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Cornerstone Economic Research

Trends in the Gauteng provincial government's budget allocations for funding NPO's

Conrad Barberton & Jonathan Carter

Cornerstone Economic Research

14 June 2005

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The 2005 Gauteng Budget shows a significant cut in the allocations to non-profit organisations (NPOs) that assist the Department of Social Development provide welfare services to vulnerable groups in the province. Compared to 2004, the budgeted allocation for 2005 has been cut in nominal terms by R117million, from R397m1 to R280m. This represents a nominal cut in funding of some 30%.

If the Gauteng Provincial Legislature approves the 2005 Budget, and the above mentioned cut in funding for NPOs gets implemented, it will result in very significant declines in the quantity and the quality of services delivered to vulnerable children, people with disabilities, people with HIV/AIDS and the aged. This will be in direct conflict with the provisions in the Constitution that require the progressive realisation of social welfare services.

The proposed cut in funding has prompted widespread concern among NPOs that rely on these funds to pay for or subsidise the services they deliver. The Gauteng Welfare Forum for Social Services has been established to represent the interests of the NPOs likely to be affected by this cut in funding. To gain a better understanding of trends in the Gauteng Provincial Government's budget the Welfare Forum commissioned Cornerstone Economic Research to investigate:
  • Trends in the Gauteng Provincial Government's budget allocations, with particular reference to allocations for transfers to NPOs;

  • Possible reasons for the cut in transfers to NPOs in the 2005 Budget and MTEF;

  • Which programmes or areas of expenditure are benefiting from the reprioritisation of the budget; and

  • Trends in the funding of NPOs in the social development budgets in other provinces.
This report sets out our findings on these issues.

  1. Information presented by the Department of Social Development to the Portfolio Committee on Social Development at a hearing on 27 May 2005 indicates that the transfers to NPOs in 2004/05 was R401.6m. This means that the proposed cut in funding is R121.5m.

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