This working document seeks to develop a new framework for a policy on financing the social service and development sector. It is in response to long standing need for a complete review of the current Policy on Financial Awards to Service Providers which falls far short of the needs of the sector and the people it serves. This working document reviews the scope, aims and objectives of a financing policy.
There is growing international recognition that social and development services are the best way to establish a social security platform in any society, and recently it has been announced that the United Nations has established a specific desk to work on this arena. Currently, there is a crisis in financing critical social and development services in South Africa.
A new framework for financing the organisations that provide social and developmental services needs to:
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move away from the old model of funding to a new model of funding;
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fund core social and development services on a sustained basis rather than rely on allocations of “left over”, incidental or discretionary funding to the sector;
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fund services based on specific guidelines and criteria; and
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outline how government is obliged according to the relevant mandates to fund social and development services.
A national audit of social service and development needs in South Africa must inform any financing policy for the sector.
This framework redefines the notion of partnership in the delivery of social and development services. Any new financing policy must include a clear definition of partnership between organizations and government and the scope of this relationship. Currently, there is not a clear understanding of who is going to do what and who is going to fund what in this sector.
1.Proposed title for a new financing policy
The working proposes the following name for a new funding policy:
A Financing Policy for Social Welfare and Development Services
The term used in current policy frameworks – “financial awards” – implies a discretionary amount that does not allocate the necessary level of responsibility undertaken in this sector for providing critical services. With the development of a new framework for financing sector must also include the spirit of partnership that the social services and development sector requires to function fully.
2.Aim of a revised policy framework
A new framework for financing the social and development service sector must:
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Define the scope of what the sector must undertake (the responsibilities of the social development sector) and set out how these activities are to be funded as based on mutually agreed upon criteria and costing models.
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Clearly define the roles of different stakeholders in the sector
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Set out how services should be funded.
3.Scope and mandate of the sector
The mandate of the sector is to address social vulnerability and poverty in South Africa and promote the social wellbeing of the population of South Africa.
While it is government’s responsibility to ensure an equitable distribution of services.
The responsibility for full coverage lies with government and government is at liberty to seek out organizations to partner with on services.
The scope of the sector is huge and is defined by the policies and legislation, aims and objectives of the various departments.
These legal mandates come from the following:
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responsibilities arising from the bill of rights in the constitution;
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responsibilities arising from international conventions, treaties and protocols;
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responsibilities arising from specific statutes;
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responsibilities arising from national policies and strategies;
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responsibilities arising from provincial and local government strategies.
A national audit of social and development services and needs of the population in South Africa must be conducted. A new financing framework must refer to the outcomes of this audit and costing of services.
4.Extent and costing of services required
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A new framework should set out the broad types of services and, if necessary, audit services each province.
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The national department of Social Development is responsible for ensure this information is available and, on the basis of this information, need to formulate tangible measurable objectives towards the provision of services in order to attain equity in service delivery to all areas.
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All services linked to legislation, policies, protocols, treaties and conventions to which South Africa is party have to be financed by this policy.
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The national department of Social Development must safeguard the resource allocation to CSOs in provinces and ensure that national treasury covers what has emerged from the social audit (in relation to social development services) and monitor the use of that funding on social development specifically. Equitable shares are not an appropriate vehicle to ensure that social development services are met.
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Financing for social and development services must be ring fenced to cover both government and CSO services.
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With reference to section 11 of the PFASP (page 23) – there is only one paragraph describing the contracting process. This working document argues that there are different kinds of financing contracts (was subsidies) and, therefore, there should be different ways of reporting and agreeing on how to pursue these.
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Some services need shorter contracts and some services require longer contracts. There should be built in recognition of CSOs performance and the requirements for funding should be adjusted accordingly (e.g. these organisations shouldn’t have to submit reports every quarter).
5.Roles and responsibility of government and CSOs to ensure service delivery
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There needs to be an ongoing discussion about which services are appropriate for government and which services are appropriate for CSOs to provide. This might be influenced by the availability of provincial resources and conditions and needs in particular areas (for example, geography, availability of CSOs, departments etc).
