South Africa NGO Sector - Revision history

Frederick Swarts: /* External Links */

2008-08-13T18:56:02Z

‎External Links

Frederick Swarts: /* References */

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‎References

Frederick Swarts: /* State-NGO Relations and the Future of Civil Society in South Africa */

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‎State-NGO Relations and the Future of Civil Society in South Africa

Frederick Swarts: /* Legal Issues and Regulations on the Formation and Operation of Nonprofits */

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‎Legal Issues and Regulations on the Formation and Operation of Nonprofits

Frederick Swarts: /* Definitions and legal classifications */

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‎Definitions and legal classifications

Frederick Swarts: /* Size and scope of the nonprofit sector */

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‎Size and scope of the nonprofit sector

Frederick Swarts: /* History of the Nonprofit Sector in South Africa */

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‎History of the Nonprofit Sector in South Africa

Frederick Swarts: /* History of the Nonprofit Sector in South Africa */

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‎History of the Nonprofit Sector in South Africa

Frederick Swarts: /* History of the nonprofit sector in South Africa */

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‎History of the nonprofit sector in South Africa

Frederick Swarts: /* History of the nonprofit sector in South Africa */

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‎History of the nonprofit sector in South Africa

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 U.S. International Grantmaking: information on legal terminology and tax laws
 http://www.usig.org/countryinfo/southafrica.asp
 ==References==

← Older revision		Revision as of 18:55, 13 August 2008
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	==References==		==References==
−
	“All You need to Know About the Registration of an Non-Profit Organisation (NPO).” Department of Social Development, Republic of South Africa. http://www.socdev.gov.za/npo/npo.htm (accessed January 19, 2007).		“All You need to Know About the Registration of an Non-Profit Organisation (NPO).” Department of Social Development, Republic of South Africa. http://www.socdev.gov.za/npo/npo.htm (accessed January 19, 2007).

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 		Civil society’s exclusion from the policy making arena both exacerbates and has resulted from these tensions.  In May-June 2006, more than 180 delegates met in New York for the United Nations General Assembly Special Session on HIV/AIDS (UNGASS), where South Africa submitted a progress report to be used by the UN to determine the effectiveness of the country’s programs to combat and treat the disease.  Although the UN had instructed governments to include civil society groups in preparing the report, the South African Joint Civil Society Monitoring Forum (JCSMF) complained that they had not been part of the process, and were generally excluded from national policy making.   Yet the South African government gave itself eight points out of a possible ten for involving NGOs in the planning and budgeting of HIV/AIDS programs.
-		Clearly, many challenges exist with respect to state-NGO relations.  Yet it is a testament to the robustness of South African civil society that these challenges are confronted openly by the NGO community.  It is truly remarkable that less than fifteen years after the end of apartheid, nearly 100,000 NGOs exist in South Africa today, working to reduce poverty and ensure equality for all citizens.
+		Clearly, many challenges exist with respect to state-NGO relations.  Yet it is a testament to the robustness of South African civil society that these challenges are confronted openly by the NGO community.  It is truly remarkable that less than fifteen years after the end of Apartheid, nearly 100,000 NGOs exist in South Africa today, working to reduce poverty and ensure equality for all citizens.
 ==External Links==

