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Non-profits struggling during Covid-19 lockdown
Author: Anika Berning
Published: 04/06/2020

​Non-profit organisations play a vital role in many different industries and communities, but some are struggling to stay afloat during the Covid-19 lockdown due to dwindling resources, writes Anika Berning from the Department of Business Management in an article for Fin24 (3 June).

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Anika Berning* 

The move to Level three of the nation-wide lockdown is an immense step forward for our economy as approximately 15 million people returned to work. While many businesses are happy to open their doors, others will unfortunately remain closed.

Consequently, the economy, already in recession, will keep plummeting. Before the Covid-19 pandemic, South Africa had an unemployment rate of 29,1% and the Chamber of Commerce predicts it could rise to 50%. As the lockdown continued over the last 60-plus days, there were growing signs of discontent and calls to end the lockdown as it is causing economic and social issues. It is suggested that 34% of South Africans have gone hungry during the lockdown. As a result, we have recently seen a spike in protests and people are asking for action.

Fortunately, several food banks have been established in poor communities and funds have been made available to expand these services. Non-profit organisations (NPOs), in particular, have played their part in alleviating the plight of millions of South Africans.  Even though their efforts sometimes go unnoticed, the over 220 000 NPOs registered with the Department of Social Development play a vital role in many different industries and communities.

The crucial contribution of NPOs is underscored by Dr Armand Bam, Head of Social Impact at the University of Stellenbosch Business School (USB), who stated recently in a blog post that “What is worth considering is that NPOs act in communities where government and businesses are not able to reach. They are accessible and agile to attend to the current crises and need our support."

Highlighting their precarious situation, Bam said that “while government can rely on our taxes to stay operational and well-resourced businesses tap into financial reserves, NPOs primarily rely on donations and personal fundraising to ensure service delivery. Many of these organisations are now facing the threat of downsizing and retrenching staff while the need for their services increases."

The last 60-plus days have proved how important these organisations are in our society as they continue helping those in need while their own resources dwindle. Due to a lack of support, many NPOs are now facing closure which will result in more job losses. While the government has put in place a R500 billion bailout plan, no financial support has been set aside specifically for NPOs. Having some of these organisations close their doors would be terrible for the communities they serve. The support they get from various donors is often not enough. Just when they're needed most during the Covid-19 pandemic some NPOs have lost their donor support.

In an interview I had with people at an NPO, one person said “it is a frustrating time for NPOs, because in all their efforts they [NPOs] are still not a recognized sector unless connected. We still continue to persevere to ensure our beneficiaries get help during these stressful times because we made an oath and we take it seriously". Another indicated that donors are reluctant to donate to NPOs during the Covid-19 lockdown and they rather donate to the Solidarity Fund. The efforts of the Solidarity Fund are not dismissed, but smaller NPOs do not have the time to apply for funds.

For them it is merely about survival and they operate from day to day to deliver much needed services to their beneficiaries. It is here where society's comprehension of the social economy breaks down. This is a much-needed sector that provides services to a large part to our society; however, they lack the proper support from both the public and private sector. This leads to a vicious circle: with the lack of proper resources and funds, an NPO cannot grow and become more professionalised, and without becoming more professionalised, they rarely receive more donations.

It is, however, not all doom and gloom when it comes to funding in these trying times. There are resources that NPOs can access that could help them to continue providing vital services to suffering communities. Some of these resources include the Gap Fund established by the Investment Group Mergon, the Charities Aid Foundation Southern Africa and the Forgood Blog.

The social economy is a very complex phenomenon in South Africa as it is extremely vital for delivering crucial services to a vast majority of our country. Unfortunately, it is overlooked by government and not always taken seriously by donors. This leaves NPOs to fend for themselves. However, these organisations thrive on their mission, commitment and compassion which make them highly efficient and resilient amidst the Covid-19 pandemic. Our situation would be much more precarious without them.

*Anika Berning is a lecturer in the Department of Business Management at Stellenbosch University. She is busy with her PhD focusing on management systems and strategy in NPOs.