The Gauteng Department of Social Development's forensic investigation order has led to funding cuts to several Gauteng non-profit organisations, including drug rehabilitation centres. Image: Lisa Nelson
A non-profit organisation whose funding has been cut off by the Gauteng social development department claims it is being unfairly punished over “frivolous” and “baseless” findings by a forensic auditor.
The organizations affected include women's shelters, drug rehabilitation centers and organizations that provide food and social services to homeless people. Many say they will be forced to scale back their services and in some cases close their doors.
Of 13 inpatient drug rehabilitation centers that received funding last year, only seven will receive funding in the first two quarters of this fiscal year, the department confirmed to Ground Up on Wednesday. Six rehabilitation centers are under review, the department said.
Earlier this week, a children's home administrator told Ground Up that because Westland doesn't have a state-funded inpatient drug rehabilitation centre, they have had to send teenage boys struggling with substance use disorders back to their families.
The forensic auditor was appointed by the department in 2023 to investigate allegations of misconduct and fraud in the not-for-profit sector. The department's budget for not-for-profits is R1.9 billion for the 2024/25 financial year, but Gauteng Premier Panyaza Lesufi has promised to increase this to R2.4 billion. Fourteen department officials have been suspended based on the findings of the forensic audit, the department said.
The forensic audit was supported by outgoing MEC Mbali Hlophe, who has repeatedly alleged that non-profits in the province are “stealing from the poor” and that there is widespread corruption in the sector.
A report submitted by the department to the Gauteng Care Crisis Committee last week, as ordered by the Gauteng High Court, includes a list of 53 organisations under investigation, out of hundreds funded by the department.
Among the organisations on the list are DaraCorp and Beauty Hub, which received multi-million rand grants for training, while others have seen their budgets cut.
However, despite the fact that these organizations have received large amounts of funding under questionable circumstances, the State Department has not presented evidence that this is the case for all of the organizations on the list.
In May, nearly two months into the new fiscal year, organizations cited in the investigation began receiving letters informing them they would lose funding as a result of the auditors' findings. Some only received letters in June.
They asked the ministry for an explanation and some received details in writing, but others were only informed of the reasons for the funding suspension in a meeting with ministry lawyers on Wednesday.
Ground Up spoke to representatives from the five organisations who attended Wednesday's meeting. They said the findings presented on Wednesday were minor issues that should have been picked up by the ministry's monitoring and evaluation team and could have been resolved quickly. They said they didn't understand why a forensic audit was needed.
These organisations have not received any funding from the ministry since the end of the financial year in March and are struggling to survive.
“Frivolous and frivolous”
Derrick Matthews, CEO of Freedom Recovery Centre, which until March was a subsidised 52-bed inpatient drug rehabilitation facility, told Ground Up that the allegations against the centre were “frivolous” and “frivolous”.
Mr Matthews was told at Wednesday's meeting that Freedom Recovery Centre had not filed audited financial statements for 2022. GroundUp has seen evidence he had filed audited financial statements.
Matthews said the ministry has never raised concerns about the organisation's compliance with regulations. He said the ministry's monitoring and evaluation officers check the centre's financial statements on a quarterly basis and no concerns have been raised so far.
The auditor also found that “high turnover of security guards” at Freedom Recovery Center was causing “instability in the organization.” Matthews explained that the guards were hired through the center's skills development program, in which individuals who have been sober for a year work at the center for three to six months.
“They are paid from DSD funds. Our security guards do not work directly with residents and therefore cannot affect the stability of the centre,” Matthews said.
The third finding against Freedom Recovery Center was that employees were given “loans.” Matthews explained that when the center delayed paying grant payments, it would sometimes use commissary funds to pay part of employees' salaries, which would then be deducted from their paychecks.
Matthews said he was in the process of discharging the last of his government-funded patients. “Both of the government-funded centres we've been instructed to send patients to during this crisis are full and can't help. We've had about a dozen calls in the last week from people who need urgent help and we're unable to help or intervene,” he said.
Representatives of other organisations Ground Up spoke to had similar concerns about the findings against them but did not want to be named for fear of being victimised.
They also expressed concern that only one ministry official and the ministry's lawyer attended Wednesday's meeting, with no lawyers present for the organization itself.
They were given until Monday to submit evidence to refute the allegations against them.
At a meeting convened by Gauteng Premier Panyaza Lesufi on Saturday, it was agreed that the organisations would receive interim service level agreements from the department by Monday, which would be finalised once the organisations have been cleared. However, none of the organisations GroundUp spoke to have received the interim service level agreements, and on Wednesday were told they would receive the agreements next week.
One of the organisations under investigation, Child Welfare Tshwane, only received payments from the welfare department last week after Gauteng High Court Judge Ingrid Opperman instructed organisations to make the payments to prevent harm to beneficiaries.
GroundUp sent detailed questions to the Gauteng Department of Social Development, but was told the department would not respond to media queries about the not-for-profit sector until further notice.
This article was first published on GroundUp.