Free State govt must pay millions to NPOs, court rules

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The department had undertaken to update ‘core costs’ annually and to review these in three-year cycles after consultations, but none of this had been done, the court heard.

The Free State High Court has ordered that the cash-strapped provincial government must bite the bullet and make good on its promise to nonprofit organisations (NPOs) by forking out more than R120 million of subsidies.

In 2010, Engo, a faith-based organisation that assists vulnerable children and the elderly, the provincial management committee of youth care centres and the National Association of Welfare and Not for Profit Organisations, took the Free State department of social development to court over a funding policy.

Judge Christiaan van der Merwe found the policy lacked “a fair, equitable and transparent method” for determining how much of their costs nongovernmental organisations had to cover themselves.

In 2014, the court approved a revised policy which effectively promised increased funding from the 2016-2017 financial year onwards.

But last year the three organisations – represented by Hurter Spies Inc – returned to court with an urgent application.

They charged the department had undertaken to update “core costs” annually and to review these in three-year cycles after consultations, but that none of this had been done.

The department, in the main, did not deny the claims but argued it should be viewed “as rather an incapacity than an unwillingness” with fiscal consolidation affecting “every department in every province”.

In what he described as “one of the most difficult judgments I have been called upon to write,” acting Free State Deputy Judge President Johannes Daffue on Friday said he had had to consider the impact of dismissing the application.

“Hundreds of people will be severely and detrimentally affected, even be found wanting of food, clothing and shelter.

“On the other hand, if I grant monetary relief against the Free State province, which is apparently in serious and dire financial straits, [the] province will find it extremely difficult to make ends meet and this may ultimately have a negative impact on service delivery in other sectors.”

Ultimately he found there was “no doubt the department must be kept to its promise”.

“In terms thereof, several years’ subsidy claims have become due and payable,” he said. “There is no doubt in my mind that the [department] made a public promise which is enforceable and it would be unconscionable for [the department] to renege on the promise.”

Daffue said if financial constraints were “really the issue,” the department should have “played open cards” with the court from the start.

He found the department had “had no intention to comply with the 2014 policy”.

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