Zuma’s half measures

Former president Jacob Zuma’s two multimillion-rand, nonprofit organisations (NPOs) managed to spend only slightly more than half their money on their stated goal: education.

The other half went to salaries, functions, travel and a suspiciously high “fundraising” bill.

The Jacob Zuma RDP Education Trust and the Jacob Zuma Foundation both raised millions of rands during Zuma’s presidency, largely to fund bursaries for poor students.

However, the Jacob Zuma Foundation spent R4.7m on emoluments for its chairperson, Dudu Myeni, between 2013 and 2017, which is more than twice what she was paid to chair the board of SAA at the time.

While the NPOs have funded many students, they both declined to say how many. The two foundations also managed to spend almost half their money on other things.

City Press has obtained the annual reports for the NPOs from 2012 onwards.

Reports from the Jacob Zuma Foundation reveal that it raised R83.6m in the six years to 2017, and spent 54% of that on bursary beneficiaries, support programmes and housing projects. It also spent R7.3m on “functions and events” and R4m on travel.

Despite being a well-paid “executive” chair and being listed on all the foundation’s reports as the primary point of contact, Myeni rebuffed questions. “I am not working at the Jacob Zuma Foundation. I chair the board. I do not use this phone for journalists,” she said on WhatsApp.

She did not respond to questions about whether the 54% of the foundation’s money spent on beneficiaries constituted a satisfactory performance, or how many bursaries it awarded.

The Jacob Zuma RDP Educational Trust is a university bursary fund. It was created in 1995 with a R500 000 reconstruction and development programme (RDP) grant that Zuma, like other members of the KwaZulu-Natal provincial executive, received to support a project of their choice.

When Zuma became president, he repeatedly nominated this NPO to receive the proceeds from the annual Presidential Golf Challenge, organised by the department of public service and administration.

According to the trust’s annual reports, it:

. Received R146.5m in donations in the seven years from 2011 to last year;

. Outperformed Zuma’s foundation and managed to pay out R87m (59%) of this in bursaries; and

. Managed to keep its administration costs at a fairly reasonable 13% of total donations, but spent 25% of them on unexplained “fundraising”. The fundraising costs have been suspiciously constant at R5.5m a year since 2014.

The money that Zuma’s education trust spent on fundraising is difficult to understand as most of its funds apparently came from the state-sponsored annual golf days, paid for by the public service department. News reports from 2016 claimed that that year’s golf day raised R9m, or 60% of all donations the trust received that year. The rest of the money it raised – R5.9m – is almost exactly the same as the cost of fundraising that year: R5.5m.

Trust chairperson Sizwe Shezi could neither confirm nor deny that it received most of its money from the golf days: “We ... cannot confirm how much was raised and how the allocations were made. In this regard, you may contact the event organisers.”

Shezi also declined to say how many students the trust benefited. Government press statements have, from 2012, almost always claimed that the trust has helped “more than 20 000” students.

“Unfortunately, we are not in a position to provide you with any additional information,” said Shezi.

Mava Scott, spokesperson for the department of public service, said the department did not know how much money was raised by the golf days: “All the monies pledged and donated were paid
directly to the charities. Therefore, the department does not have the record of the amounts paid towards the initiatives.”

In 2012, a sponsorship cost R1.2m, which has since escalated to between R2m and R3m. The major sponsors in the Zuma era were insurer Momentum, the State Information Technology Agency, Transnet, Cell C, Khauleza IT Solutions, Sizwe IT Group and EOH.

Shezi said the Zuma trust had done well and that the “trustees are very happy with the performance ... as it is within the approved compliance thresholds”.

Both NPOs are also registered as public benefit organisations with the SA Revenue Service (Sars), which makes them tax exempt provided that half of the donations are disbursed each year, a requirement the trust met.

Shezi said its fundraising bill was not disproportionate, as it holds “a number” of events every year.

“We can only confirm that the trust raised its funding directly or indirectly through events from the private sector corporates, some public entities and private businesses or individuals.”

How much is too much?

There are no firm rules about what a reasonable ratio of administrative costs to income for a charity is, but Zuma’s NPOs appear particularly inefficient.

For nonprofits that exist mostly to pay bursaries, the Zuma NPOs’ administration costs are “ridiculous”, say experts.

“It sounds very high,” said Brenda Coetzee, a chartered accountant at C Masters Development Services, which specialises in NPO finances.

To retain tax-free status, Sars requires that staff not receive “excessive remuneration”.

Myeni’s payments have tapered off, but in 2013 and 2014, she received R1.5m and R1.3m, respectively – 10% of the foundation’s total donations.

Her fees for chairing SAA during those years were R505 000 and R828 000, respectively.

Coetzee said the measure of “excessiveness” would be in comparison to executives of similar organisations.

In 2014, the scheme disbursed R8.6bn to students and paid CEO Msulwa Daca a salary of R1.6m. The foundation, which disbursed R23 million, paid Myeni R1.35m that year.

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