Professor Alfred Nevhutanda (Chairperson) & Professor Vevek Ram (CEO)

October 2011

Presentation tothe Select Committee on Trade and

International Relations

Agenda

• Overview of – the National Lottery and its components– the National Lotteries Board and its functions– The current funding model

• Criteria used to Disburse funds• Achievements and Challenges

The National Lotteries Act

• Establishes the National Lotteries Board & Specifies its Functions

• Sets up the process for awarding the Licence• Establishes the National Lottery Distribution Trust Fund

(NLDTF)• Sets up the Distributing Agencies & the process of

Distribution • Sets up process for Monitoring & Regulating

– Private & Society Lotteries– Promotional Competitions

Functions of the Board

• Advise the Minister – on the issuing of Licence/s – on the percentages allocated to good causes– on the efficacy of Legislation related to Lotteries

• Protection of Players• Maximize proceeds to good causes• Administer NLDTF• Monitor & Regulate Other Lotteries• Manage the Central Applications Office

GIDANI

NLB

NLDTF

DACharities

DAArt & Culture

DASport

DARDP

DAMisc

28%45

% 22%

5%0%

Weekly transfer

CentralApplications

Office

REGULATORMonitors activitiesthrough Licence

NGOsCBOs

Applications

Structure

Operates the National Lottery

Payments

The Current Funding Model

NLBDA

CharitiesDA

Art & CultureDA

Sport

CentralApplications

Office

NGOsCBOs

Advertised Call for Applications

Application Process

Payment

NLDTF

GrantAgreement

Applications

Forms

Internal Process

The Current Funding Criteria

Who is eligible for funding?

• Non-Profit Organisations (NPOs)

• Non-Governmental Organisations (NGOs) – Public Benefit Trusts – Section-21 Companies

• Municipalities and Parastatal Bodies

• Institutions of Higher Learning

• Public Schools

• Museums, Libraries, National Parks and Institutions (Est. through an Act of Parliament)

• Provincial Academies of Sport

• National Sports Federations

• Affiliates to National Sports Federations

• Sports Bodies

• Recreational Clubs

What are the application requirements?

Prescribed Application Form (2010/1) Registration Certificate / Proof of Affiliation Signed & dated Constitution / Founding Documents New applicants: Two most recent and consecutive sets of Annual

Financial Statements - signed & dated by a registered accounting officer

Previously funded applicants: The most recent years’ Audited Financial Statements - signed & dated by an auditor

Signed & dated Auditor’s or Accounting Officer’s Report Detailed project Business/Implementation Plan Detailed Project Budget Project Motivation

NEED

FEASIBILITY&

SUSTAINABILITY

IMPACT FINANCE

BUDGET

GOVERNANCE

PARTNERSHIPHISTORY

INNOVATION

SPREAD

FUNDING DECISION

Funding Criteria

Current Funding Focus

Charities Focus

• Capacity Building• Poverty Alleviation• Community and Residential Programmes for

– children – youth– women– the aged– persons with disabilities – people affected by / infected with HIV/AIDS – the terminally ill– drug abuse

Charities Focus (new)at least 50% to be spent on

• Expansion of home based care services through training and

• Infrastructure development for the aged, the sick, vulnerable as well as the orphaned children, disabled and rehabilitation homes

• Provision of educational facilities designed to enhance literacy through early childhood education, adult literacy, vocational training and mentoring for skills development that include the disabled people

Arts, Culture & Heritage Focus

• Major Projects of National Significance • Rural Grants for projects designed to serve the

community • Creative Development Grants• Festivals• Film Production and Distribution• Public Art• Heritage: Architectural, Archaeological, Historical and

Indigenous Knowledge Systems.• Environment

Arts, Culture & Heritage Focus (new)

• Support for causes designed to protect and promote

traditional knowledge and cultural expressions• Promotional work of arts and craft produced by groups of

disabled people and women• Development and preservation of cultural heritage sites

for revenue generation including tourism attraction, and economic viability for the community

at least 50% to be spent on

Sports Focus

• Capacity building for sports people, managers, administrators and coaches.

• Equipment and kit for teams and clubs.

• Upgrading of existing sporting facilities (incl. schools)• Funding of preparation for and attendance at Major events

Sports Focus

• Development of sport and recreational facilities in the rural areas for talent development and increase accessibility to such facilities for all including disabled persons.

at least 50% to be spent on

Achievements

NLDTF Revenue & Disbursement1st April 2000 to 31st March 2011(R million)

Revenue from Lottery Operator    

12,301

Interest on investments    

3,633

Total revenue      

15,934

Cash disbursed since inception    

10,962

Spent on administration (2.4%)    

336

Funds on hand      

4,819

Less amounts already committed as at 31 March 2011  

3,178

Cash available for allocations in 2011/2012

1,769

NLDTF Allocations1st April 2000 to 31st March 2011(R million)

Year Arts Charities Sport Misc Totals2001 4 42002 48 103 72 2232003 171 344 211 10 7362004 375 613 252 17 12572005 310 504 389 1 12042006 229 626 410 9 12742007 235 428 118 34 8152008 170 380 422 9722009 263 565 597 1 14262010 1231 1402 649 127 34092011 767 1661 665 119 3212

Totals 3799 6626 3785 322 14532

NLDTF AllocationsProvincial Spread %

NLDTF budget 2011/2012 (Rm)

Arts Charities Sport Misc TotalsBudget 496 796 389 88 1769

Allocations 182 393 250 32 857Available 314 403 139 56 912

Challenges

Challenges with current funding Model

• Low Impact• Inflexible• Absence of Targeted approach• High Risk• Reactive • Unresponsive to National Priorities• Inequitable

Application Challenges

High Rate of Declines • Incomplete documentation• Unaudited financial statements• Unregistered auditors• Documents not in the names of applicant…• Applications outside the mandate of DA (wrong sector

or non fundable items)

Project Management Challenges

• Lack of good cooperate governance• Grant Agreements not properly signed• Grant Agreements not being read• Unauthorized deviations.• Incorrect, incomplete or unsatisfactory Progress Reports• Improper record keeping• Delays in submitting requested additional information• NLDTF recognition

Other Challenges

• Fraud• Misrepresentation• Little or No Impact• Dependency• Conflict of Interests

Other Challenges

• Fraud• Misrepresentation• Little or No Impact• Dependency• Conflict of Interests

Interventions

• Medium Term – Amendments to the Act including Funding Model– Decentralized operation

• Short term – Board’s Consultative Process– Operational fixes– Formalized relationship with Distributing Agencies– Systematic Adjudication– Conflict of interest & code of conduct management– Focused calls for applications

Consultative ProcessIn order to arrive at the most appropriate model for the South African Context, the Board held consultative workshops in all provinces as well as a National Indaba

•Attended by 18000 beneficiary organizations in provinces•Attended by 1500 beneficiary organizations at National Indaba•Robust Discussion on Current Model•Consensus on proposed flexible model•Consensus on funding Policy•Consensus on simplification of process and requirements•Consensus on elimination of dependency•Consensus on elimination of Fraud and Misrepresentation

Questions…?