Two organisations, awarded almost R114m in grants by the Gauteng department of social development over the past two years, are under investigation as part of a probe into the department’s funding of nonprofit organisations.
The investigation has already led to several department officials being placed on “precautionary suspension”, according to a media statement released after GroundUp disclosed details last week of the multimillion-rand grants awarded to The Beauty Hub Academy and Daracorp.
Responding to follow-up questions about the investigation, the department said that four officials had already been placed on “precautionary suspension” and that “more individuals” had been identified as possibly involved.
The probe is into “more than those two” organisations, but the department was unable to divulge further details about its investigation, which started in October and is scheduled to be concluded in March.
The grants to Beauty Hub, which offers training in hairdressing and beauty therapy, and Daracorp, which does training for small-scale rural and urban farmers, were made at a time of deep cuts in budgets for grants to organisations working in HIV, community care, older people, poverty relief, and other key areas of social support.
Beauty Hub and Daracporp were allocated R30m and over R26m respectively for the 2023/24 financial year. In the 2022/23 financial year they received R33.7m and R23.9m respectively.
The size of the grants caused a furore among other grantees who questioned why two organisations had been allocated so much money to subsidise people they train, while other organisations funded by the Gauteng department received significantly less support to subsidise trainees. On average the department’s grants are less than a R1m per organisation per year.
In a media release two days after GroundUp’s story was published, the department said it “notes the GroundUp article” and that it “would like to assure the public that the [organisations] in question form part of the investigation taking place in the department on nonprofit organisation funding and some officials have been placed on precautionary suspension”.
The statement, issued by Lwando Majiza from the office of the MEC of gauteng department social development, agriculture, rural development and environment, said: “As indicated by premier Panyaza Lesufi in his state of the province address our provincial government is concerned about the numerous allegations we have received on malpractices and questionable funding practices in the department. Accordingly the investigation seeks to probe whether funding is allocated correctly and ascertain if we are receiving value for money.”
Although the investigation was ongoing, the department had begun “addressing areas of concern stemming from our oversight bodies, and as part of these measures is the creation of an independent nonprofit Organisation Evaluation and Adjudication panel”.
This panel would “scrutinise evaluate, and adjudicate applications for funding from the nonprofit organisation sector, and make recommendations on funding as aligned to the priorities and mandates of the department. Further the Panel is required to perform independent monitoring and evaluation of funded non-profit organisations periodically during each financial year.”
An advert for members to serve on a “centralised, independent evaluations and adjudication panel” appeared early in December.
Each panel will consist of a chair and four other members, who will “consider, evaluate, adjudicate and recommend funding across five sectors”.
During the current [2023/24] financial year, the department awarded grants of over R2.13bn to organisations offering social services, making it one of the biggest, if not the biggest, funder of this sector. It awarded R2.36bn in the previous financial year.
“We remain committed to working and supporting hardworking nonprofit organisations in our communities and through the investigation we seek to weed out maladministration and questionable funding practices” Mbali Hlophe, Gauteng MEC for social development, agriculture and rural development, commented in the media statement.
GroundUp
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