CIVIL SOCIETY IN SOUTH AFRICA

CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 Funded by the National Lottery Commission SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 A

Context The Funding Practice Alliance acknowledges that the socio-economic and political context has shifted since the completion of the research. It further recognizes that, at a global and national level, civil society spaces are opened and closed, as and when necessary, by governments and this places additional stress on the sector. It is hoped that the research findings stimulate debate and discussions that will lead to actions that strengthen the civil society sector and more importantly, strengthen the marginalized and excluded groups in our society that the sector serves. The NLC relies on funds from the proceeds for the National Lottery. The Lotteries Act guides the way in which NLC funding may be allocated. The intention of NLC funding is to make a difference to the lives of all South Africans, especially those more vulnerable and to improve the sustainability of the beneficiary organisations. Available funds are distributed to registered and qualifiying non-profit organisations in the fields of charities; arts, culture and national heritage; and sport and recreation. By placing its emphasis on areas of greatest need and potential, the NLC contributes to South Africa s development. SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 01

Contents Introduction 03 About the study 03 1. Key findings Funding sources and flows 04 1.1 About the sample 06 1.2 Income and expenditure 07 1.3 Funding sources and flows 12 1.4 Key findings - Economic contribution 14 2. Some critical considerations 18 Appendix 1: The civil society sector in South Africa Definitions and funding trends 19 02 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

Introduction In 2014 The Funding Practice Alliance collaborated with Mthente Research and Consulting Services to conduct a research study on civil society in South Africa to better understand how the civil society sector is funded, and how it advances South African society through contributing to employment and to the economy. i The study was completed in 2016. The research was made possible by the proceeds from the NLDTF and commissioned by the National Lotteries Commission in partnership with the Funding Practice Alliance. The primary reasons for embarking on the research is that the value of civil society s contribution to social change in South Africa is often understated, under-valued and there is insufficient data available on the amount of resources that flows to the civil society sector, what is supported and the number of individuals employed in the sector. The primary research questions were: Where does funding to the civil society sector come from (i.e. funding source)? Where does funding go to in terms of sectors and geography? What is the civil society sector s measurable contribution to both remunerated and non-remunerated employment? What is the civil society sector s measurable contribution to the South African economy? This document provides a summative overview - or snapshot - of selective findings from the research study. For more on the methodology used, limitations of the research, source references, and the full set of findings, see the Research Study on Civil Society in South Africa Report (available on request). About the study Size and scope of the sector The regulation and registration of NPOs falls within the mandate of the Department of Social Development (DSD), which itself sometimes blurs the lines between NPOs and CSOs. In terms of the NPO Act (Act 71 of 1997), the DSD is tasked to maintain the national NPO register. In 2013 it was reported that of the approximately 85,000 registered NPOs, 35,217 were issued with non-compliance warnings and a further 36,513 had been deregistered altogether, leaving only 29,019 in good standing. In November 2014, the DSD register showed a list of more than 80,000 NPO s. In December 2014 the DSD website showed a total of 131,055 registered NPOs, 2,146 deregistered NPOs and 1,536 applications in progress. This figure increased to 133,879 registered NPOs in February 2015. DSD indicates that the numbers of registered NPOs increases daily, and stood at 145,152 in October 2015. As the above figures indicate, the exact number of active NPOs is difficult to ascertain as accounts differ. SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 03

Research conducted in 2001 concluded that there were 98,920 NPOs in South Africa at that time: More than half (53%) were CBOs staffed primarily by volunteers. The most popular areas of engagement were Social Services (22%), Development & Housing (20%), and Culture & Recreation (20%), followed by Health (7%), Education (6%) and Environment (3%). NPOs were found to be a major employer, creating approximately 650,000 fulltime positions, noting that only 50% of organisations were staffed by full-time employees. ii Based on an analysis of DSD data presented in the 2014/15 State of the South African NPO Register Report, the greatest number of registered NPOs is in the Social Services sector (39.9%) followed by Development & Housing (20.9%). The International Organisations category has the least number of registered NPOs. Furthermore, most registered organisations are from Gauteng (32%) and KwaZulu-Natal (19%), followed by Limpopo (10.4%) and the Western Cape (10.2%). The Northern Cape has the least number of registered NPOs (2%). The majority of NPOs are registered as a VAs in terms of common law (94.3%), followed by NPCs, incorporated in terms of the Company Act (3.9%), and Trusts in terms of the Trust Property Control Act (1.8%). A total of 62,146 (or 45.5%) of all registered NPOs were deemed compliant as at end March 2015. Most activities are concentrated in the area of Social Services and most registered NPOs are based in Gauteng. The sector is a significant employer, although many full-time workers are voluntary, and there are no recent statistics on the number of employees. According to the 2013 Civil Society Organisation Sustainability Index (CSOSI) report, there is no accurate data on the size and scope of the civil society sector in South Africa due to the lack of coordination among the several government agencies that register CSOs. The research study included: A scoping and desktop review of the civil society sector. See Appendix 1 for summary information on how civil society is defined, the size and scope of the sector, and its primary funding sources. A survey with 448 civil society organisations (CSOs). 9 focus group discussions, comprising 77 CSOs across 8 provinces. 6 stakeholder interviews. The primary research findings are based on the survey, which was conducted with a sample of CSOs drawn from the Department of Social Development s (DSD) database of non-profit organisations (NPOs). The CSOs in the sample are all 04 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

