The financial sustainability challenges facing the South African non-profit sector

Abstract

Non-profit organisations (NPOs) operating in South Africa are financially weak and the sustainability of their organisations is often at risk. Post-2008, large numbers have ceased to operate, in part, because of the weak state of the South African economy. This study sought to determine the financial conditions NPOs operate under, to establish why they are so vulnerable and present recommendations as to how they can become more financially resilient. In-depth interviews with 10 senior managers in the sector, representing organisations working in education, health and social welfare, were conducted. The results indicate that the legislative environment-governing NPOs are restrictive and may be inhibiting their ability to raise funds. The results of the interviews showed that the NPOs under study rely heavily on a few large donors; placing them at great risk, should they lose this revenue stream. Donor dependence is such that some even tailor their mandates to suit donors, whilst others dedicate a significant proportion of their resources to fundraising. Consequently, donor relations management and finding new or additional donors preoccupy the minds of NPO leadership. This is notably different to NPOs in the Global North where many have embraced social enterprise and commercialisation.