Page 142 - Risk Report 2024

1. Functional State 2. Politics

The sector’s survival (especially NGOs relying on State grants) Frameworks like the NDP aim to resolve socio-economic-
and its contribution to service delivery is intrinsically linked to a political issues and align SA with similar international goals
functional State. Where the State fails, the sector meets unmet (e.g. the SDGs). Global dynamics impact their success, causing
social demands. Bureaucratic hurdles, delayed decisions, and local policy implementation failure. National policy changes
inadequate transparency and accountability hinder the sector’s create opportunities or impose restrictions for the sector,
ability to engage the State, mobilise support, engage volunteers, who may advocate for its constituents’ interests during
and attract partnerships. State failures cause mismanaged public policymaking (including aligning with foreign counterparts to
resources, corruption, and less transparency. Consequently, amplify impacts on transnational issues like climate change,
limited local and international funding is available, limiting the human rights violations, and global health crises). Geopolitical
sector in carrying out initiatives, and delivering its mandate. tensions, SA’s stance on these, and changing foreign politics
Where the State functions sufficiently, there is a change in focus impact funding priorities, the building of an ethical society,
by the sector to address new unmet needs. The dichotomy of and alleviation of social ills. SA’s internal political landscape
this is that a failed state indicates economic woes and donors’ has similar geopolitical fault lines that shift in line with global
hesitancy to fund the sector. The sector must remain informed trends, evident in the diversity of political parties’ stances on
on new trends, disseminate information publicly and engage international matters. Further uncertainty and instability follow
directly with the State to address shortcomings. in the absence of experience in coalition politics. Dysfunction,
political gridlock, or policy confusion cause reduced
international funding, bureaucratic hurdles, and legal non-
compliance. While important to guard against being used as a
vehicle for illicit activity, some policies impede NGOs’ ability to
hold the State accountable.

3. Economy 4. Social Security
The sector relies mostly on voluntary income from donors Domestic uncertainty limits discretionary spend and impacts
and is affected by eroded investor confidence and market NGOs’ funding. Social factors impacting stakeholders must
volatility. Unfavourable economic conditions, diminished inform NGOs’ adaptation of products, services, and marketing
project funding, and increased operational costs, threaten strategies. These include social values, attitudes to work,
NGOS’ financial sustainability. Potential clients may view and wellness consciousness. Social insecurity, quality of
NGOs’ services as grudge purchases that are not essential to life, inequality, and increased uncertainty around personal
their business success. NGOs therefore must position services autonomy could cause low morale and productivity in NGOs,
convincingly as essential investments for clients’ bottom line. leading to disengagement, frustration, disillusionment,
NGOs must reduce the economic impact on staff, improve decreased job satisfaction, increased stress, and demotivation.
resilience (through mitigation and insurance coverage), and Personal economic status greatly impacts charitable giving,
manage finances (e.g. healthy cash flow, diversified investors, usually guided by altruism or personal connection to the cause.
crowd funding, recurring revenue streams, investments), while Impeding individuals’ ability to care for themselves makes
maintaining trust and stability. them unlikely to provide for others. NGOs must align with the
motivations of their donors, via communication and metrics,
and devise new ways to meet their needs.

5. Rule of Law 6. Water
SA’s FATF grey listing highlighted the risk of NGOs being abused Water interruption and scarcity impacts depend on NGOs
for financial irregularities. Endemic corruption creates risky offerings, but often exacerbates existing resource constraints.
operational environments for NGOs. NGOs must understand NGOs must prioritise solutions for long-term sustainability
anti-money laundering legislation and assist society through and resilience (e.g. capacity building, community-led
preventive services and products, and rehabilitation of approaches, and investments in water-efficient technology and
those tainted by corruption. Effective implementation of SA’s infrastructure). In general, NGOs’ donors feel the social and
comprehensive legal and regulatory framework often leaves financial impact of water insecurity, which is passed down to
room for error when attempting to address crime. Public sector the sector in reduced donations and volunteering. Mitigation
corruption often does the most damage, as it takes from includes legal challenges of the State failing in its duty to
taxation, affecting service delivery. Unchallenged, corruption deliver, education on water security and cooperation with
leaves citizens disenfranchised and at risk of various social communities and officials.
woes. Mitigation includes challenging perpetrators in law,
training on ethics, protecting whistleblowers, and promoting
value-based leadership.