Age in Action, a non-profit organization (NPO) in Mahikeng, North West, has lost its bid to reverse the withdrawal of government funding. The High Court in Mahikeng recently dismissed the organization’s application with costs.
The Provincial Department of Social Development (DSD) withdrew funding for the 2021/2022 and 2022/2023 financial years. The reasons included tax non-compliance, violating the Public Finance Management Act (PFMA) and the Service Level Agreements (SLA) by transferring leftover funds to a different account.
The organization wanted the court to overturn the withdrawal and order the Department to backpay it for the period without state funding. Its lawyer, Advocate Ori Ben-Zeev, argued that without state funding, Age In Action, which assisted 10 000 people, would not be able to care for the elderly.
He also argued that no entity in the province provided these services. However, the Department denied this. The organization has been a government beneficiary since 2002, two years after it began operations. The Department, listed in the court application as the respondent alongside the Social Development MEC, argued that its decision was justified and without malice.
Advocate Tumelo Loabile-Rantao argued on behalf of the state that funding the organization despite its violation of the SLA requirements and the PFMA would give the impression that the state disregarded the laws that govern NPO funding.
“This may lead to unprecedented consequences as prospective funding applicants may form an expectation to be granted funding on the basis that they have previously been granted funding, despite their failure to comply with the SLA and PFMA,” said Rantao.
He also argued that previous funding did not guarantee funding in the future.
The organization admitted to being non-tax compliant and submitting an outdated tax certificate. On the issue of transferring funds to a separate account, it denied violation of the PFMA and SLA provisions, saying there weren't provisions against this.
The court ruled that the organization’s arguments that it was entitled to receive funding because it carried a constitutional mandate caring for older people and that the Department should have inquired about its tax compliance were misplaced.
It said the Department didn't need to assist the organization with its tax affairs, nor was it fulfilling a constitutional duty by caring for the elderly.
“It is the government, through the respondent, that has a constitutional duty to care for the elderly, and not the applicant. The respondents have no constitutional obligation to place the applicant in funds to proceed to provide its services to the elderly,” the court ruled.
The court also dismissed the organization’s argument about transferring funds, saying money from the public purse must be accounted for and spent according to relevant legislation.
The court ruled that DSD conducted due diligence and was justified in withdrawing funding. It found no malicious or unjust reasoning for refusing the financing.
