THE FORUM
COMMENTS ON THE DRAFT POLICY ON FINANCIAL AWARDS TO
SERVICE PROVIDERS
3 JUNE 2004
INTRODUCTORY REMARKS
The Forum welcomes the fact that progress is being made towards the development of a revised policy to guide the financing of the social services, given that the policy as formulated in 1999 has not proved adequate for this purpose. However, although the draft policy has some positive components, we are very concerned that in general the present document and the process whereby it has been developed incorporate almost exactly the same problems as those relating to its predecessor. We therefore appeal for a halt to the present process and for a thorough involvement of stakeholders in the fundamental shaping of the policy, and not just in commenting on what appears to be virtually a finished product. Without such involvement we see no possibility of achieving a viable approach to the funding of the sector. Neither will there be a proper basis for the type of partnership between government and civil society which is required to achieve the Department’s stated mission, and to ensure that services are based on a cooperative approach and are efficient, effective and accountable as emphasised in the Preamble.
Comments on specific sections of the document follow:
SECTIONS 1 AND 2: INTRODUCTION AND SCOPE AND PURPOSE
The basic principles outlined in the Introduction reflect the broad consensus within the sector, which was actively involved in the development of the White Paper for Social Welfare and which united behind these during the transition to democracy. The statement that realignment of services in line with government policy “has not been the general trend” is made without any evidence being supplied, and we suggest that this is a sweeping and unfair generalisation. If indeed there are organisations which are still living in the past then the Department of Social Development should address itself to them specifically and not stereotype the sector as a whole.
The proposed policy is, we suggest, based on some shaky assumptions about the social service sector and especially the roles to be played by NPOs. Until there is a clear conceptualisation of the nature, scope and responsibilities of this sector, an effective financing policy will continue to elude us. Some of the misconceptions are as follows:
First misconception: NPOs have sufficient resources to expand their services to areas which have fewer services, and those who will be disadvantaged in such a process are privileged people with a lesser need for the services in question
Most social service NPOs are struggling to cope with the demand for their services within their present localities. They are not able to spread their programmes more thinly without seriously negative consequences for those to whom they are currently accessible, who are in many cases already inadequately served due to the financial constraints within which these organisations are operating. The people using these services are predominantly poor and marginalised persons. To move services away from these in order to serve other poor and marginalised people, or to spread the services so thinly that they are of no value, will solve nothing. Such an approach amounts merely to shifting the service deficits about on the map, and robbing some poor and marginalised people to help others. The only answer is to increase the resource base so that all who need services can have access to them.
Second misconception: The responsibility for making good the service shortfalls lies with the NPOs.
The responsibility for ensuring that all people are in a position to realise their socio-economic rights as per the Constitution lies in the first place with government. It is fully appropriate for government to seek partnerships with NPOs in order to carry out this responsibility, but they can only carry out such share of this responsibility as lies within their resources. If there are areas without services it is up to government either to provide these services or to seek the help of and provide support for NPOs in order to fill the gaps. It is completely inappropriate to blame hard-pressed NPOs which are struggling to deliver services under extremely difficult circumstances for these shortfalls. Equally, where emerging NPOs which have the potential to provide needed services are without funding, the solution is not to move funds away from those which are receiving subsidies but are only just managing to cope. This merely weakens existing, sorely needed programmes. It is up to government to help find additional funding to assist those who are being left out, if need be with the help of the corporate sector and foreign donors.
Third misconception: “Tightening” the present “transformation mechanisms” will promote the transformation agenda
If by the abovementioned “tightening” is meant an intensification of the practices which emanated from the 1999 financing policy, we would suggest that some of these practices are actually causing the current deficits in services rather than helping to resolve them. Intensifying these approaches is therefore likely to compound rather than resolve the problems. As will be discussed below, the problems of service delivery in the sector have arisen because of the lack of a clear conception of its responsibilities. This has resulted in a lack of any basis for effective planning for the financial needs of the sector. It is this which needs to be corrected if we are to make any progress.
Fourth misconception: Despite the currently inadequate funding available from either the state or the private sector, NPOs can be expected not only to deliver services to unlimited numbers of people, but also to make these services adequate and effective so that they will constitute “value for money”.
No other sector expects the above of non-government partners, because it is obviously impossible for any entity to deliver a service which is far beyond its capacity and yet remain effective. To speak of quality services in such a context is to make a mockery of the concept. In every other sector, government financing in public-private partnerships is dictated by the costs of the service. But this realisation has always been absent in relation to the social services, and it appears still to be absent from the thinking behind the present document.