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 	The Department of Social Development (before 2000, known as the Department of Welfare) oversees NGO registration and NGO affairs.  Its goal is to “ensure the provision of comprehensive social protection services against vulnerability and poverty within the Constitutional and legislative framework, and to create an enabling environment for sustainable development” (DSD 10). Within the department, the National Development Agency (NDA) provides funding and capacity building to civil society organizations (CBOs, NGOs, FBOs, etc.) (DSD 15).
-NGOs may register through the Directorate of Nonprofit Organisations, which was created in 1997.  Registration is not required, but until recently only registered organizations were eligible for tax benefits.   Once registered, organizations must send annual reports of their activities along with financial statements to the Directorate (NPO Act 18,1).
+NGOs may register through the Directorate of Nonprofit Organisations, which was created in 1997.  Registration is not required, but until recently only registered organizations were eligible for [[How to obtain tax-exempt status|tax]] benefits.   Once registered, organizations must send annual reports of their activities along with financial statements to the Directorate (NPO Act 18,1).
-Several important changes have taken place recently with respect to the legal framework and tax benefits for NPOs in South Africa.  After apartheid ended in 1994, the nonprofit sector was hit hard when foreign donors redirected their funding away from civil society and towards the state.  It was in this context that the NPO Tax Lobbying Campaign arose, in an effort to bring about a more financially enabling environment for the nonprofit sector (Nelson 2.2).  In 1999, the Commission of Inquiry into Certain Aspects of the Tax Structure of South Africa (known as the Katz Commission) released a report focusing on taxation of NPOs in South Africa.  The report called attention to flaws in the existing tax legislation and made suggestions to improve the fiscal environment for NPOs.  The Non-Profit Partnership, an NGO working on behalf of the nonprofit sector, seized the opportunity to lobby for legislative changes that would expand tax benefits to encompass a broader range of organizations.
+Several important changes have taken place recently with respect to the legal framework and tax benefits for NPOs in South Africa.  After Apartheid ended in 1994, the nonprofit sector was hit hard when foreign donors redirected their funding away from civil society and towards the state.  It was in this context that the NPO Tax Lobbying Campaign arose, in an effort to bring about a more financially enabling environment for the nonprofit sector (Nelson 2.2).  In 1999, the Commission of Inquiry into Certain Aspects of the Tax Structure of South Africa (known as the Katz Commission) released a report focusing on taxation of NPOs in South Africa.  The report called attention to flaws in the existing tax legislation and made suggestions to improve the fiscal environment for NPOs.  The Non-Profit Partnership, an NGO working on behalf of the nonprofit sector, seized the opportunity to lobby for legislative changes that would expand tax benefits to encompass a broader range of organizations.
 These developments led to the passage of the Taxation Laws Amendment Act in 2000, which introduced a new term, “Public Benefit Organization” (PBO).  To register as a PBO, an organization must be a charitable trust, Section 21 company, or voluntary association, and qualify as a nonprofit organization under the Nonprofit Organisations Act; this includes a broad range of organizations.  However, whereas NPOs must be established for an as-yet-undefined “public purpose,” PBOs go one step further in carrying out “public benefit activities” (PBAs), which are defined as activities “…of a philanthropic and benevolent nature, having regard to the needs, interests and well-being of the general public.” (Income Tax Act 30,2).  At least 85 percent of these activities, measured in cost or in time spent, must benefit persons in South Africa.  Finally, at least one of the following must be true:
-#the organization’s activities must benefit, or be accessible to, the public at large, “including any sector thereof (other than small and exclusive groups)”;
+#the organization’s activities must benefit, or be accessible to, the public at large, “including any sector thereof (other than small and exclusive groups)”
-#the organization’s activities must benefit, or be easily accessible to, the poor and disadvantaged;
+#the organization’s activities must benefit, or be easily accessible to, the poor and disadvantaged
 #the organization must receive at least 85 percent of its funding from donations, grants from state bodies, or foreign grants (Income Tax Act 30,1).