registered South African NPOs and are funded by donors and/or private members. The sample excluded independent state-established institutions (such as Chapter Nine institutions), business and professional associations/unions, and religious institutions (as distinct from faith-based organisations, which were included). The sample frame was based on DSD s classifications of NPOs, as follows: Type of organisation Voluntary Associations, Trusts or Non-Profit Companies Sector Culture & Recreation Development & Housing Education Environment Health International Law, Advocacy & Politics Philanthropic Intermediaries & Voluntarism Promotion Religion (faith-based organisations) Social services Working on 132,773 eligible organisations from the DSD database, a random, yet purposive sample of 500 CSOs was extracted. The provincial spread of CSOs was proportionally representative. A total of 448 telephonic surveys were completed for analysis ensuring a less than 5% margin of error with a 95% confidence interval. The CSO survey provided the data for a cash flow analysis that determined the following: Sources of funding. Flow of funding within the sector. The extent to which the sector contributes to employment (both remunerated and non- remunerated/voluntary work) in South Africa. The extent of the sector s contribution to the South African economy. SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 05

1. Key findings Funding sources and flows 1.1 About the sample Less than half (43%) have Section 18a status. 19% have a Black Economic Empowerment (BEE) rating. 4% are registered internationally. 96.9% do their fundraising internally and don t employ a professional fundraiser. 17.4% have a reserve or endowment. 34.7% own major assets, for example property, buildings, vehicles, equipment and/or machinery. Location With regard to geographic location, the majority of CSOs use Gauteng (29%) as their base province, followed by KwaZulu- Natal (20%). The Northern Cape has the least number of CSOs headquartered in the province (2%). While a number of CSOs operate outside of their base province, very few operate in more than one to three additional provinces and under 5% work in countries other than South Africa. FIGURE 1: CSO geographic locations 29% 30% 25% 20% 20% 15% 10% <5% 5% 2% 0% Gauteng KwaZulu-Natal N. Cape Other Sectors The majority of CSOs are classified under Social Services (43%) and Development & Housing (28%). Welfare/Social Development, Youth, and Education, were highlighted as key focus areas, accounting for more than one third of the sample (38.5%). Philanthropic Intermediary & Voluntarism Promotion, and Environment, are the least represented sectors. Although CSOs are classified under a specific sector and subsector, they can potentially fit within multiple sectors as they work with various focus area/s which are often cross-cutting. FIGURE 2: CSO sectors 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 43% Social Services 43% Development and Housing 43% Welfare/Social Development, Youth and Educa on 06 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

Size In terms of annual income, the sample was disaggregated by size and five income ranges were identified: Micro = annual income less than R 50,000 Small = annual income greater than or equal to R 50,000 but less than R 500,000 Medium = annual income greater than or equal to R 500,000 but less than R 2,000,000 Large = annual income greater than or equal to R 2,000,000 but less than R 20,000,000 X-Large = annual income greater than or equal to R 20,000,000 There was a greater spread of different sized CSOs in the Eastern Cape and Western Cape. These were also the two provinces with proportionately more Large and X-Large organisations. The more rural provinces of Limpopo, Free State, North West and KwaZulu-Natal have proportionately more Micro to Small CSOs. Staffing Considering employment by province, the Eastern Cape, North West and Gauteng all have a higher than average number of Full-time employees and the Free State has a significantly higher than average number of Volunteers. Consistent with income, Gauteng has the highest number of employees in all categories, followed by KwaZulu-Natal. There is a positive relationship between income and Full-time and Part-time employment (i.e. the higher the income the more employment). Health and Social Services are the most labour-intensive sectors. 1.2 Income and expenditure Annual income and expenditure Total reported income for CSOs in 2014 amounted to R794,866,323 with an average income of R1,933,981 per organisation. In 2014 expenditure totaling R636,150,516 was reported, with an average expenditure of R1,594,362 per organisation. SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 07

