key priorities of the Department and Government as a whole

The NPO sector in SA Type of Organisation Registered Voluntary Association (Vas) 164 593 Not for Profit Companies (NPCs) 8 928 Charity Trusts 2 660 Total 176 181

Registration by Sector Registered % Social Services 68 708 39.0 Religion 23 804 13.5 Education and Research 10 332 5.9 Law, Advocacy, and Politics 4 074 2.3 Development and Housing 39 543 22.4 Culture and Recreation 11 366 6.5 Environment 1 913 1.1 Health 13 006 7.4 International 110 0.1 Business and Professional Associations, Unions 1 780 1.0 Philanthropic intermediaries and voluntarism promotion 1 545 0.9

Social Services Breakdown Objective # of NPOs Services to Children 43 990 Youth Services 10 034 Self-help 1 274 Family services 1 039 Services to people with disabilities 3 065 Income Support and Maintenance 2 671 Services to the elderly 6 139 Emergency and Relief 496 Total 68 708

Provincial Sector Breakdown FS GP KZN Lim Mpu NW NC WC Totals Social Services 6 703 3 684 19 910 13 218 8 468 5 684 4 377 1276 5 388 68 708 Development and Housing 3 729 1 782 11 981 7 964 3 675 2 460 2 420 788 4 744 39 543 Religion 1 238 1 124 9 669 4 043 1 685 1 760 1 303 462 2 520 23 804 Health 1 116 711 3 335 2 773 1 622 1161 988 288 1 012 13 006 Culture and Recreation 720 504 4 215 1 551 865 829 923 286 1 473 11 366 Education and Research 1 668 446 3 057 1 641 922 654 561 201 1 182 10 332 Law, Advocacy, and Politics 401 204 1 399 641 197 250 79 615 4 074 Environment 120 76 475 356 113 103 38 382 1 913 Business and Professional Associations, Unions 148 64 760 216 85 98 88 27 294 1 780 Philanthropic intermediaries and voluntarism promotion 105 54 599 259 49 37 41 17 384 1 545 International 1 2 70 9 4 3 18 110 15 949 8 651 55 470 32 565 18 019 12 994 11 057 3 464 18 012 176 181

Funding of NPO in DSD The Department has implemented the policy of financial awards policy as a guide to fund NPOs in the sector During the implementation of the Policy on Financial Awards (PFA), the following challenges were identified: Disparities in the funding of same services across the different provinces. Different approaches by provinces to the management and administration of funding of NPOs. Non-compliance of some NPOs to the NPO Act and other pieces of legislation. Lack of alignment to service delivery norms and standards. Lack of capacity within the NPO sector. Gross underfunding of the welfare services and the funding of the welfare NPO sector Slow transformation within the NPO sector

Solutions to the challenges Central to this partnership, is to define the partnership that is based on mutual understanding in the provision of services The current partnership with the NPO sector is based on financial support The current sector realities demand that: DSD get funded according to its mandate and costed policies and legislations including the norms and standards, Treasury should review the funding model of welfare services to ensure that there is equitable provision of services especially to historically disadvantaged communities. DSD is currently finalising the following policies The sector Funding policy The State and civil society organisations partnership model The DSD financing models (Considering the existing models)

Provincial Budget Analysis Children and Subsidies

Total Provincial Social Development Allocation Average growth rate overall for PDSDs is more a less in line with inflation over the medium term. Goods and services growth below inflation in the past, in line with inflation in the future Social Welfare Services growth improving compared to past years High historical growth rates in Children and families and Restorative services due to expenditure not allocated correctly according to new budget structure in the past Growth in Children and Families driven by ECD, which is expected to grow by 8.3 per cent per annum on average of over the MTEF Services to older persons makes up the largest portion of SWS, followed by management and support and HIV/AIDS What explains growth in Development and Research?

Distribution of allocation across Programmes, 2017/18 The largest proportion 38% continues to be spent on Children and families followed by social welfare and then Admin. All provinces spend the largest proportion of their budget on Children and Families, with the exception on WC and NW who spend the largest portion on Social Welfare Services GT spends the largest proportion on children and families, followed by LIM and KZN NC spends the largest proportion on Restorative services and development and research. Admin % particularly low in GT and WC. FS highest % Do high proportions reflect the priority in that province?

Key sub-programmes Low spending on crime prevention and support and victim empowerment is worrying HIV/AIDS shows significant increase over MTEF overall. Why? Substance abuse?

% Share of sub-programmes of total allocation This gives a picture of where the prioritises of the sector lies in terms of funding allocation- is this where the sector is looking to focus on? Most provinces still spend the largest proportions of their budgets on ECD and Partial Care and on Management and Support. Are sws still paid through management and support? Allocation of staff to correct subprogrammes still an issue? Free State, Gauteng and Limpopo spend a much lower proportion on M&S than other provinces – however Limpopo has increased the proportion allocated under ‘other’. It appears that GT and FS are budgeting correctly, allocating staff to appropriate subprogramme Isibindi is a priority area, but gets a minimal allocation proportionally.