SECTION 3: PRINCIPLES
The NWSSDF is in agreement with all the principles listed here; however we would differ in our interpretation of the principle of equity. The social service system as a whole is severely underfinanced and it is totally unfair to expect resources to be taken away from those who are currently receiving a service, which is often already inadequate, to serve those who are without services. This amounts to a redistribution of disadvantage rather than of wealth. The social services have always been a marginalised sector and should be a channel for redistribution of the resources of the country as a whole, rather than a target for the redistribution of their present miserably inadequate share of the budget. We would thus suggest that the need is in general not for a “redirection” of current services, but for an expansion of the resource base so that all, rather than just some, of those in need can be served. There may be some instances where there is a real problem of misdirection of resources, but these must then be clearly identified and closely examined, so that the particular issues involved can be addressed.
SECTION 4: SITUATIONAL ANALYSIS
The statistics provided here are useful in terms of providing some broad pointers to the developmental status of the nation, but we suggest that this is a very inadequate analysis for purposes of planning for the financing of the social service system. These are figures which all sectors require for an understanding of their broad context and for a concerted approach to the combating of poverty, HIV, unemployment and other mass problems. Poverty is undeniably the most serious challenge facing the nation – but it has to be faced by every sector. The Department of Social Development is already spending 95% of its budget on grants and pensions which are the country’s single biggest and arguably its most successful anti-poverty programme. But it has a host of other responsibilities which, while being closely interrelated with poverty, have to be addressed in their own right. Given that the Department needs to take the lead in planning for a service network which addresses the full range of social service needs of the nation, the kinds of data which are needed to serve as a basis for a social service financing policy include, for instance, the following:
- Numbers and size of communities requiring grass-roots development services for purposes of poverty eradication
- Numbers of youth requiring empowerment services
- Numbers of families affected by AIDS and requiring various forms of assistance
- Numbers of children in need of ECD services
- Numbers of abused, abandoned and neglected children and of those in prostitution and other forms of child labour
- Proportion of these children who will require statutory care vs community-based interventions
- Numbers of families requiring primary and secondary preventive services and reintegration services
- Numbers of persons with addiction problems
- Number of convicted criminals requiring rehabilitation services
- Number of first offenders requiring diversion services
- Numbers of crime victims requiring trauma counselling services
- Number of frail aged persons
- Number of these who require institutional care and number who require support services in the community
- Number of persons with severe disabilities who require support services
- Number of people with acute or chronic mental or physical health problems who require associated social services,
- ……..etc. etc.
It has long been pointed out by NPOs that there is a need for a proper audit of the responsibilities of the social service sector. Once such an audit has been conducted, we will be in a better position to begin estimating its financial needs and making systematic plans for these needs to be met. Until government together with the NPOs addresses this task, documents on financing will continue to look like efforts to force the NPOs to take on government responsibilities which are far beyond their capacity.
The 1999 study by Swilling and Russell cited in this section was never intended for the type of analysis which is required for the present purpose, and is of little help in taking us forward. The Swilling/ Russell figures in relation to fees for service require close analysis to determine what it is that they cover, and what type of “social services” they have included here, as the picture which is presented here is in our view a gross exaggeration of the ability of social service NPOs to generate income through fees. The typical social service NPO affiliated to the NWSSDF is able to garner very little in this manner because most of its clientele are poor. The study, which is five years old, is also quoted out of context to suggest that the sector is still following pre-1994 service patterns, even though the research did not investigate this issue and the researchers do not reach a conclusion, but rather raise a question in this regard. We suggest that specific research be initiated which is properly designed to investigate the current state of the service network. In terms of the Forum’s experience of its stakeholders we believe that a very different scenario will emerge. In any case such research is urgently needed for planning purposes, and for the development of policy, including a financing policy, which is rooted in reality rather than speculation and stereotyping.
SECTION 5: POLICY AND LEGISLATIVE FRAMEWORK
It is suggested that research be directed specifically towards the implications of all the pieces of legislation listed in this section, and any other statutes which contain a social service component, as part of the abovementioned process of developing an audit of the social service needs of the country. This would help in developing estimates of the share of the budget required to enable the sector to carry out its responsibilities.
SECTIONS 6 AND 7: SERVICE SPECIFICATIONS AND TRANSFORMATION
The NWSSDF is in broad agreement with the framework set out in these sections, subject to the allocation of funds in ways which properly take the responsibilities of the relevant organisations into account. NPOs must not be expected to expand into rural areas if this will mean removing services from, or seriously weakening services to, high concentrations of people in need in the urban centres. Thus what will be required is additional funding to make the extension of NPO services possible, or alternatively for the state to provide the missing service component itself. Similarly, organisations which face a constant demand for statutory services, which are often required for the protection of the most vulnerable, will require additional funding in order to preserve and develop the primary and secondary preventive components of their programmes. It must be understood that the more funding shrinks, the more an organisation ends up focusing on crisis-oriented tertiary services because these involve life and death issues which cannot be deferred. To date, the Department’s calls for a shift towards prevention have unfortunately been accompanied by a reduction of funding in real terms for these services, as well as a continued dependence by government on these organisations for the delivery of statutory services. It is impossible to expand primary and secondary preventive services under such conditions. Similarly, the demand for organisations to share resources with smaller organisations needs to be backed up with the necessary support to make this possible. As organisations become more and more cash-strapped, their resources increasingly have to be channelled into keeping their own core services going.
