In our view

Poor odds for NGOs in lottery board gamble - 24 Oct 2011 - Business Day

By Shelagh Gastrow

A RECENT Supreme Court of Appeal decision supports my belief that there needs to be a complete overhaul of the way the National Lotteries Board manages and distributes billions of rands worth of public funds. There is a distinct lack of accountability and transparency over the way the board operates and it needs to be called to account for its failure to fulfil the mandate it was given to distribute funds appropriately to nonprofit organisations and charities.

The appeal court case a couple of weeks ago concerned two charities that had their grant applications turned down for allegedly failing to comply with the guidelines. Fortunately, the court dismissed the appeal by the board and ruled in favour of the registered nongovernmental organisations (NGOs) — the South African Education and Environment Project and the Claremont Methodist Church Social Impact Ministry, Sikhula Sonke — which between them educate thousands of underprivileged children. 

The court held that the board was not justified in applying its guidelines so rigidly and unreasonably. What I find so highly objectionable about this case is that worthy organisations such as these are denied funding while the board sits on millions of rand of undistributed funds. The random decision-making, poor management and inefficient administration of the board are having a devastating effect on many wonderful NGOs in SA that provide essential services to poor and vulnerable communities.


It is a national disgrace that resources allocated for the sustainability of these organisations have been so badly mismanaged, delayed or not distributed. Only a couple of days ago, another organisation contacted Inyathelo seeking advice over what action it could take after the lottery mismanaged the administration of its grant application. It appears that, despite the court’s findings, there is still no will to change, or any apparent concern about the organisations that are being so severely affected.



The distribution agencies are accountable only to the minister of trade and industry. I have always been of the view that they should account directly to the CEO of the lottery and that the appointment process to these agencies should be transparent and open to nomination from the public. This would help promote greater accountability. Civil society members who have an understanding of how NGO s are financed should also be represented on the National Lotteries Board. This would go some way towards tackling the lack of transparency.



In March this year, the Funding Practice Alliance — which is made up of four prominent NGOs, including Inyathelo — released a research report on the National Lotteries Board and National Development Agency, titled Meeting their Mandate? In our report, we questioned whether the agency was using its grant- making role in a fair and equitable manner after the board paid out grants worth R41m to the Congress of South African Trade Unions (Cosatu) and the National Youth Development Agency to host political events. How can a Cosatu rally be deemed a needier cause than the education of underprivileged children? What has become apparent is that the board and the agency set their own development agenda, which shifts and changes in line with government policy and approach.



Of as much concern is the attitude of senior officials in the lotteries. Judge Azhar Cachalia, who presided over the case bought by the two charities, said it was "distressing" that the board did not appear to understand its mandate properly. He also pointed out that the chairman of the board seemed to hold the view that grants given were "gratuities", which were allocated at the board’s discretion.


But, as Cachalia firmly pointed out, this is wrong. The board holds public funds in trust for the purpose of allocating them to deserving projects. And it must ensure that these funds are allocated to those projects, provided, of course, they meet the necessary requirements. The funds do not belong to the board to be disbursed as its largesse.



SA needs transparent and publicly appointed boards that include people with the capacity to govern our institutions, rather than political deployments to reward loyal cadres with soft jobs. They should be people with knowledge and skills in the area in which the board operates. Good governance will not end poverty but it will go a long way to improve the situation.



• Gastrow is executive director of the South African Institute of Advancement, Inyathelo.