Damning report on Lotto funds
Agency has not accounted effectively for how it distributes funds or even fully identified the recipients of grants Plus not all of the funds have been disbursed
The National Lottery Board (NLB) and the National Development Agency (NDA), two statutory bodies tasked with distributing funds to poverty-relief organisations and charities, are failing in their mandates.
This is the main finding in a research report — compiled by the Funding Practice Alliance (FPA), a grouping of four civil society organisations (CSOs) — released on Wednesday.
The report, titled “Meeting their Mandates?”, finds that the NDA, established to eradicate poverty by granting funds to CSOs, has “been unable to disburse funds adequately, and its funding practices cannot be described as developmental”.
It finds that between 2003 and 2008, the NDA — which reports to Parliament through the Minister of Social Development — disbursed only 56% of available funds.
“Another key area of concern has been the NDA’s lack of accountability and transparency. [Its] activities have been shrouded by a veil of secrecy, and the agency has not accounted effectively for how it distributes funds or identified who the recipients of grants have been.
“It has been accused of corruption and fraud on several occasions, but senior management has never been called to account.”
The report says this lack of transparency extended to beneficiaries.
“No complete list of its beneficiaries and no details of funds disbursed have been made available on the NDA website or in its annual report.
“This calls into question whether the agency is using its grant-making role in a fair and equitable manner.”
The NDA’s refusal to participate in the FPA’s research project ”confirms the impression of a lack of openness and, further, resistance to being held accountable, especially by civil society”, the report says.
In an introduction to the NDA’s latest (2010) annual report, the agency’s board chairman, Malusi Mpumlwana, says his organisation “funded 77 projects for an amount of R96 million” during the year under review.
Turning to the NLB — which administers the National Lottery Distribution Trust Fund (NLTDF), from which grants must be allocated and disbursed to charities — the FPA research report states it is “riddled with ineffective and sometimes confusing lines of communication”.
A consequence of this is that “nobody associated with the National Lottery grant-making has been held accountable for the NLB’s inability to disburse funds effectively and efficiently to CSOs”.
Interviews with CSOs indicated that it sometimes took the NLB more than a year to process applications for NLDTF funds.
“Those organisations which have been awarded grants have had to wait a further six to 12 months for the money to be disbursed.
“The impact of this inefficiency has been catastrophic, with some CSOs having to retrench staff or close.
“The NLB has disbursed less than 50% of the available National Lottery funds in each of the last three years,” it says.
The 2010 financial statements of the NLDTF, contained in its annual report, indicate that net grant allocations for that year totalled R3.27 billion.
Among the FPA reports’ findings and conclusions are that “neither the NDA or NLB are sufficiently accountable to credible, independent oversight institutions to which the public have access”.
On the NLDTF’s miscellaneous funding category — one of five to which monies are allocated — the report says there is no public accountability mechanism in place to hold the Trade and Industry Minister accountable for grant-making decisions in respect of this particular fund.
On the NDA, it says it is “apparent that this agency sets its own development agenda, which shifts and changes directly in line with government policy and approach”.
The report further finds both the NLB and NDA, but particularly the NDA, “spend heavily on administrative costs”.
It says there are no measures in place to determine a reasonable proportion of allocated funding for each agency to cover operational overheads.
“The NDA’s current use of more than 50% of its annual allocation to cover operational costs demonstrates that urgent steps need to be taken towards improving the flow of funds to worthy projects, enhancing cost effectiveness, and encouraging public accountability,” the report says.
The four CSOs which make up the FPA are: the Social Change Assistance Trust; Rural Education Assistance Programme; Community Development Resources Association; and, Inyathelo, the SA Institute for Advancement.