Income growth over time A total of 184 CSOs (out of 411 CSOs who provided their income) reported income for the three-year period (i.e. 2012-2014). The mean income of these CSOs rose by 5% per annum, which is below inflation for the period. Of the 184 organisations, 41% reported a year-on-year income rise over the 3 years, while 8% reported a year-on-year decline. A total of 289 CSOs reported income for a two-year period (i.e. 2013-2014). Over the 2 years, mean and median incomes rose 10% and 5% per annum respectively, whilst 70% of these CSOs saw a rise over the 2 years, whilst 18% saw a drop in income. Size and growth In terms of the different levels of growth by size of CSOs, Micro and Small CSOs tend to fare better. Medium CSOs experienced growth at the average rate, which was below inflation over the period, whilst Large CSOs experienced a good growth rate however this was not uniform across the sample. The X-Large CSOs experienced negative growth over the 3 year period. Overall, the growth trend of all CSOs has been positive but uneven. Expenditure for the larger CSOs was negative in relation to income possibly due to slow growth in their income. Expenditure for the smaller CSOs was positive possibly due to the increased growth in their income. TABLE 1: Average income by size Category Income greater than or equal to Income less than Sample size % Average Median income Income Micro 1 50,000 149 36% 15,712 11,000 Small 50,000 500,000 115 28% 185,363 150,000 Medium 500,000 2,000,000 83 20% 990,769 984,000 Large 2,000,000 20,000,000 57 14% 5,332,256 4,000,000 X-Large 20,000,000 7 2% 55,005,148 35,000,000 All CSOs 411 100% 1,933,981 150,000 08 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

TABLE 2: Income growth by size (using data from CSOs that reported for all three years) Size category Number of CSOs in 2012 Number of CSOs in 2013 Number of CSOs in 2014 Total income 2012 Total income 2014 Implied annual growth rate micro 44 36 40 734,600 4,960,394 89% small 63 58 46 11,394,469 35,102,595 46% medium 31 45 54 30,014,628 34,681,818 5% large 32 29 28 168,659,371 247,905,216 14% x-large 2 4 4 215,485,980 177,000,000 (6%) 172 172 172 426,289,048 499,650,023 5% Income across provinces Gauteng had the highest average income amongst provinces in 2014, followed by the Eastern Cape, Western Cape and Free State. A similar trend is seen in terms of expenditure. The average expenditures in Gauteng and Free State are much lower than the average incomes over the same period. FIGURE 3: Average income in 2014 by province (Rand value) Eastern Cape (EC) Free State (FS) Gauteng KwaZulu-Natal (KZN) Limpopo Mpumalanga Northern Cape (NC) North West (NW) Western Cape (WC) SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 09

FIGURE 4: Average expenditure in 2014 by province (Rand value) Eastern Cape (EC) Free State (FS) Gauteng KwaZulu-Natal (KZN) Limpopo Mpumalanga Northern Cape (NC) North West (NW) Western Cape (WC) Income and expenditure by sector Health has a higher average income than other sectors, followed by Education & Research. Health also has a significantly higher average income than the sample average. The largest sector in terms of expenditure is Social Services. In 8 out of 9 provinces, Social Services expends either the highest or second highest sector of spend. In 5 provinces, Development and Housing expends either the highest or the second highest amount. In 2 provinces, Health expends the highest amount. These three sectors are not only the highest, they also dominate spend in the lowest incomeraising provinces (Free State, Mpumalanga and North West). The higher income-raising provinces of Gauteng, Western Cape and KwaZulu- Natal have more diversification of spending across sectors. 10 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

FIGURE 5: Average expenditure in 2014 by sector (Rand value) Culture and recrea on Development and housing Educa on and research Environment Health Law, advocacy & poli cs Philanthropic intermediary Religion Social Services FIGURE 6: Expenditure of provinces by sector (% of total) SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 11

