Transparency and accountability are the keys to unlocking donor trust
South Africa does not lack goodwill, nor is it short of funding aimed at social impact. What it increasingly lacks is readiness.
Too many non-profit organisations (NPOs) remain structurally unprepared to receive, manage and account for capital, while demand for social services grows and funding pools remain available. The dominant public narrative suggests that non-governmental organisations (NGOs) struggle most because money is scarce, yet the evidence tells a different story.
In early 2025, the department of social development reported that out of 280,000 registered NPOs, more than 200,000 were at risk of deregistration for failing to meet basic compliance requirements, primarily the submission of annual reports as mandated by the NPO Act. Six thousand organisations had already been deregistered.
This compliance crisis has very real consequences. Organisations that fall short on reporting and governance lose access to government grants, private donor funding and tax benefits such as public benefit organisation status. They also lose credibility, and in today’s funding environment accountability and transparency are the foundation upon which trust and support are built.
All this is happening in a context where funding is far from absent. The National Lotteries Commission alone has disbursed more than R18bn to NPOs in recent funding cycles, yet year after year concerns persist about underspending, delayed allocations and unabsorbed funds. The issue is not the availability of capital but whether recipient organisations are institutionally capable of receiving and deploying it responsibly.
The issue is not the availability of capital but whether recipient organisations are institutionally capable of receiving and deploying it responsibly.
This pattern repeats at the provincial level too. In Gauteng, for example, more than R100m was returned to the Treasury in 2025 after the provincial social development department was unable to disburse funds to qualifying organisations in time. Again, the obstacle was not intent or budget but rather readiness, compliance and administrative capacity on the ground.
The truth is capital does not fix weak systems but magnifies them. When governance is fragile, funding becomes a risk rather than a solution, and donors retreat because fiduciary responsibility demands caution.
Consider the successful turnaround of Ikhaya Loxolo Lase Gugulethu chaired by Frank Fredericks, for example. After facing issues of administration and governance failures, the organisation only regained its glory once its board structures, financial controls and reporting obligations were rebuilt. Funding did not arrive first, but its ability to receive did. Capital followed only when the institution demonstrated discipline, transparency and accountability. At the heart of the turnaround was the effectiveness of the governance structures that were put in place. Fredericks says: “It’s not about passion but practising and living the corporate governance fundamentals.”
This dynamic is not unique to NGOs but rather mirrors what happens across the SME sector. Access to finance is often framed as the primary barrier to growth, yet lenders and investors repeatedly cite weak governance, poor financial records, and unclear strategy as the true obstacles. Readiness precedes scale.
What makes the NGO sector particularly vulnerable, though, is the assumption that good intentions can compensate for weak systems, but they cannot.
What makes the NGO sector particularly vulnerable, though, is the assumption that good intentions can compensate for weak systems, but they cannot. Impact-driven organisations still operate within regulatory frameworks, financial controls and governance expectations. When these are neglected, even the most compelling mission struggles to survive.
Capacity-building initiatives
Encouragingly, this reality is beginning to register. Capacity-building initiatives focused on governance, compliance and institutional strengthening are gaining traction. Programmes that prioritise board training, financial literacy and reporting discipline are quietly doing the work that unlocks long-term sustainability, even if they attract far less attention than funding announcements.
Strengthening corporate governance is not merely a business necessity; it is a national imperative. With established corporate governance frameworks such as the King V Code in place, non-profit organisations can leverage these principles to enhance transparency, strengthen reporting practices, and attract high-value donors.
The lesson here is pragmatism, not pessimism. South Africa does not need new funding mechanisms for its NPO sector before it addresses the fundamentals. The capital exists. The social need is undeniable. The missing link remains institutional readiness.
For NGOs, the challenge is appreciating that compliance is not bureaucracy for its own sake, and governance is not a distraction from impact. These are the mechanisms through which trust is built and resources flow. Until more organisations internalise this, money will continue to circulate around them rather than through them.
The question today is whether enough NGOs are ready to receive funding responsibly and whether South Africa will finally invest in readiness with the same energy it invests in goodwill. The answer will determine which organisations survive to tell the tale.
• Mtwentwe, AGA (SA), MD of Vantage Advisory and host of the SAICABIZ impact podcast.