5.1.Roles and responsibilities of government
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The cost of core services that are required to fulfill a legal mandate should be covered in full by government (including the cost of statutory services).
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A general principle is that government departments should fund the agreed upon core costs of services and these will be applied uniformly in all provinces. The departments will have the prerogative to provide additional funding over and above core funding depending on the service provided, but they are responsible for not paying less than the core costs of services.
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It is government’s role and responsibility to provide a statutory framework for the financing policy in consultation with CSOs.
In addition to the above points, government is responsible for:
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providing a structure for the governance of the country within the legislative and policy frameworks;
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to ensure and provide the necessary mechanisms and structures for communication and consultation;
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providing an enabling environment for the delivery of social services;
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providing adequate funding and other resources for the core services delivered by CSOS;
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providing a mechanism for evaluation and monitoring of government funded services;
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consulting with the social and development services sector in the planning of core services;
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working towards the continued growth of an independent and creative social and development services sector;
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promoting the value of the social and development services sector to achieve common aims and objectives;
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providing for the participation of the social and development services sector in the development of public policy.
The above must account for the different levels of government.
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National government is responsible for developing, maintaining and updating overall policy, making sure a financing system is applied throughout the country (as described above, they should be collecting information nationally to inform the latter).
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Provincial departments are responsible for applying a uniform system for evaluation, ensuring that the provincial budget allows for the implementation of national standards.
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The national Department of Social Development should liaise with national treasury and provincial departments of Social Development should liaise with provincial treasury.
5.2.Roles and responsibilities of CSOs
CSOs have the following roles and responsibilities, including to:
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Deliver services efficiently and effectively within the accepted ethics and paradigm of the policies and strategies which have been developed in consultation with the CSO sector and the state.
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Provide services in an open, equitable and accountable way.
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Be accountable to the state for any public funds received and report on activities in such a way as to command public confidence.
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Function as a watchdog over the principals and policies of the government in the interest of the consumers of services and the wider public.
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Ensure the coordination of services and engaging the relevant department in this discussion.
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Work in partnership with government to achieve common aims and objectives.
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Advise government on issues of concern.
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Advocate and campaign for change as a response to needs.
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Raise funds elsewhere for services that are not core services (CSOs should not be penalized for raising funds).
5.3. Principles of sound partnership
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A financing policy should facilitate a sound partnership between the states and CSOs. Such a relationship is rooted in the acceptance by both parties of their shared vision and responsibility for the delivery of services within the accepted policy framework.
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Government has the primary responsibility to ensure that services are available. It can provide services itself and can enter into partnerships with others, such as civil society organizations.
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Government needs to look at what the core costs of these financial services are.
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In this partnership, it is the responsibility of government in collaboration with the community to ensure service delivery.
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In this partnership, civil society must be accessible to the state for purposes of joint planning, information sharing and decision-making.
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The expectations of each partner must be balanced with their respective capacity.
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The expected level of performance, outcomes and operating conditions must be clear and specific.
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Arrangements for training and capacity building where appropriate.
A partnership that facilitates financing of the social and development services sector must meet the objectives of the Constitution, White Paper for Welfare and PAJA.
Other principles of sound partnership include:
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one based on mutual respect for the distinctive contribution of the partners;
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good corporate governance and accountability;
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community participation, and involvement, in service delivery and management;
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openness, transparency and accessibility between the partners;
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two-way communication that is accessible to all partners;
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clarity on roles and responsibilities of different partners;
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sufficient support for institutional capacity and resources to assist vulnerable people/communities;
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a ‘we’ attitude rather than a ‘them and us’ attitude;
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a commitment to make the partnership work;
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specific objectives that have been agreed upon ‘up front’;
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adequate decision making processes;
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opportunities for recognizing success of each partner.
6.The transformation imperative
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There is a need for a system that caters for all people in South Africa. The social services and development system must be accessible to everyone in need of a service on account of vulnerability, poverty and marginalization.
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The change in the context in South Africa (new policies and an emphasis on rights) means that the sector needs a policy framework that enhances service delivery as opposed to focusing solely on transformation. The social and development service system must be informed by a rights based approach and needs a financing policy that supports. (***move this as a principle to the beginning of the document?).
