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The National Lottery and the non-profit sector

1.6 The Distribution Agencies
 
The decision as to which organisations are to receive funding is the responsibility of the nominated Members of the Distribution Agencies.

Two-and-a-half years after the start of the National Lottery, only three of the four key Distribution Agencies have been established. Moreover, these Agencies were only established a year after the first Lotto tickets were sold, and then only in the face of severe criticism from the general public and parliament. The Agencies remain severely understaffed, and it is clear that the attention given to the profit-making side of the gaming industry has not been matched by an equal commitment to maximise the quite enormous benefits that this industry offers to the Arts, Sports, and Charities-Welfare sectors.

The Agencies established so far are the Charities; Arts, Culture and National Heritage; and Sport and Redistribution Agencies. Members of these Agencies were appointed by the Minister of Trade and Industry on February 1 2001.

The procedures for dispersing funds allocated to the RDP and Miscellaneous Purposes categories are still under review, and it is not clear when, if at all, a decision will be taken as to their future. At present, and in accordance with the provisions of the Act, these categories are administered by the Minister of Trade and Industry.

Unfortunately, no accurate, up-to-date distribution figures exist. The best available information is presented in some detail in Appendix A: Distributions to date. As these figures show, there is a considerable amount of money that has yet to be distributed: approximately half of the total money available in 2001-2002. Unfortunately, it is not clear how much of this was carried over from the first round of distribution (up until 31 March 2001), and how much of this stems from the second round of distribution (up until 31 March 2002).

As such, it is impossible to speculate as to whether the distribution process has become more effective as the Agencies grow in experience, or whether the Agencies have become less effective in the face of rapidly increasing sums of money.

1.6.1 The miscellaneous category

The Miscellaneous category is intended for “emergency funding”. The Minister of Trade and Industry, in consultation with the Minister of Finance, has discretion as to how these funds are to be used.14

Comparatively little money has been allocated from this category so far. Between December 2000 and January 2001, in response to a public outcry regarding the slow pace of allocation,15 emergency funding of just over R4.1 million was allocated to 80 organisations which had benefited previously from the scratch card operations run by Ithuba and the Community Chest.

Between 1 April 2001 and 31 March 2002, R21.96 million was transferred to the Miscellaneous category of the NLDTF. None of this money was disbursed, and it (and the interest it accumulates) is available for distribution.

There is considerable debate within the Lottery Board as to the best way to use this money.16 This is an area where potentially meaningful lobbying might take place, especially given the size of undistributed funds.17

Many people have suggested that the idea of a general emergency and discretionary category, subject to a statutory funding ceiling (currently 5%), is a good one, and should be supported. Initial concerns that this would be used arbitrarily or for overtly political reasons—as was the case in the UK, for example, with money allocated for Millennium celebrations—do not appear to have been warranted, although whether this is due to the inability of the Ministry to spend money or a credit to responsibly manner in which the Minister administers the fund remains to be seen.

1.6.2 The Reconstruction and Development Programme (RDP) category

Of all the categories, the RDP category poses the greatest dilemma for the National Lotteries Board. The category reflects the concerns of parliament in 1997 when the Act was passed. The abandonment of the Reconstruction and Development Programme means that there is no longer any clear basis upon which allocation decisions might be made, and the category appears to be superfluous.18

With the abandonment of the Reconstruction and Development Programme, the Minister of Finance is supposed to identify a fund into which money from the RDP category is paid.19 Although the idea of transferring money to the NDA has been mooted, no decisions have yet been taken. 20

To date, no funds have been allocated from the RDP category, and a total of R63.92 million is available for distribution.21

The Lotteries Board is working with the Ministers of Finance and Trade and Industry to develop a policy for dispensing the RDP money. As with the Miscellaneous category, this is an area where potentially meaningful lobbying might take place.

1.6.3 The Charities Distribution Agency

The Charities Distribution Agency is responsible for guiding the allocations made to the broadly defined charity and welfare sector, and is appointed by the Minister of Trade and Industry, in consultation with the Minister responsible for welfare and population development.22 Ten members23 were appointed on 1 February 2001, one of whom has since resigned, ostensibly because of his frustration with the way in which the Agency is operating.24

A request to speak directly with the Agency members was declined by the Lotteries Board.25 As such, it has not been possible officially to canvass their views on operation of the Agency and the distribution to date.

