POLICY ON FINANCIAL AWARDS TO SERVICE PROVIDERS

PORTFOLIO COMMITTEE

23 August 2011

1

PRESENTATION OUTLINE1. Purpose2. Update on Policy Implementation3. Background4. Rationale for the review5. Policy Gaps Identified through the Desktop Analysis and Provincial

Consultative sessions 6. Context of the Policy7. Outline of the Policy8. Key Areas of the approved Policy9. Policy Implementation Plan10. Support for the implementation of the PFA11. NPO Financing Guidelines12. Recommendations

2

PURPOSE To present the reviewed Policy on Financial Awards

To provide an update to the Portfolio Committee relating to the approved policy implementation plans and the NPO Financing Guidelines

To obtain a buy-in and support and emphasize the importance of committing to future processes related to the successful implementation of the PFA and related other frameworks

3

BACKGROUND

Since the finalization of the Policy on Financial Awards to Service Providers (PFA), its approval in October 2004 and the consequent implementation thereof with effect from April 2005, the Policy has served as a guide to the departmental partnership with the NPO sector

The policy sought to ensure the achievement of the departmental strategic objectives, specifically with regard to the delivery of social welfare services in partnership with the NPO sector

This partnership has continued to be characterized by concerns and various challenges, key amongst which has been around the effectiveness of the policy and more critically, the Departmental funding relationship with the NPO sector

4

UPDATE ON POLICY IMPLEMENTATION PLAN

The policy was approved by HSD and MINMEC on 14th & 31st March 2011 respectively for implementation in a phased-in-approach

Cluster workshops on the National Baseline Costing Models held in Gauteng and Western Cape provinces. Kwazulu-Natal workshop was held on 15 – 16 August 2011.

Meeting held with Free State provincial department with regard to the second Free High Court Judgement on 27 – 28 July 2011

Presentation of the PFA to the Kwazulu-Natal provincial department held on 12 August 2011.

5

BACKGROUND (Cont…)

The current reality is that the highest % of financial allocations disbursed by the Department (DSD) to non-profit organizations, continue to benefit more established and well resourced organizations.

This funding approach has over the years dramatically reinforced the racially skewed, urban biased distribution of services

It has not assisted the department to respond to the service delivery backlogs in poor and rural areas.

The approach has equally not enabled the Department to respond to its transformation agenda and imperatives, including the broad ones of government

6

RATIONALE FOR THE REVIEW OF THE POLICY

Over a period of five years of implementing the Policy, numerous

concerns from various stakeholders with regard to the ineffectiveness of the policy were received by the Department

In 2009/10, a Desktop Analysis conducted by the department with the engagement of the NPO sector and provinces revealed further gaps

MINMEC and HSDS requested the review of the Policy on Financial Awards to Service Providers (PFA) to address the gaps identified during its implementation period (2005-2010)

7

POLICY GAPS IDENTIFIED THROUGH THE DESKTOP ANALYSIS

Gaps identified through a Desktop Analysis and consultative sessions with the NPOs and Provinces:

There was lack of uniformity in the implementation of the policy across provinces

The national and provincial roles and responsibilities in relation to NPO financing were not clearly defined

The policy was not aligned to the various newly approved departmental pieces of legislation

Inadequate financing of statutory services

Different procurement approaches that are used for the financing of NPOs within the social services sector continue to promote inequitable distribution of resources

8

POLICY GAPS IDENTIFIED THROUGH THE DESKTOP ANALYSIS (Cont...)

Gaps identified through a Desktop Analysis and consultative sessions with the NPOs and Provinces:

Lack of disclosure of sources of financing by non-profit organisations

Multiple dipping by NPOs across various government departments for the same services

Alignment to service delivery norms and standards and costing models

Lack of capacity within the NPO sector linked to the R&R Strategy

Delays in the transfer of funds to NPOs

Non-Compliance of NPOs to the NPO Act and other related pieces of legislation

9

POLICY GAPS IDENTIFIED THROUGH THE DESKTOP ANALYSIS, (Cont...)