1.3 Funding sources and flows The proportionate contribution of diverse funding sources was grouped according to the following funding categories: International: includes international government donors, international organisations and international philanthropic organisations SA government: includes National, Provincial and Local government departments as well as government agencies National Lotteries Board (NLB) Local citizenry: includes SA foundations and trusts (local philanthropy), other NGOs, private individual donations and corporate support Self: includes self-generating income projects/activities and membership fees Funding received The total of combined funding reported from the various funding sources amounts to R668,960,887. International sources contributed the largest portion of total funds to CSOs in 2014 (40%), followed by the SA government (24%), and Local citizenry (23%). However, if one includes local sources - SA government and its agencies, the NLB, South African foundations/trusts and NGOs, corporates and private individuals (excluding Self ) then the total contribution locally is greater than International contributions (54% versus 40%). Funding sources The top funding sources in terms of Rand value are: International Government Donors (23.5%), International Organisations (14.2%), and Provincial Government (12.2%), followed by Private Donations (9.5%) and National Government (8%). The Department of Social Development (DSD) was the most commonly cited government department providing funding to CSOs. Value and proportion of funding per sector Social Services received the majority of funds in 2014 (36%), followed by Health (27%) and Development & Housing (18%). Funding is more likely to be driven by sector and geography than CSO size. 12 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

Provincial features The Eastern Cape primarily raises funds from South African government sources, which is spent on Social Services and Development & Housing. 65% of Free State CSOs are Micro or Small and the dominant focus is on the provision of Social Services. Gauteng has the highest income, partly because it hosts the largest of the X-Large CSO in the sample. The largest X-Large CSOs appear to be completely dependent on international funding which explains the province s dependence on that source. Generally, however, its other CSOs seem fairly diversified in terms of funding sources. KwaZulu-Natal is diversified in size of CSOs and spending across sectors. It is dependent on South African government sources for funding. Limpopo s Large CSOs are dependent on international funding, and the primary sectors of spend are Social Services, Development & Housing and Health. Mpumalanga, the Northern Cape and the North West raise the lowest income by total and relative to their populations. Mpumalanga s spend is dominated by Social Services. The Northern Cape s focus is on Social Services followed by Religion, while the North West s primary focus is Health. The Western Cape s proportional income slightly exceeds its population. It is diversified in terms of fundraising and spending. Sector features Development and Housing is a significant sector, ranking either first or second in spend for 5 provinces. It is the second largest sector in terms of the number of CSOs. Its primary sources of funding are South African government, international donors and self-generated income. Environment is the smallest sector in terms of number of CSOs but has a much larger average income than many other sectors, attesting to its CSOs being larger in size. Health is a significant sector funded by international and South African government sources. This sector is highly dependent on the few large CSOs and their international funders. Social Services is the most significant sector in terms of number of CSOs, and size of funding and expenditure. Its primary sources of funding are the South African government, the NLB and local citizenry. It attracts little international funding in comparison to the other large sectors of Development & Housing and Health. It is a labour-intensive sector. SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 13

1.4 Key findings - Economic contribution The calculation to determine and quantify the contribution of CSOs to employment in South Africa was based on the size of the target population and the average number of employees. Projections for likely employment and likely economic contribution utilised the following two assumptions: 1. Assuming that 100% of the population of 132,773 registered NPOs is active, use the sample average number of employees to project the likely population employment contribution. 2. Assuming that only 35% of the population of 132,773 registered NPOs is active, use the sample average number of employees to project the likely population employment contribution. This was determined during the fieldwork phase of the research study, where only 35% of the sample database were contactable. Civil society s economic contribution (based on assumption 1 above) Total contribution is just short of 3.3 million remunerated and non-remunerated employment opportunities. The economic contribution is estimated as more than R256 billion, of which the sector is likely to expend over R211 billion. 1.3 million Full-time and one quarter of a million Part-time remunerated employment opportunities 45,000 Internship opportunities 1.4 million non-remunerated Volunteer opportunities 174,446 opportunities for Associates Civil society s economic contribution (based on assumption 2 above) Total contribution is just over 1.1 million in remunerated and non-remunerated employment opportunities. The economic contribution is estimated at almost R90 billion in terms of income, of which the sector is likely to expend R74 billion. Half a million Full-time 88,000 Part-time employment opportunities 15,000 Internship opportunities Half a million Volunteering opportunities 61,000 opportunities for Associates 14 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

