National Development Agency under fire
It is interesting to note that in its 10 years of operation, the National Development Agency (NDA) received its first unqualified audit in 2010, only. However, in spite of the fact that it does not have its own financial house in order, it imposes strict reporting requirements on its grantees and in some instances, projects and programmes have been terminated.
Questions have been raised about the ability of the National Lotteries Board (NLB) to hold the NDA accountable for its operations and to ensure that strong governance and accountability mechanisms are put in place.
These findings and questions are raised in a report released March 30, 2011, by the Funding Practice Alliance (FPA) in Cape Town - a social pressure group highlighting problems within the official funding and grant channels, managed by the NDA and NLB.
Shelagh Gastrow, spokesperson for the FPA, said that neither the NDA or the NLB are sufficiently accountable to credible, independent oversight institutions to which the public have access, and to the relevant Minister, in respect of financial management and organisational performance.
“Neither agency is held fully accountable by the existing state structures and both are often neglected by the Ministers to whom they report,
“What is more alarming is that both agencies, but the NDA in particular, spends heavily on administrative costs. 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,” said Gastrow.
The report also states that with regard to the NDA, it is apparent that this agency sets its own development agenda which shifts and changes directly in line with government policies and approaches. Its project formulation approach means that it actively creates and then funds development projects in line with its shifting agenda.
“Through our research, we found that not only is the NDA spending too much on operational costs, but it has not met its legislated mandate,” she said. “If any CSO failed to meet its mandate, it would be in trouble with its grantees, losing credibility and losing any future monies.”
The NDA’s legislated mandate is to
Enable dialogue between civil society and the state; and Work in partnership with civil society to investigate and tackle the real causes of poverty.
The report not only highlights key problem areas of the NDA, but makes recommendations on how these problems might be addressed.
Some such recommendations are that the NDA should have an appeals process for rejected applications as the Agency disburses public funds and should therefore be held accountable for how it disburses funds. It would also be a good channel for obtaining constructive feedback on how organisations can improve their chances of receiving funding in future applications.
“A process map and timeframes for grantmaking are also necessary so that everyone understands the processes and their roles and responsibilities, including members of NDA and NLB grantmaking staff,” said Gastrow.
“Our hope at FPA is that this report will provide the research-based evidence on which CSOs, the NDA and the NLB can jointly engage. That it will not be limited to improving the flow of funding, but will also contribute to best practice developmental grantmaking in South Africa.”
The report, entitled 'Meeting their Mandates?' is the result of a year-long research process by the Funding Practice Alliance (FPA) into the funding practices of the National Development Agency (NDA) and the distribution by the National Lotteries Board (NLB) of moneys held in the National Lottery Distribution Trust Fund (NLDTF) for distribution to socially worthy projects.
The FPA comprises four civil society organisations: the Social Change Assistance Trust (SCAT), Rural Education Assistance Programme (REAP), Community Development Resource Association (CDRA) and Inyathelo - The South African Institute for Advancement.