Per Capita Expenditure: Children (excluding ECD and Partial Care)

Transfers to NPO’s R’000

Transfers to NPO’s

Transfers to NPO’s for Children

Some Analysis and Proposals on 2016/17 Budget

Analysis of per capita expenditure

Scenarios to move to greater equity in spending for DSD

FUNDING OF NPOS IN GAUTENG

Legislative Framework Guiding NPO Funding General legislative framework that influences our environment vs legislation that permits or mandates the funding of services The general legislative framework creates an enabling, non-restrictive environment for the funding and management of NPO transfers Constitution provides legal mandate for the existence of Social Development as a Department; PFMA and Treasury regulations provides financial management framework; NPO Act gives legal existence of organisations that the Department partner with; Other Acts are supporting frameworks to be taken into account; The Policy on Financial Awards which is currently under review by National Social Development provide guidance on approaches or types of funding, administrative processes, etc

NPO Transfers From 2015/16 to 2017/18 Financial Year STATEMENTS OF TRANSFERS TO NON PROFIT INSTITUTIONS 2015/16 FINANCIAL YEAR 2016/17 FINANCIAL YEAR 2017/18 FINANCIAL YEAR Programme Sub_Programme Actual Transfer Total allocated Budget SOCIAL WELFARE SERVICES CARE & SERVICES TO OLDER PERSONS 235 550 220 915 217 105   SERVICES TO PERSONS WITH DISAB 88 464 94 756 101 145 HIV AND AIDS 273 237 311 267 343 777 SOCIAL WELFARE SERVICES Total 597 251 626 938 662 027 CHILDREN AND FAMILIES CARE & SERVICES TO FAMILIES 122 189 125 930 133 813 CHILD CARE & PROTECTION 16 655 10 890 19 150 COMM BASED CARE SER FOR CHILDREN 411 794 447 787 437 907 CHILD AND YOUTH CARE CENTRES 154 060 150 384 167 154 ECD & PARTIAL CARE 336 914 358 659 412 150 CHILDREN AND FAMILIES Total 1 041 612 1 093 650 1 170 174 RESTORATIVE SERVICES CRIME PREVENTION & SUPPORT 92 551 82 551 85 390 VICTIM EMPOWERMENT 57 226 65 294 67 767 SUBST ABUSE,PREV&REHAB 88 764 123 036 192 990 RESTORATIVE SERVICES Total 238 541 270 881 346 147 DEVELOPMENT & RESEARCH INSTITUTIONAL CAP&SUPP FOR NPOS 20 000 20 700 20 190 POVERTY ALLEV&SUSTN LIVELIHOODS 174 671 193 017 224 543 WOMAN DEVELOPMENT 17 261 9 030 14 350 YOUTH DEVELOPMENT 5 750 23 128 24 035 DEVELOPMENT & RESEARCH Total 217 682 245 875 283 118 Grand Total 2 095 086 2 237 344 2 461 466

Highlights of Transfers over 3 financial years 6% subsidy increments were implemented for the past three financial years to minimise the negative impact of inflation; Innovative programmes such as non-centre based in un-serviced areas, mobile services, independent living model for people with disabilities, active aging prg etc were introduced as game changers in the sector; Implementation of Isibindi model which seek to address the Child & Youth Care Worker skill shortage in the children sector; Various support programmes targeted at ECDs such as standardised nutritional meals, OHS Equipment, minor renovations, psychometric assessment of children, etc; In line with the provincial priorities, expansion of various sustainable livelihoods prgs such as welfare to work, dignity packs, food banks, school uniform, women development, etc were funded; Completion of various social infrastructure (Proto-type) projects for occupation by selected organisations as part of addressing the infrastructure challenges; Financial bail-outs to organisations in financial distress due to shrinking of donor funding particularly National Lottery;

Funding Model for Child Welfares For 2017/18 financial year, Gauteng DSD will be funding 122 welfare NPOs providing families services with a budget of R133 million; The main subsidy goes towards the professionals below: GDSD provides post-funding with related administrative costs and the 2017/18 annual rate after 6% increment is as follows: Over and above post-funding, GDSD provides limited programme funding focusing on professional psychological services to augment the social work services; Social Work Managers Social Work Supervisors Social Workers Social Auxillary Workers Total Professionals 22 99 441 237 799 Social Work Managers Social Work Supervisors Social Workers Social Auxillary Workers Admin Costs per Worker R238 079 Including admin R200 826 R157 737 R133 558 R31 038

Why not fund statutory services 100% Financing through the Policy in Financial Awards: The Department recognizes that it is not the sole funder of services to the poor and vulnerable sector of the community. Funding is provided with the understanding that organizations do and will raise funds from other sources such as other state departments, donor organizations, corporate social responsibility programmes from the private business sector, through trusts and foundations and the proceeds from lotteries. The current amendment of the Policy on financial awards seeks to provide a fair, equitable and transparent method of determining the contribution of NPOs to the cost of social welfare services provisioning; Since the start of 2015/16 financial year, GDSD has ceased to fund additional social work posts to the NPOs and any additional cases will be directed to the Department; The Strategy is to reduce reliance on the NPO sector on implementation on statutory services and to gradually take over the function.

DSD Plans to address the shortcomings National Social Development has reviewed the White Paper and funding of social services is one of the critical areas; Revision of Policy on financial awards to address the shortcomings; The revised policy to be accompanied by funding and costing model; Implementation will be in a phased-in approach to ensure equitable and uniform funding & delivery of services;

Conclusion The current situation in the country as articulated in the White Paper review report, point to the fact that Social welfare services are underfunded. Treasury working with DSD to fast track the model of funding of welfare services including funding of NPOs DSD is of the view that these initiatives will assist in bridging the funding gaps

Thank you!