In my simplistic good vs. evil view of the world, I struggle to place the Lotto / NLTDF on the side of good. It has too much money to ignore of course, and smart NPO’s chase all the opportunities they can. That said, how sad that R1.8 billion is in the hands of an insane donor.
The interview suggests 4 facts:
1. Money gets allocated on a first-come-first-served basis
This means the NLTDF exercises no quality control at all before funding; it simply says yes to qualifying applications until its money is spent. Why choose this approach? Because it is easy, not because it is right, because it spends money quickly, and NLTDF cares for quantity not quality. Without a system for measuring impact and cost-effectiveness, the NLTDF struggles to rank projects, so it doesn’t – it closes its eyes. The sector plays a price for the NLTDF avoiding the issue. “Good guys” can lose to “bad guys”. Even when the projects are the same (e.g. feeding AIDS orphans), the low-cost and high-impact projects can lose to expensive flops. Poor provinces can lose to rich provinces, the countryside can lose to the city. Worse, because big projects consume money faster than small ones, its administrators are tempted to favour the urbanised provincial white elephants.
2. Money gets allocated without reference to externally audited impact
This means the NLTDF exercises no quality control after funding either; by not auditing its beneficiaries it produces no benchmarks, builds no capacity to evaluate and support genuine performance, and encourages the “bad guys” to invest only in their marketing and not in their operations – which promotes extravagance, con-men and scams.
3. Money gets allocated without a funding cycle
This means the NLTDF gives highly variable funding without giving NGO’s income security (e.g. for 3 years or so). This tempts NGO’s into destruction with the classic “Lotto-1-2-3”.
Year 1, the NGO applies for a bit, and gets it. The amount is small, only enough to fill some gaps.
Year 2, emboldened, the NGO applies for a lot in year 2, and gets it. It’s enough to start projects, buy assets, hire staff, become more expensive to run.
Year 3, the NGO applies for even more, and gets nothing. It loses staff, closes projects and alienates donors. Possibly, it closes down.
4. Money gets allocated for the project, not the organisation running the project
This means the NLTDF somehow wants the work of designing and delivering the project to be done, which is managed by the organisation, without paying for it. The result will be weak projects and closed head offices. Does the NLDTF really think it is good and right to feed the child and starve the parent?
The unintended consequence of the NLTDF’s playing pin-the-donkey is that “bad guys” and high-cost / low-impact projects squeeze out “good guys” and economical / effective ones. What is worse, that the NLDTF is doing it or that Sershan endorses it? For the money it costs and the money that it spends, the taxpayer, the public, the lotto player and the non-profit sector expect the NLTDF to work harder and smarter than this. It is no excuse that the NLTDF is learning. It’s parent in the UK had EXACTLY the same issues decades ago, and South Africa is filled with wise counsel in government, the aid agencies, industry, CSI departments, auditing firms and the non-profit sector.
Ta ta ma chance to get this right, or bye bye the charities.
Errol Goetsch, www..xe4.org