The Free State High Court Judgement also identified

some gaps in the Policy

The following main challenges were identified:

Subsidisation which does not cover the financing of services adequately

Ineffective implementation of the new pieces of legislation

Lack of uniformity in the implementation of the policy

Disparities in the financing of NPOs

Delays in the transfer of payments to NPOs

10

CONTEXT OF THE POLICY

The thrust of the reviewed Policy hinges on the following:

The approach that DSD takes charge of its relationship with

the NPO sector and also takes lead in mobilizing and transforming the sector

The policy seeks to position the Department to assume its leadership position towards the effective management of financing services delivered by the NPOs within the social development sector

11

KEY AREAS THAT HAVE BEEN INTRODUCED IN

THE POLICY The following key areas have been introduced in the

current policy with a view to address gaps and challenges identified through the Desktop Analysis of the previous policy:

Partnerships Transformation (enhanced)Service specifications (enhanced)New approach of Financing (new)

12

KEY AREAS THAT HAVE BEEN INTRODUCED IN THE POLICY (Cont…)

IMPLEMENTATION OF THE POLICY (new):

Roles and responsibilities Institutional arrangementsRoles and responsibilities of national and provincial

departments of social developmentDeveloped and ensured the linkage of the Policy to

the NPO Financing Guidelines

13

KEY AREAS THAT HAVE BEEN INTRODUCED IN

THE POLICY (Cont…)

PARTNERSHIPS:

The policy recognizes the significance of partnerships and strives for the improvement and clarification of the relationship between DSD and the NPO sector

Acknowledges that partnership allow for levels of consultation and negotiations that would ensure that services are equitably, effectively and efficiently delivered.

14

KEY AREAS THAT HAVE BEEN INTRODUCED IN THE POLICY (Cont…)

PARTNERSHIPS (cont…):

Pro the strengthening of communication channels

Unpacks and clarifies roles and responsibilities of DSD and the NPO sector

Echoes for the effective management of financing services delivered by the NPOs within the social development sector

15

KEY AREAS THAT HAVE BEEN INTRODUCED IN

THE POLICY (Cont…) PARTNERSHIPS (cont…):

Broad roles and responsibilities of the Department of Social Development:

Determination of priorities

Development of guidelines and relevant legislative framework

Proper monitoring and evaluation of services rendered by the NPO sector

Ensure compliance to the policy related others, guidelines and legislative frameworks

16

KEY AREAS THAT HAVE BEEN INTRODUCED IN THE POLICY (Cont…)

PARTNERSHIPS (cont…):

Roles and responsibilities of the national Department of Social Development towards the implementation of the policy:

Provision of leadership and guidance in the implementation of the policy

Provision of strategic direction for social service delivery

Ensuring the development and implementation of integrated intersectoral policies and programmes, at both national and provincial level.

Harmonizing central functions with those of other national departments, provincial departments and other role players (including NDA).

Developing quality assurance systems for the delivery of social welfare services

17

KEY AREAS THAT HAVE BEEN INTRODUCED IN

THE POLICY (Cont…)

PARTNERSHIPS (cont…):

Roles and responsibilities of the Department of Social Development:

Ensure capacity and institution building

Promote partnerships and linkages with other key role players for effective service delivery

Procure services in line with government priorities

Provide financial support to projects and programmes within available resources

18

KEY AREAS THAT HAVE BEEN INTRODUCED IN

THE POLICY (Cont…)

PARTNERSHIPS:

Roles and responsibilities of NPOs in the partnership

Compliance with the NPO Act and any other relevant policies and legislation

Provide services in accordance with the prescribed services norms and standards for service delivery

Ensure that their organisations provide transformed, efficient and equitable services

19

KEY AREAS THAT HAVE BEEN INTRODUCED IN

THE POLICY (Cont…)

PARTNERSHIPS:

Roles and responsibilities of NPOs in the partnership

Ensure that the organisation’s governance structures are representative of the demographics of the communities they serve

Adhere to the departmental NPO Financing Guidelines and related other policies that give effect to the effective implementation of this policy

Be accountable to government for any public funding received and report on activities in such a manner as prescribed in the Service Level Agreement or Contract.

20

KEY AREAS INTRODUCED IN THE POLICY (Cont…)

TRANSFORMATION:

The Department to take leadership in the effective management of the financing of NPOs

Focus is on empowerment of emerging NPOs (After the dawn of democracy, attempts were made to reach out to emerging and new organizations but not much progress has been realized)

Facilitate the provision of support to such organisations to be responsive to the Policy

Facilitation of responsiveness to transformation imperatives by funded NPOs in line with the PFA

The Department to monitor responsiveness to transformation imperatives both internally and externally

21

KEY AREAS THAT HAVE BEEN INTRODUCED IN THE POLICY (Cont…)

SERVICE SPECIFICATIONS: (More emphasis on the

rationale for service specifications)

Determination of priorities for service delivery at either national or provincial level

These are to be informed by amongst others, government priorities, research, statistics, demands for service delivery etc

Determination of where, to whom and for what purpose funding will be allocated

22

KEY AREAS THAT HAVE BEEN INTRODUCED IN THE POLICY (Cont…)

NEW FINANCING APPROACH:

In order to address the challenges identified, specifically

with regard to the financing of statutory services, this

chapter proposes:

A move from subsidisation to programme financing in accordance with national norms and standards and costing models to ensure uniformity

