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SUBMISSION TO THE PORTFOLIO COMMITTEE ON THE DISTRIBUTION OF SPECIAL FUNDS

The Community Chest is a fund-raising and grant-making organization that supports the maintenance and development of services provided by NGOs and CBOs. With a declining availability of funds, they aim to distribute adequate funding to hundreds of organizations facing growing needs and inflationary requirements.

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SUBMISSION TO THE PORTFOLIO COMMITTEE ON THE DISTRIBUTION OF SPECIAL FUNDS

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  1. SUBMISSION TO THE PORTFOLIO COMMITTEE ON THE DISTRIBUTION OF SPECIAL FUNDS

  2. INTRODUCTION The Community Chest is a fund-raising and grant-making organisation. Its primary aim is to assist organisations with the maintenance and development of their services. The core activities include: Fundraising through multiple sources; Capacity Enhancement Programmes; Developmental Funding of NGO’s and CBO’s. In recent years we have distributed in excess of R 14 million annually to 500 Welfare and Development projects in 10 different sectors earmarked for development and care. Our ambit of funding includes social services and development. There are currently 21 Community Chests in South Africa; the Western Cape being the oldest and largest. Today they support almost 800 organisations nationally, distributing approximately R 25 million annually to services most critically in need of development within the South African context.

  3. LEGAL FRAMEWORKS What kind of an organisation are we?   ·NPO Status and registered in accordance with the NPO Act, with the Department of Welfare ·Voluntary Association Tax Status: We have complied with SARS requirements in accordance with the amendments to the Income Tax Act ( Taxation laws amendment Act 30 of 2000). As required, we have applied to the Receiver of Revenue in Pretoria for a) Exemption from Income Tax in terms of section 10(1)(cN) – Prior to the amendments we enjoyed tax exempt status in terms of 10(1)f of the IT Act, IT Ref 613/496/03/3 and b) requested approval as a Public Benefit Organisation (PBO) in terms of Section 30(3). In attempts to qualify for 18A tax status the Community Chest has had to establish an independent entity ( Community Chest Section 18A Fund NPO 016 287 ) to separately channel donations to organisations that will qualify for the latest tax deduction and have also requested approval as a Public Benefit Organisation in respect of this entity.

  4. OPERATIONAL Paid Staff total Paid full-time: 34 Paid part-time: 4 Volunteers Unpaid part-time: 9020 The Community Chest contracts additional staff for specific tasks, as and when necessary. The Annual Community Carnival makes use of approximately 9000 volunteers. Our Committees and Board members are all volunteers i.e. Board members: 20; Finance Committee: 8; Grant Management Committee: 25; Special Events Committee: 8; Fundraising Donations Committee: 4.

  5. STATEMENT OF NEED The Community Chest of the Western Cape has historically Invested donations to Welfare and Development Organisations donated by members of the community through various fundraising methods. Fundraising programmes have included appeals to Companies; Employees at their workplaces; Individuals; Trust and Estate Administrators and Local Councils; Competitions and Special Events; and Investment of Capital Grants and Legacies. Over the past few years the Community Chest has seen a reduction of its active fundraising income ( investments being erratic and dependant on market value ) which has resulted in a steady erosion of its reserves. This has seriously restricted our ability to distribute adequate funding according to the growing needs and inflationary requirements of the hundreds of NGO’s and CBO’s that we support - funding operational costs not commonly supported by other donors. The environment in which the Community Chest functions, has changed significantly over the years seriously challenging our ability to ensure the future of hundreds of welfare organisations in the Western Cape. The changes now, are more marked than ever before, changes in legislation, corporate policy, economy and increased social needs in the community such as HIV/ AIDS and TB, have impacted on the traditional activities of our organisation considerably.

  6. Ø Funds available from all sources has been declining, particularly as a result of the redirection of foreign donor funding to NGO’s by international donors. Many organisations are continuing to lose invaluable foreign funding and inconsistent corporate social investment policies are severely undermining sustainable development within a particular development sector resulting in increased demands for support from the Chest. ØThe number of organisations involved with formal and informal fundraising has increased significantly over the last 10 years making demands on what can be regarded as limited resources. ØIn addition to these trends, corporates have been setting up their own Corporate Social Investment Departments in lieu of using community-based organisations like the Chest for their social investment. ØIncreased needs and social problems such as HIV/AIDS and TB have forced us to dedicate additional financial resources to services addressing these issues.

