A methodology to improve third sector investment strategies: the development and application of a Western Cape based financial resource allocation decision making model
Date
2005-12
Authors
Smit, Andre de Villiers
Journal Title
Journal ISSN
Volume Title
Publisher
Stellenbosch : University of Stellenbosch
Abstract
South Africa has high levels of social need which are steadily growing. While the third
sector is large and contributes substantially to social service provision, it together with
government is seemingly incapable of providing adequate social services, particularly
in the more poverty-stricken rural areas of the country. Among other, at the root of the
third sector’s inability to adequately serve the needy, is a lack of funding caused by
poor funding policies and uninformed financial resource allocation decision making.
As such, this study set out to develop an automated financial resource allocation
decision making model that would provide extensive organised data to better inform the
allocation decision making process – the first component of the study. It was also
purposed to provide a range of otherwise lacking empirical data on the third sector to
determine service and staffing norms, patterns of funding and to assess financial
management of this sector.
In so doing the Community Chest of the Western Cape was selected to serve as the
locus of the study – their existing manual allocation approach was analysed and a new
more sophisticated automated model was developed. Data generated by the model
pointed to a further research need, that of a better understanding of the funding and
financial management practices of the third sector. This gave rise to the third
component of the study, a survey of 232 beneficiary organisations of the Community
Chest. An analysis of the data generated by the model and collected from the survey
highlighted yet another need, the poor financial management acumen of the sector.
In order to address this need and hence the efficacy of the model, a survey of 207
University of Cape Town management accounting students was conducted to determine
the feasibility of using their financial management knowledge and skills to support
financially and IT-illiterate organisations – the fourth component of the study.
The study primarily adopted a quantitative research paradigm; the research design was
exploratory-descriptive and used a primary data design with limited secondary data
analysis. Data was captured in MS Access and analysed using Statistica and MS Excel.
Results indicated that the country’s funding policies were wanting and that the
allocation of state and state-controlled funding agency resources were not being
allocated in concert with adopted policy. In almost all cases the poorer rural areas had
and received fewer resources. Most organisations surveyed were not financially
secured and their ability to fundraise was very limited. Their financial management
ability was not good. Fortunately a substantial number of accounting students indicated
a willingness to improve the financial management ability of such needy organisations.
The study concludes by recommending further development of the model, utilisation of
accounting students and calls for a major assessment of third sector needs, its funding
and financial management. It also recommends the formulation of new funding
policies.
Description
Thesis (DPhill (Social Work))—University of Stellenbosch, 2005.
Keywords
Theses -- Social work, Dissertations -- Social work, Decision model, Community Chest of the Western Cape -- Finance, Resource allocation -- South Africa -- Western Cape -- Management, Finance -- Decision making, Community development -- South Africa -- Western Cape -- Citizen participation, Economic development projects -- South Africa -- Western Cape -- Finance