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Throughout modern history and around the globe, Non-Governmental Organizations (NGOs), and Civil-Society Organizations (CSOs) have played an essential role in solving humanity’s toughest problems. Supported by a vast web of foundations, public funding, and private donors, these organizations take on challenges from extreme poverty to infectious disease to educational inequity. However, as a sector, there is a problem in the way we fund these entities. Funding sources national, state and local governments; multilateral and bilateral institutions; private foundations and individuals are part of a complex system with inconsistent practices.
NGOs “strive to deliver strong results but often at great institutional and personal cost.” This manifests in various ways:  

  • Financial weakness in the social sector: Gaps between funding and the cost of delivering the work hollows out organisations by persistently draining resources and placing organisations at risk of financial collapse. 
  • Poor investment in capacity: NGOs often put off improving infrastructure, investing in new technology and staffing. Reducing back-office expenditures often compromises an organisation’s ability to meet their goals and objectives by reducing productivity and efficiency. 
  • Under-reporting of indirect costs: NGOs are reluctant to communicate openly with funders about the true cost for fear of losing a grant.
  • Poor knowledge: Under-reporting also results in poor knowledge of actual indirect costs which can impact on strategic decision making within NGOs.  
  • Increased costs: Many NGOs experience an increase in indirect costs as a result as they often spend more on reporting and accounting to comply with funder requirements. 
  • Pressure to raise rare unrestricted funding: This puts greater pressure on organisations to raise unrestricted funding to fill any shortfalls, which in turn costs the NGO more.

What can be done to resolve these challenges? 
Researchers in the theme “NGO Funding” suggest that the best place to start is with extensive stakeholder engagement across the sector “so that funders better understand what it takes to deliver impact and so that NGOs can begin to report more accurately. This in turn will require investment in training of both NGOs and funders to start moving towards methods for reporting that encourage more equitable funding of costs.”
In South Africa, Corporate Social Responsibility (CSR) is not only a frequent topic for conversation and debate, but also a tangible effort by many companies. The social picture of the country after the Apartheid era was one of marked inequalities in terms of education, infrastructure, economic power, and basic services access. The democratic regimes that have governed the country since 1994 have made important efforts in combating those social imbalances through different social programs and various public initiatives, but also through the impulse given to the private sector. Although the South African Companies Act 61 of 1973 does not oblige companies to engage in CSR projects, the country’s Policy Document and the King II and King III reports explicitly address the need and relevance for corporations to acknowledge all stakeholders and to adopt a “triple-bottom line” approach. In particular, the King reports constitute accepted guides of best practices in corporate governance in South Africa, focusing on social, environmental and economic concerns. The King reports’ clauses are not mandatory, but they take a “comply/apply or explain” approach that somewhat forces corporations to apply CSR programs or justify why they have not adopted them.
According to research, not all CSR efforts in South Africa result from voluntary or indirect business decisions; some of them are the product of corporate compliance with the Black Economic Empowerment (BEE) legislation. The BEE Act forces South African-based companies to consider all stakeholders when performing their internal and external operations in an effort to eradicate social and economic inequalities inherited from the Apartheid days and to help previously discriminated groups to actively participate in the country’s economy. Companies that refrain from complying with the BEE scorecard can obtain negative ratings, therefore complicating their ability to operate in the country. Corporations should not only see BEE as a way of ensuring black participation (ownership, management and development) in the national economy, but also as a mechanism to empower rural and local individuals/communities and to support protected groups as part of their social responsibility exclusively intended to address racial imbalances; it also tries to strengthen the socio-economic spectrum of the country over the basis of equality and fairness.

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Media keeps showing us pessimistic views of the future where it becomes all too easy to buy into the idea that tech is out to rob us of our humanity. However, current trends from global thought leaders and data reveal that technology is allowing us to reconnect with our humanity. It is believed that, as part of the continued evolution of technology, 2020 will be a very considered and introspective year for the use of technology in South Africa.
Amidst a tough economic environment, businesses are expected to make more judicious calls on the technology that will be adopted and in many regards, they will focus less on the technology for its own sakes but rather focus on how we seek to rediscover our humanity whilst technology is advancing at a rapid pace. Some of the key technology trends that we expect to see go mainstream include edge computing, which will be tightly linked to further release of spectrum allowing telecommunications players to start providing 5G communications to citizens across the country.

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Read the e-newsletter here: Issue 693: The Need for NGO Support in the Wake of Economic Downturn

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