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 In addition to government funding, the private sector contributed R3 million in 1998, while international nongovernmental aid was about R.5 million, the bulk of which went towards health, education, and development and housing.
-==Definitions and legal classifications==
+==Definitions and Legal Classifications==
 The 1997 Nonprofit Organisations Act defines an NPO as
-A trust, company or other association of persons—
+a trust, company or other association of persons—
 *(a)	established for a public purpose; and
 *(b)	the income and property of which are not distributable to its members or office-bearers except as reasonable compensation for services rendered.
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 This definition encompasses a variety of organizations, including NGOs, CBOs, faith-based organizations (FBOs), Section 21 companies, trusts, and “any other Voluntary Association that is not-for-profit.”
-	The term “nonprofit organizations” has come into common usage relatively recently.  In the 1980s and 1990s, “service organizations” was the common term, which gave way to “NGOs” and “CBOs.”  NPOs then gained currency as a broad term distinguishing these organizations from the for-profit sector (Swilling and Russell 6).  Prior to 1997, NPOs were variously defined as apolitical organizations serving the interests of their members, and organizations working for a “public purpose,” a phrase which was then enshrined in the 1997 law.  A debate about the definition of “public purpose” followed the passage of that law, and led in 2000 to the creation of another term, “public benefit organization” (PBO), discussed below (Swilling and Russell 9).   The main legal distinctions between all of these organizations are trusts, Section 21 companies, and voluntary associations.  Trusts, which are governed under the Trust Property Control Act of 1988, may be established for private benefit or for a charitable purpose.  A trust is created when property is transferred by a trust deed; trustees  then administer the property and funds of the trust in the interest of beneficiaries (which may be broadly defined in public interest terms).
+	The term “nonprofit organizations” has come into common usage relatively recently.  In the 1980s and 1990s, “service organizations” was the common term, which gave way to “NGOs” and “CBOs.”  NPOs then gained currency as a broad term distinguishing these organizations from the for-profit sector (Swilling and Russell 6).  Prior to 1997, NPOs were variously defined as apolitical organizations serving the interests of their members, and organizations working for a “public purpose,” a phrase which was then enshrined in the 1997 law.  A debate about the definition of “public purpose” followed the passage of that law, and led in 2000 to the creation of another term, “public benefit organization” (PBO), discussed below (Swilling and Russell 9).
 Section 21 companies, as defined by the Companies Act of 1973, are nonprofit associations “having the main object of promoting religion, arts, sciences, education, charity, recreation, or any other cultural or social activity or communal or group interests.”  NPOs that have registered with the government and are not trusts, religious institutions, trade unions, or cooperatives fall into this category.  All Section 21 companies must register with the Registrar of Companies (Companies Act Chapter IV, 63).  Foreign nonprofits can register branches in South Africa under Section 21A of the Companies Act.
 	Most nonprofit organizations in South Africa are voluntary associations (USIG 3), many of which work only at the community level (Swilling and Russell 20).  There is no official registration process for such organizations.  Rather, an agreement, which is usually written but may be oral, is formed among three or more people with a common goal other than making profits.  Voluntary associations are governed by common law, and may be classified in legal terms as either corporate bodies (“universitas”) or “non-corporate associations” (USIG 3). In order to qualify as a universitas, and organization must be structured to continue as an entity regardless of changes in membership; it must be able to hold property distinct from its members; and no member can have any rights to the property of the association based on membership (USIG 3).  The Johns Hopkins study notes that while little statistical information exists regarding such organizations, they are believed to have a significant effect in alleviating poverty by responding to local problems more quickly than more formal organizations or government bodies (Swilling and Russell 21).
 ==Legal Issues and Regulations on the Formation and Operation of Nonprofits==

