In November and December 2019, the FHR conducted a due diligence exercise at CAOs in all nine provinces as part of the ‘emergency call for proposals’ process. The visits created an opportunity for staff and board members to meet, and, in some instances, to meet with communities that benefit from the services provided by the CAOs. The FHR identified some critical issues during the due diligence exercise, which include funding, fundraising skills, land ownership, as well as other concerns of specific CAOs.
The availability of funding has been a long-standing issue within the CAO sector, which has recently found itself in dire straits, with a number of CAOs being forced to close. The FHR remains one of the few organizations providing both operational and programme funding to CAOs as well as other services such as technical assistance, expertise and capacity-building. Funding challenges have been exacerbated by internal and external factors. The internal factors include a lack of capacity to fundraise (in particular locally), a high staff turnover, a lack of capacity to meet all reporting requirements, and the absence of succession plans, to mention a few. External factors impacting the financial situation of the CAOs include the withdrawal of international donors from South Africa, and a global decrease in funding for civil society organizations.
In addition, the lack of capacity within CAOs to raise funds through diverse sources or creative means contributes to the funding issue. This suggests that funders should mobilize greater resources for capacity-building in the area of fundraising.
Another issue brought to our attention during the due diligence exercise, was that of land ownership. Most CAOs do not own the land from which they operate, and funds that they secure are often used to cover the costs of office space. Once the funding runs out the CAOs are therefore forced to close. Accordingly, we believe that the idea of having partnerships between the CAOs and municipalities should be further explored.
Other common issues raised during the due diligence exercise include:
- Lack of recent audit reports;
- Minus balance on their accounts;
- Non-compliance with some or all contract provisions due to a lack of capacity.
In response to these challenges, the FHR has developed a bespoke contract with CAOs that will mitigate risks related to the distribution of the emergency grants.