  7. ØThe introduction of the State Lottery in 1999, effected a significant estimated financial loss of a minimum of approximately R 2 million per annum for the Community Chest. Since the inception in 1993 the Community Chest Scratch Card Division, (the 1st of its kind in the country), contributed an outstanding R 28 million to social services in the Province. Closure of this valuable income generation department has therefore been an enormous blow to the Chests fundraising efforts. This has also affected the income of the many welfare and community development projects that relied on this type of activity as an integral part of their fundraising strategy. In addition to the loss in our income for distribution, we are therefore also faced with increased appeals from these organisations. The advent of significant developments in the Tax Legislation pertaining to the Non Profit sector, will provide new opportunities for many organisations and donors for the first time. The Community Chest has played a supportive role in the NPP Tax Campaign thus far and will continue to do so. However, those organisations who do not qualify for 18 A will be considerably disadvantaged in their ability to attract donors. The Community Chest is committed to ensuring that additional resources are distributed to these critically needed services and we anticipate increased requests from organisations in those sectors.

  8. The most important need facing the Community Chest is the ability to grow its operations to ensure sustainable community development within the NGO & CBO sector. We need to continue to increase our income in order to address the growing number of appeals received each year . These appeals range from established projects, to increasing requests from numerous community based initiatives. The active fundraising activities over the past few years have resulted in significant shortfall, forcing the Community Chest to utilise its reserves and income intended to fortify reserves, to maintain adequate & budgeted grants to beneficiaries. Due to the poor performance of our investments and a lack of Scratch Card income we were forced to deplete R 3 026 067 of our financial reserves to cover organisational costs in order to maintain our distribution to beneficiaries. Continued depletion of reserves is not a viable alternative to the sustainable development of the Community Chest nor the hundreds of organisations it supports. Our policy dictates that at any given time, at least 3-4 years of reserves must be available to ensure ongoing support for the Communities Welfare and Development services.

  9. General Programme: Many community-based organisations (CBO’s), providing essential services at a grassroots level, struggle to survive. The Community Chest has identified that many of these organisations are not adequately equipped with the necessary information and skill, needed to successfully manage their operations and access funds. Financial accountability and sound business management practices are particularly lacking. To ensure the existence of vital community services, the Community Chest has embarked on developing the skills capacity of various community-based organisations. Through this programme the Community Chest ensures that the poorest of the poor are the major target of its donors funding. One of its most important benefits is that, as organisations become more streamlined and efficient, a smaller percentage of their resources are used for administration, increasing their capacity to assist the people they serve. This programme has opened channels of communication with grassroots organisations, alerting the Community Chest to the most pertinent needs in the community. It provides the Chest the opportunity to conduct studies that can indicate whether an area or sector is being over- or under-resourced. It also enables us to establish the degree to which a particular service is of benefit to the development of individuals and communities.

  10. CLARIFY AMBIT OF FUNDING The Western Cape Community Chest funds programs and services in the Welfare and Development sector Internally we have accepted the following as our definition of development : “Any work reflecting a process of enlarging people’s choices” SPECTRUM OF SERVICES GRANT MANAGEMENT

  11. SERVICE POOREST OF THE POOR COMMUNITIES Some information on the poverty levels in our Province • 30 communities in the Province have a ranking that indicates Worst Case Scenario Poverty and Vulnerability • 17 of these communities are to be found in the Mitchell’s Plain Magisterial District • The majority of the communities at the top of the list are from Informal Settlements in The Cape Metropolitan Area • Informal Settlements around Grabouw and Robertson are top of the list in Non-Metro Areas • Other Rural Areas high on the list are GEORGE <0.590: (Rhobololo, Xolweni, Bongani, Covie, Witlokasie, Nekkies, Flenters, Damse Bos, Concordia, JCC Camp) • VREDENDAL (Rietpoort, Koekenaap), PAARL, WORCESTER (Fairy Lang, Chris Hani Informal) • Rural Areas with low population figures but still Vulnerable and Poor <400 : CERES, VAN RHYNSDORP, LEEUGAMKA, BEAUFORT WEST and OUDTSHOORN

