Annual Report: Financial Year 2007/08 Presentation to the Portfolio Committee on Social Development Cape Town 22 January 2009

NDA Legislative Mandate: Primary Mandate To contribute towards the eradication of poverty and its causes by granting funds to Civil Society Organisations for the purpose of • Implementing development projects for poor communities; and • Strengthening the institutional capacity of other Civil Society Organisations that provide services to the poor Secondary Mandate Promote consultation dialogue and sharing of development experience between Civil Society Organisations and relevant organs of state; debate development policy; and to undertake research and publication aimed at providing the basis for development policy.

Vision, Mission and Values A developing society free from poverty MISSION To contribute to poverty eradication and elimination of its causes VALUES As a development agency, we subscribe to the following values: • Integrity • Excellence • Dignity • Partnering • Commitment • Empowerment

2007/08 Summary Performance Report The report is based on the following FOUR STRATEGIC GOALS: Organisational Transformation Partnering For Development Community Empowerment for Sustainable Development Communication of Credible and Relevant Researched Development Information

NON FINANCIAL PERFORMANCE REPORT Goal 1: Organisational Transformation • Achieved organisational stability; • Enhanced a performance culture by improving the performance management system • Strengthened the organisational capacity by building the Human Resources Unit; filling critical vacancies; increasing efforts in the areas of training and education of staff; and putting in place appropriate policies; • Improving on good governance by ensuring that compliance is observed; and • Increasing organisational visibility by building relations with stakeholders and promoting the NDA brand.

NON FINANCIAL PERFORMANCE Goal 2: Partnering for development • Developed a partnering for development strategy which is still to be approved by the Board based on the overall strategy of the organisation. • Conducted an extensive organisational promotion campaign to raise awareness about the NDA, its mandate and work among key stakeholders in government and Civil Society Organisations. • Strengthened our “on the ground” collaborations with strategic partners in the implementation of projects, especially local municipalities and specific relevant departments. • Established new relations with UNDP and the Human Rights Commission who collaborated with us in our annual poverty conference which took place in October. • Established relations with the Universities of Limpopo; Venda and the Premiers’ office. These relations resulted in a successful collaboration on our conference on poverty in Limpopo. • Continued with our role as coordinating Agency for the South African Chapter of the German – South Africa partnership forum for development.

NON FINANCIAL PERFORMANCE Goal 3: Community Empowerment for sustainable development • R89,9 million in grant funding to 78 CSOs; NGOs and Co-operatives was approved by the Board. This was aimed at funding poverty eradication and development projects across the country especially in the rural areas. The amount of R133, 8 million included in the annual financial statements relates to projects that were approved from 2001 to 2008. The budget for 2007/8 for project funding was R89, 9 million which was committed to projects. Included in the R133,8 million is the R56, 8 million of projects that were approved in the current financial year and the balance of R77 million relates to projects that were approved between 2001- 2007. This has benefited 9 725 people directly and 229 361 indirectly throughout the country.

NON FINANCIAL PERFORMANCE The biggest amounts of these grants went to those provinces with the largest population of rural and poor, i.e. KwaZulu Natal; Limpopo and the Eastern Cape. • Successfully implemented the second phase of capacity building for CSOs which was started in the previous year with a grant of R25, 7 million. • A large number of CSOs are benefiting from project through training.

NON FINANCIAL PERFORMANCE Breakdown of provincial grant commitments for 2007/08 financial year is as follows: Province Total number approved Amount Eastern Cape 12 R15,197,111 Free State 10 R 7,915,393 Gauteng 6 R 5,881,732 KwaZulu Natal 6 R13,081,851 Limpopo 9 R11,045,0125 Mpumalanga 7 R 8,938,371 Northern Cape 8 R 7,257,692 North West 13 R12,305,059 Western Cape 7 R 8,263,875 TOTAL 78 R89,886,109

NON FINANCIAL PERFORMANCE Goal 4: Communication of credible and relevant researched information 4a. Research information: o The state of CSOs o Municipal Poverty Profile and Resource Flows o Provincial Poverty Profile and Resource Flows

NON FINANCIAL PERFORMANCE 4b. Promotion of NDA visibility: Published the following: o Four issues of The Voice newsletter o Four issues of TsaRona newsletter o NDA generic brochures distributed at RFPs o NDA annual report o NDA Strategy document o Oudsthoorn Poverty conference report o October 2007 Poverty conference report o Website updates o Intranet updates o Revised brief strategy and profile documents o Requests for Proposals adverts for six provincial offices o South African Local Government Association exhibition o Corporate Social Investment exhibition o Institute for Local Government Management Roundtable o National Council Of Provinces o Budget Vote o Branded the organisation at 229 project sites in eight provinces.