Dominant themes 1 TABLE 3: List of key themes from focus group discussions Node Themes Sub-themes Funding environment Negative perceptions Changed for the worse; adverse; top-down approach; navigate; funding difficult to bias Changing nature From charity to impact-driven; decrease in international funds; growing fatigue of the private sector; increased competition for limited funds; decrease in impact of CSOs; insufficient support from local sources; gifts-in-kind Challenges Encountered Funding models Lack of innovation; lack of diversification; multiple income streams; high dependence on single sources Fundraising Lack of sufficient funds available; increased competition for limited funds; lack of sufficient fundraising skills; time-consuming; lack of information and awareness Budgets Too restricted; lack of flexibility; do not cover operational costs; cash-flow issues; uncompetitive remuneration Governance and resources Lack of skilled staff; poor organisational governance; lack of administrative skills Government Support Lack of administrative support; lack of response/feedback; poor communication; delayed payment of tranches; funding bias Support Requirements Capacity-building Organisational development initiatives; assistance with application procedures; M&E and reporting mechanisms; financial management; strategic planning Cooperation Collaboration; long-term, sustainable funding partnerships; strategic partnerships; networking platforms; skills transfer Applications Improved feedback and response; improved M&E; lenience of donor requirements Solutions/ Resolutions Improved relationships with donors Based on trust; Increased accountability; negotiation; increased flexibility Greater collaboration Networking and sharing of resources and skills; increased value and impact achieved; facilitation of long-term, sustainable partnerships between government, private sector and CSOs Diversification Multiple and diverse income sources; improved cash-flow; decreased 1 Key themes emerged from the 9 focus groups (with 77 CSOs across 8 provinces) are summarised in the table above. SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 15

Emerging themes 2 TABLE 4: List of key findings from identified stakeholder groups Key Finding Government Donors Civil society Changing Increasing need for Decrease in International Need for multiple and funding Government sources to funds means that local diverse sources of income environment support the sector. donors will be required to and less dependence on Amidst increasing step in and provide greater a single source of funds, registration of new support for CSOs in as this could potentially NPOs, and decreasing particular, CSOs will look create cash flow International funds, there to SA government and problems and impact on will be more pressure Corporate sources sustainability. on Government sources for support. to allocate a greater proportion of annual budgets to NPIs in key sectors. Majority of Many CSOs are newly The smaller CSOs are often Potential for smaller CSOs are established and small in not sufficiently equipped CSOs to collaborate more Micro/Small terms of employees and with requisite skills to effectively with larger and newly income. ensure they can remain CSOs as well as established Arguably the survival sustainable. Funds should with donors. rate of CSOs could be therefore be accompanied CSOs need to be more similar to that of SMMEs, by capacity-building; these strategic in their planning, who struggle to survive two aspects should not ensure they have strong past the first two years of occur in isolation from governance systems operation. Much greater one another. in place and also be Government support for more accountable to the sector especially both donors and the non-financial support in communities they serve terms of capacity-building if they wish to remain and skills development sustainable. is required. Lack of Compliance and Attracting and retaining Greater collaboration/ adequate other administrative skilled staff is often co-operation between skills within requirements expected of a challenge for CSOs larger and smaller CSOs, the sector CSOs should be simplified who are unable to offer with the former providing and greater emphasis competitive remuneration. invaluable mentorship placed on organisational Greater flexibility and and skills transfer (and development initiatives, less restrictive budgets potentially also sharing ensuring that CSOs could assist in this regard. resources) with are equipped with the Furthermore, as already smaller CSOs. resources required to mentioned, donors should remain sustainable. ensure that funds are accompanied by capacity- building initiatives. 2 Based on discussions with identified stakeholder groups (namely, government, donors and civil society. 16 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

Key Finding Government Donors Civil society Lack of Greater awareness/ Donors should CSOs should create information promotion of the various communicate more networking platforms and sources of Government effectively amongst through which they can awareness funds, specific sectors/ themselves, working share information and focus areas funded, as well together to ensure greater assist one another to as where/how to apply for impact is achieved. identify funding sources, these funds is required, as Referrals or but also to share skills and is feedback and response recommendations should other resources. to applications. be made more frequently, enabling more CSOs to receive support and from the correct source. Lack of Robust monitoring and Greater accountability Strong governance accountability reporting procedures must be insisted upon, and structures and reporting will ensure greater CSOs should be expected ability should be accountability, and should to report how budgets staple features of any be strictly enforced. were spent and the impact organisation. Government sources too achieved through the Accountability leads should better monitored projects/activities funded to trust and better and report the impact of by these donor funds. relationships with donors, organisations/projects which in turn could supported. potentially create space for negotiation and greater flexibility in budgets. Accountability goes both ways however, and CSOs need to ensure that their donors also remain accountable. SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 17