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There must be continued transformation to ensure that services are accessible to everyone in each community.
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The needs of each community and individual need to be addressed within a development orientated framework.
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Government must accept responsibility for ensuring that there is total coverage and, therefore, must finance the sector in a way that means that CSOs don’t have to be excessively dependent on fees (therefore excluding the poorest people).
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The government has the overarching responsible for ensuring that a system is implemented that provides services for all people in South Africa. Civil society in partnership with government will be financed to contribute to the implementation of this national social services and development system.
6.1.Financing implications for transformation
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Government funding needs to extend to all needs in all areas of the country and must aim to remove the current overdependence by organisations on fees for the running of their core services.
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Where government needs the support of CSO partners to render new services, funding will be made available by government for this purpose.
6.2.NPO responsibilities in transformation
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Financing policy must account for providing services for all people in South Africa.
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Necessary resources must be made available to meet these needs, with a rights based approach to social and development services in mind. NPOs are responsible to assist with providing these services where they have the available resources.
7.Funding
7.1.Values and principles for the financing policy
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A financing budget should incorporate annual increases for CSOs in terms of their allocation for the provisions of core services and for staff.
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Core costs should incorporate the principal of equal pay for equal work – including, adjustments to state salaries which should be followed by adjustments to CSO salaries.
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A financing policy must outline a fully funded agreed upon core costs payment
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CSOs should get paid for the services that they deliver and if the sector can deliver services more efficiently than government in a certain area, this should be considered to ensure access to service delivery for all.
7.2.Government funding
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Core services (statutory services) that are required to fulfill a legal mandate should be covered in full according to mandated obligations outlined in section 3.
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A general principle is that government departments should fund the agreed upon core costs of services and these will be applied uniformly in all provinces. The departments will have the prerogative to provide additional funding over and above core funding depending on the service provided, but they are responsible for not paying less than the core costs of services.
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Types of funding:
1.Core services mandated by legislation, the constitution and core policies should be fully funded by government
2.Funding based on the agreed upon costing of service that is uniformly applied in all provinces.
3.Government should make provision for the discretionary funding of additional services nationally and in provinces.
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The annual presentation of DSD bids to national treasure should be preceded by a national social service needs audit and the associated costing.
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Local authorities must facilitate the operation of social service and development organisations by exempting core social services from payments of rates and taxes and from fees for legally required registration certificates (e.g. R1500 for a health certificate).
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There needs to be an integrated and coordinated financing policy between the spheres of government that ensures that organisations providing core services can comprehensively (holistically) meet the social and development needs of the country. There also needs to be an integrated and coordinated approach that uses taxes and rates to support core services in all areas of South Africa.
7.3.Funding from non-government sources
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CSOs undertake to raise funding for services that are not core services, which is intended for the improvement of the services that they can provide.
8.Forms of Funding
In order to fulfil its mandate, government works in partnership with CSOs in the social and development services sector. Government will provide the following types of financing to its partners in the sector:
1.Core services mandated by legislation, the constitution and core policies should be fully funded by government.
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Full long-term funding of core operational costs of constitutionally and/or legally mandated activities.
2.Funding based on the agreed upon costing of service that is uniformly applied in all provinces.
3.Government should make provision for discretionary funding of additional services nationally and in provinces. These include:
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Seed financing
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Capital financing
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Venture financing
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Partial financing
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Shared financing
4.Financing could be provided as an incentive to deliver a particular type of service within any of the categories.
9.Methods of payment
9.1.Contractual obligations of government
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Financing will be provided prior to the period of service delivery to ensure that core services can be rendered during that period.
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Financing must be dependable and on time.
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Financing must be accompanied by payment notification in order for partner organisations to identify the core services/programmes for which the funding has been received.
9.2.Eligibility for financing
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CSOs must fulfill legal requirements for providing core services.
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CSOs must demonstrate the ability to provide core services.
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CSOs must be financially accountable.
10.Requirements of funding
The following points describe the requirements for funding:
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A nationally standardised business plan that all funded organisations will submit to government.