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 	The third group of civil society organizations is often referred to as “social movements.” These are community-based groups that are more formal than the survivalist CBOs, and are often supported by a base of middle-class activists (Habib 683).  Their aims are explicitly political, and they work to mobilize poor communities to challenge the political, social, or economic status quo.  Though formal NGOs and social movements represent the minority of civil society organizations, they receive the vast majority of aid resources, from the government, private sector, official development agencies, and private foundations (Russell and Swilling).
-==Size and scope of the nonprofit sector==
+==Size and Scope of the Nonprofit Sector==
-According to a 2002 study conducted by the Johns Hopkins Institute for Policy Studies, in 1999 there were 98,920 non-profit organizations in South Africa (Swilling and Russell 20).  Of these, 53% (or 53,929 organizations) were voluntary community-based organizations not formally structured and registered as nonprofits. A further 11,459 organizations were classified as “Section 21” companies under the 1997 Nonprofit Organisations Act; that is, they were formally registered as nonprofits.  Both the community-based and Section 21 organizations worked in eight areas: culture and recreation; development and housing; social services; health; education and research; advocacy and politics; religion; and environment (Swilling and Russell 22).   The rest of the organizations covered by the study were religious organizations, unions, burial societies/stokvels, cooperatives, political parties, or trusts.
+According to a 2002 study conducted by the Johns Hopkins Institute for Policy Studies, in 1999 there were 98,920 non-profit organizations in South Africa (Swilling and Russell 20).  Of these, 53% (or 53,929 organizations) were voluntary community-based organizations not formally structured and registered as nonprofits. A further 11,459 organizations were classified as “Section 21” companies under the 1997 Nonprofit Organisations Act; that is, they were formally registered as nonprofits.  Both the community-based and Section 21 organizations worked in eight areas:
-This study, which was compiled using a sampling method from 40 diverse communities across South Africa, contains the most comprehensive set of data currently available.  The government statistics agency, Statistics South Africa (http://www.statssa.gov.za/), does not have a database for the nonprofit sector.  There are plans, however, to include the nonprofit sector’s contributions within South Africa’s National Account System (Department of Social Development 115).  According to the Department of Social Development, a government agency, there were 37,532 nonprofit organizations (NPOs) registered in March 2006 (DSD 115), working in the areas of culture and recreation; development and housing; education; environment; health; international; law; advocacy and politics; philanthropy/volunteerism; religion; and social services.  This figure includes the roughly 11,500 Section 21 companies of the Johns Hopkins study, plus religious organizations, trusts, and others.
+This study, which was compiled using a sampling method from 40 diverse communities across South Africa, contains the most comprehensive set of data currently available.  The government statistics agency, Statistics South Africa (http://www.statssa.gov.za/), does not have a database for the nonprofit sector.  There are plans, however, to include the nonprofit sector’s contributions within South Africa’s National Account System (Department of Social Development 115).  According to the Department of Social Development, a government agency, there were 37,532 nonprofit organizations (NPOs) registered in March 2006 (DSD 115), working in the areas of:
-Another resource is the PRODDER database, established in 1987 and currently run by the South African NGO Network (SANGONeT).  Because registration is voluntary, PRODDER does not provide a comprehensive look at the NGO sector in South Africa; currently only 2,120 organizations are listed.  Furthermore, these tend to be larger, more formal organizations that take the initiative to register, rather than smaller community-based organizations (Swilling and Russell 12, 52); many of these smaller organizations may in fact be “briefcase NGOs.”  Thus, the vast majority of NGOs in South Africa are community-based organizations that are not formally registered with the government.
+Another resource is the PRODDER database, established in 1987 and currently run by the South African NGO Network (SANGONeT).  Because registration is voluntary, PRODDER does not provide a comprehensive look at the NGO sector in South Africa; currently only 2,120 organizations are listed.  Furthermore, these tend to be larger, more formal organizations that take the initiative to register, rather than smaller community-based organizations (Swilling and Russell 12, 52). Many of these smaller organizations may in fact be “briefcase NGOs.”  Thus, the vast majority of NGOs in South Africa are community-based organizations that are not formally registered with the government.
-According to the Johns Hopkins study, the largest sector of NGOs in South Africa deals with social services (22,740 organizations; 3,614 formally registered), followed closely by development/housing and culture/recreation (Swilling and Russell 22).  Within the social services sector, activities included child, youth, and family services; services for the disabled and elderly; emergency relief services; and (the largest group) material assistance (Swilling and Russell 29).  In the development and housing sector, the majority of organizations worked in economic, social and community development rather than in housing itself (Swilling and Russell 31).
+According to the Johns Hopkins study, the largest sector of NGOs in South Africa deals with social services (22,740 organizations; 3,614 formally registered), followed closely by development/housing and culture/recreation (Swilling and Russell 22).  Within the social services sector, activities included [[Children's NGOs|child]], [[Youth NGOs|youth]], and family services, services for the disabled and elderly, emergency relief services, and (the largest group) material assistance (Swilling and Russell 29).  In the development and housing sector, the majority of organizations worked in economic, social and community development rather than in housing itself (Swilling and Russell 31).
-Altogether, the estimated income of NGOs in South Africa was R14 billion in 1998, with the government contributing 42% (R 5.8 billion), about 10% of which came from Overseas Development Aid (ODA) (Swilling and Russell 34).  Most government funds went to social services (R 2.1 billion), health (R 1.7 billion), and development and housing (R 1.1 billion) (Swilling and Russell 35).  The Johns Hopkins study notes that while development and housing organizations are generally concentrated in poorer areas, the health and social services sectors are characterized by well-developed, formal NGOs, which tend to be concentrated in urban middle-class communities; this raises the concern that poorer populations may not be benefiting from government funding of health and social services as much as wealthier populations (36).
+Altogether, the estimated income of NGOs in South Africa was R14 billion in 1998, with the government contributing 42% (R 5.8 billion), about 10% of which came from Overseas Development Aid (ODA) (Swilling and Russell 34).  Most government funds went to social services (R 2.1 billion), health (R 1.7 billion), and development and housing (R 1.1 billion) (Swilling and Russell 35).  The Johns Hopkins study notes that while development and housing organizations are generally concentrated in poorer areas, the health and social services sectors are characterized by well-developed, formal NGOs, which tend to be concentrated in urban middle-class communities. This raises the concern that poorer populations may not be benefiting from government funding of health and social services as much as wealthier populations (36).
 In addition to government funding, the private sector contributed R3 million in 1998, while international nongovernmental aid was about R.5 million, the bulk of which went towards health, education, and development and housing.