2. Some critical considerations The research process and findings raise a number of key considerations for civil society going forward. These include, amongst many others: If Social Services receive the majority of funding, what does this mean for the role of the state in providing such services? What does the fact that international sources of funding are higher than domestic sources say about the state of philanthropy in SA? In regard to the concentration of CSOs in urban centres, what is the effect on grant making to CSOs in needier provinces? The role of volunteers/unpaid staff in civil society. How the civil society sector is defined and categorised for the purpose of producing meaningful and disaggregated statistics related to funding. How the emerging body of research on funding sources and flows is best shared, and how collective engagement might be enhanced in the setting of future research agendas. How the sector s economic and social contribution can be best understood and measured. 18 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

Appendix 1: The civil society sector in South Africa Definitions and funding trends Below is key information from the scoping and desktop review that formed part of the research study. Defining the civil society sector Internationally, there is general consensus that civil society is a sphere of social life outside of government and private households where people come together to take collective action for various periods and in formations of differing degrees of formality on a voluntary basis, and in the public interest. Given it s voluntary associational nature, civil society is broadly defined as: Voluntary collective actions around shared interests, purposes and values distinct from families, state and profit-seeking institutions. A social sphere separate from both the state and the market that includes organisations that are non-state, not- for-profit, and/or voluntarily formed by people in that social sphere. In South Africa, the Coalition on Civil Society Resource Mobilisation iii defines civil society as occupying the space between the state, the market and the family, acknowledging that definitions of civil society remain contested. Similarly, the National Development Agency (NDA) describes civil society as those organisations and groups, or formations of people, operating in the space between family and state, which are independent, voluntary and established to protect or enhance the interests and values of their members/founders. Emphasising the exclusion of the market, there is general consensus that civil society precludes political parties and organisations as well as economic organisations such as firms, cooperatives and partnerships. Three useful criteria for defining and characterising CSOs are that they: Receive the predominant portion of its revenue from private contributions, not from market transactions or government support. Take a particular legal form (for example, an association or a foundation) that is exempted from some or all of a country s taxes. Promote the public good, encourage empowerment and participation, or seek to address the structural roots of poverty and distress. iv Groups operating within civil society share the common features of being voluntary/ non-coercive and not-for-profit, although there may be significant diversity in their SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 19

purposes, levels of establishment and organisational forms. Both in South Africa and internationally, there is wide variety of types of CSOs. These include registered charities, development non-governmental organisations, community groups, women s organisations, faith-based organisations, professional associations, trade unions, self-help groups, social movements, business associations, coalitions and advocacy groups. Many other types of organisations are also active in the space, and refer to themselves by different names and with different purposes, such as coalitions, councils, civic organisations, think tanks, and networks. Three blocs of South African CSOs that have emerged in the post-apartheid period are described as follows: An increasing number of informal, survivalist community- based organisations, networks, and associations that enable poor and marginalised communities to simply survive the daily ravages of neoliberalism. A wide range of organisations sometimes described as social movements that are characterised by formal community-based structures, distinct leadership and membership, and political motives. A powerful set of formal service-related NGOs that, as a result of the more enabling environment created by the democratic regime, have entered into partnerships with or subcontracted to the state. v There is some debate over whether registered non-profits that do not serve the public interest should also be considered CSOs. Such organisations include professional associations, political parties, trade unions, civics, school governing bodies, non-profit academic and health institutions, sports and social clubs, stokvels and cooperatives, among others. It is often the case that the term CSO is used interchangeably with the term NPO. One of the key distinctions made between NPOs and CSOs is that the latter exist for public benefit although there may not always be consensus among actors about this benefit. This is in addition to other key characteristics, as described by the NDA, which include: Having a common purpose, usually (but not exclusively) around service delivery, social watch, advocacy, research or education. Being private, in terms of occupying space outside of both the state and market. Being self-governing. Not distributing profit. 20 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

