R557m NPO funding lost in 3 years

Beneficiaries accused of inflating needs in order to get more state money


In a massive financial blunder, the Eastern Cape department of social development has admitted to losing more than half a billion rand over a three-year period through maladministration of funds for non-profit organisations.
A preliminary report of the department’s forensic investigation with the provincial treasury found 812 instances, totaling R557m, where NPOs did not meet the correct guidelines and legislation to receive funding during the 2015/16 and 2017/18 financial years.
Social development head of department Ntombi Baart told the Dispatch on Thursday this had happened as a result of the department giving funds to NPOs that did not meet or uphold the terms and conditions necessary for funding.
“These findings have revealed that we haven’t been fully following up on the money given to NPOs.
“It is our administrative processes that were flawed and the department is already working to improve on this,” Baart said.
“Yes, the value of the non-compliance amounts to R557m but that does not necessarily mean that those are acts of corruption. They are just non-compliance issues.”
Jay Kruse, of the Public Service Accountability Monitor (PSAM) at Rhodes University, said the department’s findings clearly revealed “the weaknesses within the department”.
“We’ve received repeated concerns from NPOs that meet all the requirements and have been applying without luck for years, saying the people getting funding do not deserve it.”
Baart said the maladministration was discovered after the NPOs were fact-checked against the department’s compliance checklists.
She said the money was lost to NPOs’ inflating their needs – either in terms of dependents or staff – in order to get more money from the department.
“When we did our audits, the maladministration deficiencies picked up all amounted to this amount [R557m].
“In some instances, NPOs receive funding for the compensation of in-house social workers, for example. But when it comes to accounting, they fail to prove that they have those.”
Baart said the findings also indicated the department’s failure to ensure that agreements with NPOs were upheld.
She said until last year, the department did not have a monitoring and evaluation directorate to monitor funds given out, an audit committee, a risk management committee, or an internal chief audit executive to audit the department. The directorate was only approved this week.
“Our standard operation procedures need to be beefed up.
“But a directorate has been put in place. We just need to start resourcing it,” she said...

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