  12. ADDRESSES A NEED We do not follow the fashion in grant making. The money goes to where it is most needed. Whilst we are part of the national agenda in addressing the needs of society, the Community Chest has often been part of setting the priorities for this Province. Our funding of service networks and engagement in strategic alliances has resulted in these activities gaining support from provincial and local government. In addition, we service the needs of both donors and beneficiaries. By identification of projects and the mentoring of projects, donors are convinced that their money is reaching its intended target. Beneficiaries are able to access funding previously inaccessible to them. On average the Community Chest has distributed R14-million in cash over a period of 5 years. This amount is considerably increased when the cost of training/capacity building and in-kind assistance is added. • DO NOT SOLICIT APPLICATIONS – ON AVERAGE PROCESSES 950 PER ANNUM, UNLESS PRIORITY NEED FOR SUCH A SERVICE This is inclusive of cbo’s, pbo’s and ngo’s delivering services in deep rural, rural peri-urban and urban communities.

  13. Applications are processed on merit and the need reflected, both financial and in service rendering, qualifies the organisation for the level of grant allocated.Organisations are assessed on the levels of sustainability they may or may not attain.Sustainability choices: Financial sustainability Impact sustainability Institutional sustainabilityOur grant making is unique in that we fund operational expenditure, paid monthly, directly into the organisation’s bank account. • INTERNAL PROCESS AND GRANT MANAGEMENT COMMITTEE All applications are subjected to strict internal and external scrutiny. Internally, all applications are processed by the staff and prepared for volunteers of the external committee (Grant Management Committee). This currently consists of 23 persons : 6 social workers and 17 chartered accountants (some retired, some semi-retired and others are still gainfully employed). We cannot begin to calculate the value this expertise has for the Community Chest.

  14. DEVELOPMENT • BACKGROUND AND HISTORY The Community Chest has been involved in the development of grassroots communities for the past 10 years. It is our intention to enhance community-based organisations to deliver better services. We are involved in capacity enhancement, knowing that we cannot change the face of CBOs overnight. Development is about engaging people in a process that results in people having greater choices in their lives. In areas where the ultra poor is expected to survive it is the poor that are delivering services CURRENT DEVELOPMENT • Basic Organisational Development (EOC) • Management • Bookkeeping • Meeting appropriate legal frameworks • Proposal writing • Assessment, Monitoring & Evaluation of Community-based Organisations (EXTERNAL) • Corporates • Provincial Government • Mentoring of Emerging Community-based Organisations (INTERNAL & EXTERNAL) • Preparation of PBOs to benefit from New Tax Laws

  15. OUTCOMES 2002 our 1000th attendee graduated. 2002/2003 Financial Year – 185 CBOs have received continuous funding for more than three years and have accessed state and private funding previously inaccessible. This has been achieved as a direct result of completing the EOC Course and implementing the learning. The Community Chest has been instrumental in the development of grant management policies at local and national level. The IDT, Ithuba, local Government and Provincial Government are a few of those who have benefited by our expertise. • EXPANSION The Community Investment Team engages the attendees and their organisations in constant evaluation. To this end we have identified additional courses required with the new demands being made on organisations by donors and State. 1. Project Management 2. Office Skills 3. Governance Development 4. Business Administration 5. Events Management 6. HELPLINE : (021) 424-3344 7. Grant Management 8.Community Profiling 9. Facilitating Workshops on Community / Individual Rights

  16. CONCLUSION Our ambit of funding determines who may access financial resources from the Community Chest. However, as we see ourselves as a resource development organisation, we are willing to train / re-orientate any person involved in developing services or addressing needs of our communities to give meaning to our democracy. RECOMMENDATIONS • Special funds such as the ones under discussion could be effectively invested in communities through partnerships with lasting credible resources and structures within the various Provinces. These will differ from Province to Province.. • This could lead to the development of a much needed accrediting grant distribution council which has a thorough understanding of the needs and priorities of the Development agenda.. It could result in the following: • Rule out duplicate funding • Create synergy as funds may be earmarked for different aspects of an organisation • Set standards • Go a long way to developing sustainability • Outcomes • These special funds could also jointly develop models for grant distribution indigenous to Provinces and South Africa. • Explore the need for training and capacity building in a structured and strategic fashion.

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