Finally, while NPOs are already heavily engaged in fundraising from non-government sources and will continue on this path, it is not acceptable for government to trade on this factor and call for an unrealistic level of independence from social service NPOs. There is strong resistance among foreign and private sector donors to paying for work which is regarded as the direct responsibility of government. Also, for certain types of work, such as statutory social services, government should not be talking about financial independence at all. It should be purchasing such services in full as would any other sector of government when delegating a core responsibility to a private partner. At present it is the NPOs which are subsidising government through the delivery of such services, and this is both an unjust and an unsustainable arrangement.
SECTION 8: FINANCING
The financing options mentioned in this section are acceptable. The possibility of shared financing offers a way in which organisations can cooperate to overcome the fragmentation of services which is a feature of our system for historical reasons. This is a potentially very useful approach. The long-term contractual financing approach is one which is appropriate to a great many organisations which deliver essential social services that in their very nature can never become self-sustaining. Within this approach we would like to see, clearly outlined, a model whereby the state delegates relevant responsibilities to NPOs on the basis of full funding of a basic service package, according to the actual costs incurred. Such NPOs could then commit to an additional contribution via their own fundraising, for purposes of improving service quality, conducting research, piloting new services and so forth. Statutory social services are an obvious candidate for such an approach, and various other types of service which are central to the implementation of the Department’s constitutional responsibilities could also fall in this category.
While the methods of payment as outlined in the document appear satisfactory, in practice at present there are very serious problems. Many organisations are finding themselves crippled by a pattern of chronic lateness in payments by provincial departments. There needs to be a firm requirement set out in the policy document for timeous payment by government of the agreed amounts.
As regards eligibility for financing, the Forum is broadly in agreement with the criteria as stated. However we would suggest that “the Department’s priorities and objectives” (clause 8.4.2) should be arrived at in consultation with its NPO partners and must include statutory social services for which the Department itself carries the primary responsibility. What has happened in the past is that there has been a tendency by the Department to deprioritise these issues and reduce funding for them, while continuing to expect the NPOs to deliver them at an acceptable standard. In relation to the distribution of services (8.4.5), we would emphasis, as mentioned above, that this is a matter which the Department itself must address, although it may call on the help of NPOs for this purpose. Each NPO operates within the limits set by its particular support base, and this cannot simply be shifted or expanded at will. The Department has the options of delivering the necessary services itself, or of making it financially possible for an NPO to move into an unserved area. The current pattern of blaming NPOs for the lack of services in rural areas, while nothing is done from the Department’s side to enable them to expand their services into these areas, is unacceptable and a source of resentment. Rather, the NPOs deserve great credit for shouldering the massive proportion of the social service workload to which they are already committed.
Similarly, many larger NPOs share of their skills and infrastructure with emerging organisations. But the resources of these organisations are already very thinly spread and the mentoring role is very demanding in terms of staff time and administrative backup. Again, if the Department wishes to extend this capacity there is a need for it to strengthen the infrastructure of the organisations concerned so as to allow them to carry on with their core business while also providing this type of support to smaller bodies.
Section 9: CONTRACTS
This section appears fair and reasonable.
SECTION 10: MONITORING AND EVALUATION
This section is generally acceptable, provided that the Department does not have unrealistic expectations of what is to be delivered relative to the amount of funding it is providing. On the basis of current subsidies, plus the limited amounts which organisations are able to raise from other sources, it is often wishful thinking to expect them to follow best practice models, train their staff properly, continuously evolve their products, keep pace with the latest developments etc. These things tend to fall by the wayside when an organisation has to use too many of its resources simply to survive. Such demands can justly be made if the Department makes a simultaneous commitment to properly playing its own role in the financing of services. In addition it is of vital importance that officials do not interpret “value for money” (p28) in terms purely of numbers served. Government must take into account that there are limits to the capacity of every programme, and attempts to pressurise NPOs into taking on more than they are equipped to manage leads to services which are ineffective, or which may even be a danger to those served, because they do not allow for service delivery of an adequate quality or at necessary levels of skill and intensity.
SECTIONS 11-14: REDUCTION, SUSPENSION AND TERMINATIONS OF FUNDING; DISPUTES; COMMUNICATIONS AND CONSULTATION
The Forum supports the content of these sections, and welcomes the commitment to consultation and communication. We would ask that this approach be immediately brought to bear in relation to the present document - i.e. that a proper consultative process be engaged in and that this policy be reworked accordingly.
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