SUBMISSION TO THE PORTFOLIO COMMITTEE ON THE DISTRIBUTION OF SPECIAL FUNDS

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SUBMISSION TO THE PORTFOLIO COMMITTEE ON THE
DISTRIBUTION OF SPECIAL FUNDS

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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 NGOs and CBOs. 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.
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LEGAL FRAMEWORKS
What kind of an organisation are we?     NPO
Status and registered in accordance with the NPO
Act, with the Department of Welfare      Voluntar
y 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.

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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.

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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 NGOs and CBOs 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.
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Ø Funds available from all sources has been
declining, particularly as a result of the
redirection of foreign donor funding to NGOs 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.   Ø  The 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.   Ø  In 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.   Ø Increased
needs and social problems such as HIV/AIDS and TB
have forced us to dedicate additional financial
resources to services addressing these issues.
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Ø The 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.
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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.
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General Programme   Many community-based
organisations (CBOs), 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.
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GRANT MANAGEMENT

• 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
  peoples choices
• SPECTRUM OF SERVICES

ADVOCACY Process whereby the rights of communities are championed
LOBBYING Attempting to change the point of view of legislators decision-makers, as well as public opinion in favour of issues affecting specific communities
RESEARCH Study of a subject so as to learn new facts offer recommendations
COUNSELLING Guidance to improve social functioning of communities
SHELTER Temporary care for destitute individuals
HOSPICE Facility where terminally ill patients receive palliative care
DEVELOPMENT WORK A process of enlarging peoples choices
PREVENTION / RAISING AWARENESS Process aimed at minimizing/eliminating the impact of conditions that may lead to social malfunctioning
NETWORKING Formal or informal linkage of people or organisations sharing resources, skills, contacts and knowledge
COMMUNITY BASED CARE Help and support given to individuals in non-residential settings by informal or formal helpers
JOB CREATION PROJECTS Structured situation where people are enabled to gain knowledge skills to improve their chances of becoming financially self-sufficient
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• 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
  Mitchells 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
  lt0.590 (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 lt400 CERES, VAN RHYNSDORP,
  LEEUGAMKA, BEAUFORT WEST and OUDTSHOORN

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• 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 cbos, pbos and ngos
  delivering services in deep rural, rural
  peri-urban and urban communities.

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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 organisations 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.

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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

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• 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 [phone]
• 7. Grant Management
• 8. Community Profiling
• 9. Facilitating Workshops on Community /
  Individual Rights

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RECOMMENDATIONS
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.

• 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.