In our view

National Lottery is failing to meet its mandate

By Shelagh Gastrow, Executive Director of The South African Institute of Advancement, Inyathelo.

A recent Supreme Court of Appeal decision supports my belief that there needs to a complete overhaul of the way the National Lottery Board manages and distributes billions of rands worth of public funds. There is a distinct lack of accountability and transparency over the way the board operates and they need to be called to account for their failure to fulfil the mandate they were given to distribute funds appropriately to non-profit organisations and charities.

The Supreme Court case a couple of weeks ago concerned two charities who’d had their grant applications turned down for allegedly failing to comply with the guidelines. Fortunately, the court dismissed the appeal by the Lotteries Board and ruled in favour of the registered NGOs - the South African Education Project and Environment Project (SAEP) and the Claremont Methodist Church Social Impact Ministry, Sikhula Sonke (Sikhula Sonke) - who between them educate thousands of underprivileged children. The Supreme Court held that the board was not justified in applying their guidelines so rigidly and unreasonably.

What I find so highly objectionable about this case is that worthy organisations like these are denied funding while the Lotteries Board sits on millions of rands of undistributed funds. The random decision making, poor management and inefficient administration of the board is having a devastating effect on many wonderful NGOs in South Africa who provide essential services to poor and vulnerable communities. It is a national disgrace that resources allocated for the sustainability of these organisations have been so badly mismanaged, delayed or not distributed. Only a couple of days ago, another organisation contacted Inyathelo, seeking advice over what action they could take after the lottery mismanaged the administration of their grant application. It appears that despite the court’s findings, there is still no will to change nor any apparent concern about the organisations that are being so severely affected.

At the moment, the distribution agencies are only accountable to the Minister of Trade and Industry. I have always been of the view that they should account directly to the CEO of the lottery and that the appointment process to these agencies should be transparent and open to nomination from the public. This would help promote greater accountability. Civil society members who have an understanding of how NGO’s are financed should also be represented on the National Lotteries Board. This would go some way towards tackling the lack of transparency.

In March this year, the Funding Practice Alliance - which is made up of four prominent NGOs including Inyathelo - released a research report on the National Lotteries and National Development Agency entitled “Meeting their Mandate?” In our report, we questioned whether the agency was using its grant-making role in a fair and equitable manner after the board paid out grants worth R41 million to COSATU and the National Youth Development Agency (NYDA) to host politically-motivated events. How can a COSATU rally be deemed a needier cause than the education of underprivileged children? What has become apparent is that the board and the agency set their own development agenda, which shifts and changes in line with government policy and approach.

Of as much concern is the attitude of senior officials in the lotteries. Judge Azhar Cachalia, who presided over the case bought by the two charities, said that it was “distressing” that the board did not appear to understand its mandate properly. He also pointed out that the chairperson of the board seemed to hold the view that grants given were 'gratuities', which are allocated at the board's discretion. But as Judge Cachalia firmly pointed out, this is wrong. The board holds public funds in trust for the purpose of allocating them to deserving projects. And it must ensure that these funds are allocated to those projects, provided of course that they meet the necessary requirements. The funds do not belong to the board to be disbursed as its largesse.

South Africa needs transparent and publicly appointed boards that include people with the capacity to govern our institutions rather than political deployments to reward loyal cadres with soft jobs. They should be people with knowledge and skills in the area which the board operates. Good governance will not end poverty but it will go a long way to improve the situation.


 

Shelagh Gastrow is one of the founders of Inyathelo, The South African Institute for Advancement, which is dedicated to building a sustainable South African civil society. Its core work is to advance social change by working with key institutions and non-profit organisations to ensure their long-term sustainability. Shelagh was previously Director of Fundraising at the University of Cape Town (1998-2002). Before that she worked in the nonprofit sector, particularly with the Institute for a Democratic Alternative for South Africa (IDASA) where she headed its Africa programme. She is also the author of five editions of the “Who’s Who in South African Politics”.