Financing based on departmental priorities and affordability

Financing based on identified needs and availability of financial resources

Procurement of services through calls for proposals

23

KEY AREAS THAT HAVE BEEN INTRODUCED IN THE

POLICY (Cont…)

NEW FINANCING APPROACH:

Linkage of proposals to service demands and realities (situational analysis per province)

NPO financing time lines linked to MTEF periods and the NPO Financing Guidelines

Disclosure by NPOs to prevent multiple dipping for the same services

Removal of other types of financing ( will be provided for through NDA) -HSD decision on utilization of entities

24

KEY AREAS THAT HAVE BEEN INTRODUCED IN THE POLICY (Cont…)

IMPLEMENTATION OF THE POLICY:

This policy will be implemented by both the national and provincial departments of Social Development in line with the NPO Financing Guidelines

National should provide leadership and guidance as stipulated within the section on roles and responsibilities

Provinces should take responsibility of ensuring effective and proper implementation, monitoring and reporting by funded organizations.

25

KEY AREAS THAT HAVE BEEN INTRODUCED IN THE POLICY (Cont…)

INSTITUTIONAL ARRANGEMENTS:

The department will establish a national forum for the following purposes:

adoption of a collective approach and joint preparation for policy implementation,

NPO coordination and management, monitoring of effective and efficient service delivery

and effective reporting facilitation of improved interaction with all key

stakeholders at all levels, especially at community levels

26

POLICY IMPLEMENTATION PLAN

Provinces to develop migration plans that will reflect their peculiarities and requirements to ensure that they progress within reasonable time frames towards full implementation of the policy

2011 earmarked as a preparatory year towards migration from current situations

The Department will facilitate the development of monitoring and evaluation systems to ensure that provinces adhere to their migration plans linked to the proposed policy implementation plan

The national Department of Social Development will take the overall responsibility of supporting provinces towards migration and effective implementation of the policy.

27

SUPPORTING POLICIES/ GUIDELEINES FOR PFA IMPLEMENTATION

The following administrative mechanisms and

tools will support and give effect to the implementation of the policy:

National Norms and StandardsNational Baseline Costing ModelsNPO Financing Guidelines Integrated Service Delivery Model (ISDM) (currently

referred to as the Social Welfare Services Framework)

28

NPO FINACING GUIDELINE(How the guideline will address the challenges)

Guideline act as planning and management tools for Provinces

An implementation of the PFA It provides time frames on when to contract NPO , transfer funds and

reporting. Provide framework for coordinating provinces on NPO funding No delays as they would be reminded by National Proposed capacity for NPO funding and management Its objective in nature & address needs of the department Provide uniformity in NPO funding Provide tools for NPO funding and management

NPO FINANCING GUIDELINES:

NPO Financing Guidelines were developed parallel to the review process for the following broad purposes:

to give effect to the implementation of this policy to assist both the national and provincial departments of

social development toward the effective implementation of the PFA

to address major gaps identified in the current departmental NPO financing system.

to serve as a guide towards uniform implementation of the PFA.

30

NPO FINANCING GUIDELINES (Cont…)

The guideline is build around establishing partnerships as a form of funding NPOs for sustainable community service delivery

NPO funding revolves around capacity of Provinces to facilitate and manage the process

Depart from the premise that NPO funding is a Financial transition that must adhere to financial legislation and policies

Prescribe funding approaches, processes and steps for funding NPOs

Prescribe tools to be used by Provinces Prescribe time frames ( when to fund and proposed funding

durations)

NPO FINANCING GUIDELINES (Cont…)

Institutional arrangement Guideline proposed appropriate Capacity of National and Provinces

to deal with NPO funding

Proposed Process of NPO funding Identification of the need for contracting/funding NPOs Preparation of NPO funding ( A Project Plan) Establishing NPO Business plan evaluation Project Team

Management of funded NPOs M&E and indicators Reporting schedules

NPO FINANCING GUIDELINES (Cont…)

Steps for NPO funding that comply SCM

Call for proposals must be prepared and approved Adverts for 30 days ( both informal and formal) Briefing Session to empower CBO , FBO etc Adjudications by the Special adjudication team Recommendation and Awarding Signing of SLA

33

NPO FINANCING PROCESS TIME LINE

NPO FINANCING TIME FRAME

Alignment to the MTEF period

Funding NPO for a three (3) years as opposed to one year due to labour intensiveness of the process

Yearly project evaluation and appraisals

CONCLUSION

The policy and the guideline will be implemented in

phased approaches starting 2012/13 financial year;

Further consultation with stakeholder will be continued

to ensure comprehensiveness and maximum impact;

Issues of transformation will be given more attention to address service delivery especially in the poverty rural areas.

Support to provinces will be provided continuously

36