DSD categorises NPOs into three main types: Voluntary associations (VA), which refer to groups of three or more individuals who form an organisation to achieve a non-profit objective, and are governed by a written agreement or founding document (constitution). Trusts, which are arrangements set out in trust deeds in which an owner hands over property and/or funds to a group of people (trustees) for administration for the benefit of other people (beneficiaries) for a stated objective. Not-for-profit companies (NPCs), which are associations that are incorporated but not for gain, and are governed by the Companies Act of 2008, and referred to as Section 21 companies (2008). In 2010/2011, Stats SA developed the South African Non-profit Institution Classification System (SANPIC). According to this, the 11 main classificatory groups for non-profit institutions (NPIs) are: culture and recreation; education; health; social services; the environment; development and housing; law, advocacy and politics; philanthropic intermediaries and voluntarism promotion; international; religion; business and professional associations; and unions. Trends in civil society funding The DSD estimates that in 1998, the NPO sector was worth R13.2 billion, including cash and in kind payments, with the following specific contributions to Gross Domestic Product (GDP): Volunteer labour R5.1 billion The private sector - R3.5 billion Self-generated income projects - R4.6 billion The DSD estimates that in 2007, total NPO income in South Africa was R12.5 billion. According to Stats SA, in 2010, 39.8% of the total income of South African NPIs in 2010 was sourced from government subsidies, 19,5% from local donations, 16.7% from fund raising collections, and 14.6% from membership fees. While this provides an overall picture of NPI income, it is not clear how other sources such as corporate social investment (CSI), international organisations, UN agencies, formal philanthropic organisations, and state and country aid agencies are incorporated. Foreign aid Between 1994 and 1999 the US was the largest overall foreign donor to South Africa providing around US $530 million, followed by the European Union Programme for SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 21

Reconstruction and Development (EUPRD) at US $420 million. Other significant country donors included the Netherlands, the Nordic countries, Germany and the UK, which together provided between an estimated US $15 million and US $45 million annually between 1994 and 2000. Government funding A review of DSD annual reports from 2009 to 2014 highlights that only a small percentage of overall annual departmental expenditure goes to non-profit institutions (NPIs). The majority of the expenditure is transferred to the South African Social Security Agency (SASSA) for social security grants. There are a number of other government departments that report transfers/subsidies to NPIs, some of which are outlined below. The Department of Arts and Culture (DAC) transferred 3.71% of its annual expenditure for 2013/2014 to NPIs, totalling R102.2 million. The Department of Sports and Recreation (SRSA) transfers the greatest proportion of its annual expenditure to NPIs. This amounted to 21% (R221.2 million) in 2012/2013 and 16.28% (R174.6 million) in 2013/2014. The Department of Public Works (DPW) transferred 7.45% (R448.6 million) of its total annual expenditure in the 2013/2014 financial year. This was a massive increase from the previous financial year 2012/2013 when it transferred 4.06% (R292.6 million). The Department of Health (DoH) transfers a very small proportion of its budget to NPIs. In 2013/2014, a total of 0.7% (R209.6 million) of the DOH annual expenditure was recorded as transfers to NPIs. The Department of Labour transferred 4.33% (or R88 million) in 2012/2013 and 5.38% (or R127.7 million) in 2013/2014. The Department of Science and Technology (DST) transferred 1.37% (or R84.7 million) to NPIs in 2013/2014. The Department of Higher Education and Training (DHET), which has not been a significant funder to the NPI sector, transferred approximately 6.51% (or R3 billion) to NPIs in 2013/2014. This was a significant increase from the 0.01% (or R5 million) of the previous financial year. 22 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