The initial focus of the Charities Distribution Agency was directed at “organisations serving the needs of children, the youth, socially vulnerable groups (e.g. elderly, women, and disabled) and people living with HIV/AIDS.” Controversially (see the discussion in Part Two of the Report), this was subject to the clause that “Organisations had to demonstrate that they faced the risk of scaling down or closure if not assisted.”26 This later consideration meant that members of the Board were given little freedom to assess the merits of project-based proposals, and were instead directed by the Minister to take decisions simply on the basis of urgent financial need. This all but excluded from consideration any applicant with reserve funding or investments of its own, regardless of the type of service they provided,27 and flew in the face of government’s general insistence that non-profit organisations put measures in place to help secure their sustainability.

Based on the experiences gained, as well as discussions within the Agency itself, the criteria were changed somewhat for the 2002-2003 funding cycle. Here the focus was placed on:28
  • capacity building for organisations and communities which will involve training; advocacy and lobbying; and skills development,


  • poverty alleviation, and


  • community and residential care for the vulnerable, i.e. children, families, older persons, persons with disabilities, women, people affected/infected by HIV/AIDS, the chronically ill, youth, and drug abusers and offenders.
One significant criticism of the earlier funding approach is that by expecting applicants to be registered non-profit organisations with audited financial statements, many innovative and effective community based organisations were excluded.

The latest funding criteria seek to broaden the pool of potential applicants by “requesting” non-profit organisations to enter into a “formal working relationship” with unregistered community-based organisations, and to assist these organisations to apply for and to help administer this money should the application be successful. Non-profit organisations are entitled to include in their funding applications the costs incurred in such partnerships, although the Lotteries Board has expressed concern about the “unrealistic” nature of many of the budgeted claims.29 No guidelines to govern this intended cooperation have been provided.

To date, the Charities Distribution Agency has been allocated the lion’s share of the NLDTF money. In 2000-2001, a total of R44.2 million was distributed.

In the 2001-2002 funding cycle, this rose to R103.28 million, out of an available R154.7 million.

1.6.4 The Sport and Recreation Distribution Agency

The Sport and Recreation Distribution Agency is responsible for overseeing and guiding the allocations made to the sports and recreation sector, and is appointed by the Minister of Trade and Industry in consultation with the Minister responsible for sport and recreation.30 Five members31 were appointed on 1 Feb 2001.

Much criticism has been levelled against the Lottery for funding sports at the expense of charities, or, as one critic suggested, for “Robbing the Helpless to help footballers.”32 Clearly, this raises important “macro” issues relating to the purpose of the NLDTF and the types of causes it should support. Should the Lottery be used to fund a cross section of good causes, including the arts and sporting worlds? Or should funding be restricted to priority developmental welfare targets? Or should some sort of balance between the demands of these sectors be sought? This report can do no more than flag this “macro” question: it is the responsibility of all organisations and interested parties to develop their own answers to this.

At the same time, it is important to put the allocations to “non-welfare” organisations into the context of the laws governing the National Lottery. Thus it must be remembered that the minimum allocations (10%) given to Arts and Sports are determined by law, not by the Minister, the Lotteries Board, or the Distribution Agencies. It is only when amounts in excess of this “statutory floor” are claimed that the Minister’s discretion becomes important.

The criteria for priority funding in the Sports category have not changed since the initial round of funding applications. Emphasis is placed on the provision of equipment for and the renovation and upgrading of existing infrastructure, as well as capacity building in sport. Applications for new infrastructure are not considered.33

This stress on infrastructure and capacity development is understood as an empowerment exercise. Thus, in response to public criticism of the large sums of money allocated to sporting bodies like the Blue Bulls Rugby Union (R1.15 million in 2000-2001),34 the Lotteries Board is quick to point out that this money was allocated specifically to the upgrading of stadiums in six under serviced areas, and that none of this goes to the Blue Bulls rugby team.35 Ironically, the decision—which is perfectly legitimate and in keeping with the brief of the Arts Distribution Agency—to award R1 million to the Cape Town opera has not been widely criticised.36

In the 2000-2001 funding cycle, a total of just over R20.2 million was allocated.

In the 2001-2002 funding cycle, the total amount disbursed was R71.66 million, out of an available R99.3 million.

1.6.5 The Arts, Culture and National Heritage Distribution Agency

The Arts, Culture and National Heritage Distribution Agency is responsible for overseeing and guiding the allocations made to this sector, and is appointed by the Minister of Trade and Industry in conjunction with the Ministers responsible for arts, culture, science and technology, and environmental affairs.37 Twelve members were appointed on 1 Feb 2001.38

Within this category, three sub-sectors have been identified, namely, the Arts, Heritage (both Cultural and Natural), and Environment, each of which has its own qualifying criteria.