Financial Report: 2007/08

1. Condensed Statement of Financial Performance The statement of financial performance on Page 53 of the Annual Report is summarized Summarized by grouping the Top 4 expense items separately and the rest of the expenses as a separate grouping

2. Highlights on Financial Performance The entity is reporting a deficit of R61.4m for the period under review compared to a budgeted break-even. The reported deficit is mainly attributable to projects committed in the current year which were approved by the NDA Board in previous financial years. These projects could not be provided for in the books in prior years as they do not meet the requirements for either a Provision or a Contingent Liability. These projects amounted to R76.2m. If the income statement is stripped of the effect of these projects and the one-off EU Ineligible expenditure, the entity will be reporting a surplus of R20.3m (as shown in the condensed income statement above).

Highlights (continued) The following major expenses items are explained and analysed R 190.6m:2008, R 138.1m:2007 below. These expense items make up 88% :2008 and 85% :2007 of the total value of expenses

2. 1 Committed Poverty Eradication Projects. (R133. 1m in 2008 and R92 2.1 Committed Poverty Eradication Projects (R133.1m in 2008 and R92.4m in 2007) Committed projects of R133.1m compared to a budget of R89m for the current year are split as follows per year of approval by the NDA Board. Projects are recognized as an expense and liability when a contract is signed by both recipient of funds & the NDA. Year of Approval 2006 and Prior 2007 2008 Total   Committed in current year 11 479 357 64 701 989 56 891 282 133 072 628 No of Projects 21 58 55 134 57% (R76.1m) of the value of commitments relates to projects approved in years prior to 2007/08 FY. In the 2007/08 FY the Board approved projects of R89.9m of which only R56.9m was committed in the current FY. On average it takes it takes 2 - 3 months for a contract to be signed after the project has been approved by the Board.

2.2 Staff Costs (R38.3m in 2008 and R33.3m in 2007) Staff costs are split per division as per Note 12 on Page 71 of the Annual Report Staff costs increased by 15% of which 7.5% was attributable to annual increase in salaries and the rest made up of increases in staff recruitment. These studies were outsourced to External Service Providers

Consulting fees increased by 10% 2.3. Consulting & Professional Fees (R13.6m in 2008 and R12.3m in 2007) Consulting fees increased by 10% between 2007 and 2008 FY The largest contributor to the 10% increase was spending by the Research unit The increase in Research resulted from 3 major studies commissioned in the current year, namely: Provincial Poverty Profile Municipal Poverty Profile State of Civil Society Organisations

2.4 Ineligible Expenditure (R5.6m in 2008 and R Nil in 2007) A one-off expenditure relating to expenditure incurred by EU funded projects.

3. ANALYSIS OF MAJOR BALANCE SHEET ITEMS 3.1 The cash holdings of R278.7m is made up as follows: Cash holdings for the NDA R264m Cash held on behalf of the EU R14m * The cash holdings of R264m is broken down as follows: Amount due to Projects per Projects Liability Note 18 R191.1m Balance of IDT development funds R40.9m Funds set aside for Projects approved R33m by the Board but not yet committed The cash held on behalf of the EU is made up of the balance of uncommitted funds in terms of the EU funding agreement. These funds will be refunded to the EU in the 2008/09 FY.

3.2 Fixed Assets (R4.1m in 2008 and R2.8m in 2007) The increase of R1.4m is mainly attributable to: acquisition of Computer and Photocopying equipment increase in Depreciation due to the acquisition of new assets 3.3 Intangible Assets (R1.6m in 2008 and R Nil in 2007) this relates to the cost of the development and implementation of the ERP system which was implemented in September 2007

Committed Projects (continued)… This increase is mainly attributable to the following: Increase in commitments of R41m (R92m:2007 and R133m:2008) Decrease in project write backs of R6.3m (R6.8m 2007 : R0.6m:2008) Project Liability by Province  Provinces EC FS GP KZN LI MP NW NC WC Total Project Liability 22 935 704 13 540 976 16 992 859 23 993 043 32 805 619 21 684 260 20 536 610 15 160 382 23 472 308 191 121 761 % split 12% 7% 9% 13% 17% 11% 8% 100% No. of projects per province 70 28 37 39 91 52 25 43 422 The average cycle of a project is 24 months.

4. Committed Projects (R196m in 2008 and R141.7 in 2007) Projects Liability increased by R54m (38%) year on year. This increase is mainly attributable to the increase in commitments from R92m in 2007 to R133m in 2008. The commitments are aged as follows by year of approval: Project liability by Board approval date (Projects Age Analysis)    Year approved by Board Prior to 2006 2006 2007 2008 Total Project Liability 54 903 880 26 997 612 56 486 293 52 733 977 191 121 762 % split 29% 14% 30% 28% 100% No. of projects 194 83 82 63 422 The average cycle of a project is 24 months.

CONCLUSION The NDA received an unqualified audit opinion in the year 2007/08 The Auditor General reported a matter of failure to comply with section 53 (1) of the PFMA by the NDA – The NDA has in the current year complied with the above section as we submitted the budget by September 2008. On other matters of governance reported by the Auditor General, the NDA has put mechanisms in place to ensure that those will not be repeat findings in the 2008/09 audit.

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