C Masters Development Services

Tenders & Contracts

Cathy Masters B.Com (Hons) CA(SA)Lisa Thompson-Smeddle Mphil; Bphil; BA

Strategies for financial sustainability for NPO’s

1. Diversification of income sources

2. Reducing “donor” dependence - contracts for services or outputs – focus is shifting from input to output & impact so too the financing model!!

3. Building, investing, & protecting reserves – necessary to support new models of financing!

4. Building relationships with government and the private sector

Tenders & ‘trade’ contracts1. A tender is an offer to do work or supply goods at a fixed

price. Once accepted, a tender is a binding contract.

2. A contract between parties to deliver particular activities (services) or outcomes (products) for a fee or price.• Direct exchange of value - direct to the

customer/beneficiary and paid for by them • Indirect delivery of value to others - Contracted/paid

by one party and delivered to a different party/beneficiary

Tenders & contracts for NPO’s1. For sale of core activities and outcomes directly related

to objectives, e.g. NICRO, Trauma Centre, JET Education Services

2. For sale of unrelated (or partly related) activities and outcomes.• Business on the side e.g. CWD bookshop, 2nd hand goods

Beneficiaries in trading activities, e.g. Wola Nani, Oasis

• Consulting fees – selling expertise e.g.

The Possibilities• Large donor funds are shifting to support government

services• Government needs NGOs to assist with service

delivery• Once you have completed a successful tender with

government your likelihood of winning further bids increases

• Government and private sector

institutions allow for long term

contracts

Research and Planning• Scan tender sites and/or subscribe to tender services for relevant

opportunities – examples (Tenderscan, Tradeworld, GCIS tender bulletin, Government Gazette, relevant websites,

newsletters)• Understand the procurement systems (MFMA,PFMA)

• B-BBEE status• Conflict of interest • Understand relevant policies• Quality and competitive pricing

Before you Begin: Register on Supplier Databases• City – Metro/municipality• Provincial• National – Treasury• Government departments• SETA’s

The Challenges• Registrations & compliance• Specific terms of reference• Alignment of objectives• Scope of delivery

(often wider than local community)• Capacity issues• Lengthy tender/contract process• Cash flow – delayed payments• Cost competitive but must be financially viable

Get your ducks in a row!!Registrations and Compliance

• Legal structure – basics• Governance• NPO Act • SARS -Valid tax clearance

certificate• B-BBEE - certificate• Financial – audited AFS• Company profile/CVs

Finances• Reserves or ‘seed’ money - cash flow• Full costing– not just direct delivery cost, but also

underlying support/infrastructure costs,

but still competitive!• ‘Profit’ margin and risks• VAT & other tax implications

Meeting the challenges• Collaborations• Consortiums• Business partnerships• Government • Donors

Shift Thinking!! Think Big! • Social Enterprise• Sell ‘social outcomes’ not problems or activities• Think innovation, opportunity, and successful change• Think bigger – scale- ability• Think ‘brand’ value• Be adaptable• Not too “precious”• Brave heart

Thank You

Cathy MastersExecutive Director

CMDS082 574 9907021 797 6226

cathy@cmds.org.zawww.cmds.org.za

Lisa Thompson-Smeddle Director

Sustainable Development Network083 458 1143021 659 2551

lisa@sdnafrica.comwww.sdnafrica.com

Factors that affect organisational sustainability