Although the focus of the report is the Charities Agency, this Agency should be born in mind as it overlaps with many of the concerns of the developmental and welfare sectors. Indeed, some organisations have found that their areas of interest overlap. In one case, a decision was made to apply to this Agency on the assumption that there would be less competition for funds.39

In the current (2002-2003) round of funding, the category is open to a wide range of funding applications. Preference is however given to proposals that promote job creation, skills transfer, equity and redress of historic imbalances, and Nation building.40

Within the Arts sub-category, both major project funding applications and creative development grants will be considered. In addition, applications from festival organisers, organisations involved in the production of films and documentaries, organisations involved in public art, and grants to projects in the rural areas.

Within the Heritage sub-category, three priority areas are identified:
  • Architectural, archaeological and living heritage conservation
  • Indigenous knowledge systems
  • Historical and cultural research and surveys
Four preferential focus areas are identified for the Environment sub-sector, namely:
  • Biodiversity in conservation and eco-development
  • Anti-pollution and anti-degradation of the environment
  • Temporary relief from disasters and the prevention of erosion of the environment
  • Regeneration of effected environments
In the 2000-2001 funding year, a total or R9.8 million was dispersed under the Arts, Culture and national Heritage category.

In the 2001-2002 funding year, this had increased dramatically to R48 million, out of an available R99.3 million.

Footnotes:
  1. National Lotteries Act 57 of 1997, s.31(1).
  2. Business Day 04/10/2001.
  3. Interview with Sershan Naidoo, 20/05/2002.
  4. Information provided by National Lotteries Board (2001); and National Lottery Distribution Trust Fund (2002a)
  5. Interview with Rob Davies, 11/06/2002.
  6. National Lotteries Act 57 of 1997, s.27(1).
  7. Interview with Sershan Naidoo, 20/05/2002; Interview with Edwin Smith, 28/06/2002.
  8. National Lottery Distribution Trust Fund (2002a).
  9. Dr Teboho Maitse (chair), Mr Lionel Louw, Mr Henry Shaw, Mrs Margaret Grobbelaar, Mr Arthur Magerman, Ms Gail Smith, Mrs Joyce Matube, Mr Musa Madonsela, Mr Vincent Daniel, and Ms Boitumelo Setalentoa (Government Gazette No 22040, 1 February 2001; Social Development Portfolio Committee (2001).
  10. Confidential interview with Agency member.
  11. Correspondence with Sershan Naidoo, April-May 2002.
  12. National Lotteries Board (2001).
  13. Confidential interview with Agency member.
  14. Information on Charities taken from the 2002 application forms (National Lottery Distribution Trust Fund (2002b)).
  15. Interview with Sershan Naidoo, 20/05/2002
  16. National Lotteries Act 57 of 1997, s.29(1).
  17. Dr Mathume Phaahla; Ms Kedidimetse Tshoma (chair); Mr Daniel Jordaan; Mr Gideon Sam; and Mr Denver Hendricks (Government Gazette No 22040, 1 February 2001; Social Development Portfolio Committee (2001).
  18. Nigel Brice: “Robbing the Helpless to help footballers”, Sunday, September 30, 2001 (correspondence with DA).
  19. Information on Sports taken from the 2002 application forms (National Lottery Distribution Trust Fund (2002b)).
  20. See, for example, the exceptionally ill-informed article by Barry Ronge, “Lotto’s bad sports,” Sunday Times 1 Aug , 2001.
  21. Interview with Sershan Naidoo, 20/05/2002
  22. Although one organization was quick to point to the irony that long-standing community arts organizations did not receive funding, whereas former recipients of large state grants, like the Opera, did. Interview with Graham Falken, Community Arts Project (CAP), 12/06/2002.
  23. National Lotteries Act 57 of 1997, s.30(1).
  24. Dr Tanya Abrahamse; Dr Razeena Wagiet; Mr Eugine Moll; Dr Nombasa Tsengwa; Ms N Danby; Mr EPM Radebe; Dr Prince Nevhutalu (chair); Mrs DNA Ntela; Mr Vusithemba Ndima; Mrs P Madiba; and Ms GM Masemola (Government Gazette No 22040, 1 February 2001; Social Development Portfolio Committee (2001).
  25. Interview with Louis Vale, Grassroots Adult Education and Training Trust, June 2002.
  26. Information on Arts, Culture and National heritage taken from the 2002 application forms (National Lottery Distribution Trust Fund (2002b)).
  27. Information on Arts, Culture and National heritage taken from the 2002 application forms (National Lottery Distribution Trust Fund (2002b)).
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