20 July 2020 Report prepared by: Lisa Vetten (Care Work Campaign) and Margaret Grobbelaar (National Coalition of Social Services)

On 26 March 2020 South Africa was placed under lockdown to contain transmission of the coronavirus. The impact of this decision on non-profit organisations (NPO) providing social care, or welfare, services is sketched in this rapid assessment – compiled at a time when almost 2.9 million net job losses were recorded in South Africa between February 2020 and April 2020, with two-thirds of these lost by women (1.9 million) and one third by men (1 million).1 Near-overnight unemployment on this scale has already produced a series of social shocks whose effects are likely to reverberate for time to come. The need for social care and other helping services is very likely to increase under these conditions. However, the demand for these comes at a time when NPO social care services have themselves been made fragile, the lockdown having exacerbated pre-existing weaknesses and difficulties in the financing of NPOs’ social care services. The report thus aims to highlight both what is urgently in need of attention, as well as to identify emerging points of strain which, if left unattended, have the potential to become crises likely to lead to the loss of both services and jobs. Given the feminised composition of the NPO workforce, these job losses will only reinforce the disproportionate impact of the lockdown upon women’s employment. Analysis of the Quarterly Labour Force survey for the third quarter of 2017 produced a (weighted) estimate of 210 853 people working for a NPO, of whom 69% were female.2 Data from the Expanded Public Works Programme (EPWP) foregrounds women’s presence within the non-profit sector even more clearly: between 2014/15 and the third quarter of 2017/18, approximately 75% of the sector comprised women workers.3 The services focused on by the report include domestic violence shelters, child protection services, residential facilities for older persons and people with disabilities, child and youth care centres, victim empowerment services and other forms of social welfare services. The significance of these services to the country is underscored by their designation as ‘essential’ in terms of the regulations contained in Government Notice no. 318, published on 18 March 2020. Information was gathered over a period of about a week from the organisations belonging to the National Coalition of Social Services (NACOSS) and other networks collaborating with the Care Work Campaign. The report is thus not representative of all NPOs’ circumstances but indicative of the kinds of problems being experienced and where intervention needs to be focused. The report is also limited by many organisations’ fear of victimisation by district or provincial officials should they speak out. Thus, while some gave permission to be identified, others did not, while still other organisations did not wish to respond at all.

  1. Financing NPO social care services during the lockdown NPOs and the Department of Social Development (DSD) both provide social care services in an arrangement that dates back to 1938 and the establishment of the country’s first department of welfare.4 Because these NPO services fulfil the mandate of the state they are subsidised by DSD, on the expectation that NPOs will raise the balance of their costs elsewhere. However, should organisations prove unable to obtain the balance then the department of social development (DSD) ought to fully cover the cost of the service according to the 2014 decision National Association of Welfare Organisations and Non-Governmental Organisations and Others v MEC of Social Development, Free

1 Casale D and Posel D. (2020). Gender and the early effects of the COVID-19 crisis in the paid and unpaid economies in South Africa. Paper 4, Wave 1 of the National Income Dynamics Study (NIDS) – Coronavirus Rapid Mobile Survey (CRAM)
2 See Vetten, L. (2019). ‘Listening, care, support and respect’: A field guide to the making of inequality in South Africa’s Thuthuzela Care Centres’ Transformation, 101: 61-83.
3 ibid
4 ibid

State and Others5. The next section first sets out the current status of subsidy payments and then discusses the impact of the country’s economic contraction on the ability of NPOs to raise the additional funds required to carry out their duties.

1a. Payment of subsidies

The lockdown was initiated just days before the start of the 2020/21 financial year. In provinces such as Gauteng and Western Cape attempts were made to sign SLAs remotely. More or less timeous payment of first tranches was reported by Free State, Northern Cape, KwaZulu-Natal, Gauteng and Western Cape. Payment was also made in full to organisations in these provinces. However, three-and-a-half months into the financial year Eastern Cape has yet to make the great majority of payments. Some payments also remain outstanding in Limpopo, Mpumalanga and North West. Organisations in these provinces also reports cuts made to their subsidies. This is despite the fact that national DSD issued a circular to provinces encouraging them to pay subsidies in full based on the 2019/20 amounts. A list of some of the reported organisations which have signed contracts but who have either not received their first tranche, or had cuts made to their subsidies is attached as appendix A.

Eastern Cape

As at 17 July we were able to identify two organisations that had received payment – some six weeks after the Head of Department (HoD) issued a memorandum on 5 June blaming COVID19 for delays in payment. Late payment is, however, the norm rather than the exception in Eastern Cape. According to organisations paid on a quarterly basis their first tranche is routinely only paid in July and subsequent tranches on an unpredictable basis thereafter. Departmental memoranda and news reports support this:

  • At the start of the 2017/18 financial year a number of organisations received unanticipated cuts to their subsidies and only received their first tranche of payments in September and October of 2017.
  • On 21 December 2018 the HeraldLIVE news site reported that subsidy payments were three months late. According to the article, the department’s new payment system, installed in June 2018, had proved dysfunctional and was the cause of the delays.6
  • Approximately two months later on 25 February 2019 the department issued a memorandum to NPOs stating that the provincial head office had been contaminated by a battery acid leak. With the building having to be evacuated for a period of time there would, once again, be delays in NPO payments.
  • On 12 June 2019 the department issued a memorandum explaining why NPO payments were being delayed yet again. According to this document, an audit of the payment system had found insufficient controls to be in place – necessitating another round of changes to the NPO payment system.

The rationality and lawfulness of the Eastern Cape DSD’s decision is to be tested in Case 2460/2018, Eastern Cape NGO Coalition versus MEC for Social Development. The matter was originally set down for hearing via video conference on 28 May 2020 but, due to its significant public interest, has been rescheduled to a time when it can be heard in open court.
In addition to delaying payment, the department also took the unilateral decision to reduce certain of the amounts of subsidy paid towards services for older persons and people with disabilities, as well as the provision of home-based care to people with AIDS and the running of early childhood development (ECD) centres. But, as the memorandum clearly acknowledges, organisations had already signed their service level agreements (SLA) with the department. The due date for receipt of these contractually determined sums of money has passed – again, a fact acknowledged in the department’s memorandum.

5 National Association of Welfare Organisations and Non-Governmental Organisations and Others v MEC of Social Development, Free State and Others (1719/2010) [2014] ZAFSHC 127 (28 August 2014)
6 https://www.heraldlive.co.za/news/2018-12-21-ngos-face-festive-season-cash-crunch/