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The content of Service Level Agreements must be negotiated in advance and must be legally binding (both parties must sign the agreement prior to delivery of core services).
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Any agreements for financing of core services should be binding on both parties.
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Requirements for financing should make provision for inflation and for the provision for a stable labour force and for training and development.
11.Monitoring and evaluation
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Monitoring and evaluation ensures accountability from both partners on the spending of public money. It also provides essential data required for the planning of core services.
11.1.M&E obligations of funded organisations
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All funded organisation are accountable and must be compliant with relevant legislation, policies and norms and standards.
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Organisations must ensure that financing is allocated to the services that it is intended for.
11.2.M&E obligations of government
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To establish a national benchmark for cost efficiency and for professional effectiveness, in consultation with the CSO sector.
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To determine minimum service conditions in the social service and development services sector.
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The establishment of agreed core costs for core services.
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Government is responsible for monitoring service provision by CSO partners.
11.3.Criteria for sound M&E processes
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M&E processes must ensure that client confidentiality is protected and privileged information is only accessible based on a stringent code of ethics that has been mutually agreed upon by government and its core partners.
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Monitoring and evaluation requirements need to be integrated between departments and spheres of government.
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Monitoring and evaluation processes must be standardised and designed purposefully and with key issues in mind such as, the measuring of impact and promotion of best practice; and, the gathering of data needed for service planning and budgeting.
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There needs to be monitoring of people whose service needs are not being met in parallel with what services have been delivered. This will determine where there are gaps in service provision.
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There needs to be a standardisation of the timeframes for periods of monitoring and evaluation (which have been predetermined by different spheres of government) so that they can be correlated to inform annual statistics.
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Monitoring and evaluation only has value if it is being shared with organisations that are being monitored. In order to continually improve the provision of core services, organisations must be kept informed of the outcomes of M&E processes.
12.Reduction, suspension and termination of funding (refer to PFASP document)
Please refer to the PFASP for this section where the following issues are considered:
Circumstances that may result in reduction, suspension or termination
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Government has the right to reduce, suspend or terminate financing as consulted with the organisation providing services
Remedial action to avoid reduction, suspension or termination
Processes to be followed
Appeal process
13.Disputes (refer to PFASP document)
Please refer to the PFASP for this section where these issues are considered
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Disputes should be allowed
14.Communication and consultation is a non-negotiable
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In addition to the current policy section on communication and consultation in the PFASP, a formal communication channel needs to be established that will ensure that both the department and organisations have access to information on the needs of service recipients.
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The National Advisory Board as legislated by the National Advisory Board Act (2002?) and the White Paper on Social Welfare (1997) should become one of the mechanisms for communication and consultation within any financing policy.
15.General administration
A national strategy and support from the national department will guide the implementation of the policy and this should fall within an integrated framework.
16.GLOSSARY OF TERMS
In this working document the following terms apply:
Government refers to all three spheres of government – national, provincial and local government
Civil society organisations refers to CSOs, CBOS, NPOs which may operate at national, regional, provincial or local level.
Mandatory financing refers to the funding of core services provided by Civil Society Organisations (‘Subsidy’ or ‘financial award’ has not been used throughout the working document and are considered inappropriate terms)
Funded partners or organisation – a new framework will refer to a “funded partner” or organisation and not a “service provider”.
Furthermore, the following terms included in the PFASP are ill considered:
Well established organizations: the distinction in the PFASP between well established organisations and newly established organisations is unhelpful in the context of the mandate to provide core services. All organisations that assist in this mandate required ongoing financing for core services.
Transformation: the definition of transformation (PFASP, Glossary of Terms, p34) does not clearly articulate what needs to happen in relation to service delivery. A definition of transformation of social and development services must articulate a rights based approach to accessing service delivery.
17.Way forward on the working document
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JSC members to review working document and send comments and feedback to Karen by Wednesday 21 July.
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Willie to provide details of international trend emphasising the importance of social and development services, which can be used as an introduction to the working document.
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Marieta to provide details of the King III report in relation to the M&E section – specifically how administrative expectations can hamper service delivery.
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Note the terms included in the glossary of the PFASP that are inappropriate.
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