Official Development Aid (ODA) The international aid environment has changed significantly over the past few years, with organisations such as the United States President s Emergency Plan for AIDS Relief (PEPFAR) and the UK Department for International Development (DfID) scaling down on direct financial support to middle income countries. In 2013, DfID announced that it would end its bilateral Official Development Aid (ODA) programme to South Africa by 2015. USAID decreased its planned funding to South Africa from US$438.1 million in 2015 to US$374.2 million in 2016. South Africa continues to receive support from the Global Fund to Fight AIDS, Tuberculosis and Malaria. Between 2002 and 2016, 56 donor governments pledged US$42 billion through the Global Fund to South Africa. The European Union (EU) annually commits over R6 billion to South Africa in grants and loans to economic and social development, as well as governance programmes. ODA to South Africa between 2009 and 2013 remained relatively constant. International private donors In 2012, Africa accounted for 25% of international grant dollars, up from 14% in 2002. This increase was largely driven by The Gates Foundation. Africa-focused giving by other foundations increased by more than 90%, however this growth has not been linear. Health captures the largest share (51.8%) of Africa-focused giving, followed by International Development & Relief (31.8%), Children & Youth (35%), and then Women & Girls (20%). Local private giving The Nedbank Private Wealth Giving Report II indicates that 91 % of High-Net Worth Individuals (HNWIs) gave money, time or goods to social causes in 2012, down slightly from 2010 (94%). The report also shows a slight decrease in the value given, with 63% giving less then R 25,000 (up from 50% in 2010). Giving was most commonly targeted at Social and Community Development causes, such as hospices, children s homes and support for the aged. NPOs were the most popular beneficiary type. The most common form of giving other than cash was volunteering time to NPOs (43% of non-cash givers), followed by donations of essential items to individuals and NPOs. The report also highlights the limited use of formal giving structures as only 4% of respondents use a trust or foundation for their giving. SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 23

Corporate social investment Trialogue (2014) reported a total estimated CSI expenditure of R8.2 billion vi in 2013/2014, and that: The growth of corporate CSI expenditure has been a flattening over the last 10 years. The largest proportion of CSI goes to Education. Corporates are the top income source for NPOs (20%), followed by private individuals (15-16%), self-generated (10-13%), and foreign independent donors (11-12%). SA government support dropped from 15% in 2013 to 11% in 2014, whilst foreign state donors declined from 7% to 4% and NLB funding decreased from 8% to 7%. Endnotes i ii iii The research study was conducted by Mthente Research and Consulting Services. The Size and Scope of the Non-profit Sector in South Africa (Swilling and Russell, 2002). Although outdated, particularly given recent changes in terms of NPO deregistration and the impact of the global recession, this is the most frequently cited study on scope conducted to date. The Coalition comprises the Charities Aid Foundation, Southern Africa (CAF), CIVICUS, the Cooperative for Research and Education (CORE), the Legal Resources Centre (LRC), the National Welfare Forum (NWF) and SANGONeT. iv Salamon et al (2003). v Habib (2005). vi This figure represents a growth of 4% in nominal terms or a negative growth of 2% in real terms. 24 CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

KEY FINDINGS The majority of CSOs are Micro to Small with an annual income of less than R500,000 The greatest proportion of funds (in Rand value) comes from international sources n Micro n Small n Medium n Large n X-Large n International (40%) n SA Government (24%) n Local Citizenry (23%) n NLB (7%) n Self-generated (7%) WHERE THE FUNDS GO SOCIAL SERVICES HEALTH DEVELOPMENT & HOUSING 36% 27% 18% GAU WC KZN 42% 13% 12% SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 a

WHAT FUNDERS FUND International SA Government National Lotteries n Health n Development & Housing n Law, Advocacy & Politics n Social Services n Social Services n Development & Housing n Health n Culture & Recreation n Social Services n Culture & Recreation n Education & Research n Development & Housing n Health Local Citizenry SA Government n Social Services n Environment n Development & Housing n Education & Research n Social Services n Development & Housing EMPLOYMENT CONTRIBUTION SCENARIO 1 Likely Population Employment Range Million SCENARIO 2 Likely Population Employment Range Million 3 million 3 3.3 million 3.6 million 2 1 million 1.1 million 1.2 million 2 1 1 0 Lower Likely Upper 0 Lower Likely Upper ECONOMIC CONTRIBUTION SCENARIO 1 Likely Population Income Billion 400 358 billion SCENARIO 2 Likely Population Income Billion 150 125.3 billion 300 155.6 billion 200 256.8 billion 100 54.5 billion 90 billion 100 50 0 Lower Likely Upper 0 Lower Likely Upper b CIVIL SOCIETY IN SOUTH AFRICA FUNDING FEATURES & ECONOMIC CONTRIBUTION

We work to transform the relationship between civil society and funding agencies (private, business and state) in order to support and strengthen a vibrant civil society. Inyathelo: The South African Institute for Advancement www.inyathelo.org.za Community Development Resource Association (CDRA) www.cdra.org.za The Social Change Assistance Trust (SCAT) www.scat.org.za SUMMARY OF A NATIONAL RESEARCH STUDY OCTOBER 2017 c