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 In the early 1980s, anti-Apartheid civil society organizations grew as a result of President P.W. Botha’s liberalization of the political system.  Nonetheless, his reform movement retained repressive elements, and the state-civil society relationship throughout the 1980s remained adversarial, with a hostile legal and financial [[Environmental NGOs|environment]] for NGOs (Habib 675-77).  Oppositional social movements spawned by community-based organizations were integral in bringing about the end of Apartheid in 1994. <membersonly>
-With the transition to democracy in the post-apartheid period, South African civil society evolved into three groups: formal NGOs; informal, survivalist community-based organizations (CBOs); and so-called “social movements” (Habib 678-683).  Government support for formal NGOs was first enshrined in the 1994 Resource Development Programme spearheaded by President Nelson Mandela.  Since then, the government has sought to create an enabling environment for NGOs, first by repealing repressive legislation and opening the door for legitimate protest, and later by introducing a variety of legislation regarding NGO registration and tax benefits, which will be discussed in further detail below.  The result has been an increasing partnership between these organizations and the state on policy development, implementation and service delivery, as well as growing criticism of the professionalization and commercialization of NGOs from both within and outside the sector (Habib 679).
+With the transition to democracy in the post-Apartheid period, South African civil society evolved into three groups:
 	South Africa’s political transition also led to economic liberalization, which, while benefiting the upper classes throughout society (particularly black elites), has devastated the lives of many poor families.  As a result, there has been a rise in informal CBOs attempting to meet the needs of marginalized populations.  Adam Habib argues that, rather than celebrating such organizations as examples of South Africa’s dynamic social change movement, one should recognize them as “survivalist responses of poor and marginalized people who have had no alternative in the face of a retreating state that refuses to meet its socioeconomic obligations to its citizenry” (Habib 682).
-	The third group of civil society organizations is often referred to as “social movements”; these are community-based groups that are more formal than the survivalist CBOs, and are often supported by a base of middle-class activists (Habib 683).  Their aims are explicitly political, and they work to mobilize poor communities to challenge the political, social, or economic status quo.  Though formal NGOs and social movements represent the minority of civil society organizations, they receive the vast majority of aid resources, from the government, private sector, official development agencies, and private foundations (Russell and Swilling).
+	The third group of civil society organizations is often referred to as “social movements.” These are community-based groups that are more formal than the survivalist CBOs, and are often supported by a base of middle-class activists (Habib 683).  Their aims are explicitly political, and they work to mobilize poor communities to challenge the political, social, or economic status quo.  Though formal NGOs and social movements represent the minority of civil society organizations, they receive the vast majority of aid resources, from the government, private sector, official development agencies, and private foundations (Russell and Swilling).
 ==Size and scope of the nonprofit sector==

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 The nonprofit sector in South Africa has a long [[History of the NGO Sector|history]].  The beginnings of civil society arose during the colonial period with various religious, cultural, and welfarist community-based groups. In addition, the [[Europe]]an colonial powers brought their own organizations with them from the seventeenth through the nineteenth centuries (Swilling and Russell 67).
-During the twentieth century, the nonprofit sector developed further through a corporatist  pact between the British elite and Afrikaner  middle class (Swilling and Russell 68).  Large, formalized non-governmental organizations (NGOs) dealing with health and social services emerged for the exclusive care of the white community.  At the same time, grassroots community-based organizations arose in the black community in order to provide basic services.  These groups were often survivalist and stood in opposition to segregation and later apartheid.   For the most part, the white-run government tolerated these organizations, except during periods of active political repression like the 1960s.
+During the twentieth century, the nonprofit sector developed further through a corporatist  pact between the British elite and Afrikaner  middle class (Swilling and Russell 68).  Large, formalized [[Overview of NGOs|non-governmental organizations (NGOs)]] dealing with health and social services emerged for the exclusive care of the white community.  At the same time, grassroots community-based organizations arose in the black community in order to provide basic services.  These groups were often survivalist and stood in opposition to segregation and later Apartheid.   For the most part, the white-run government tolerated these organizations, except during periods of active political repression like the 1960s.
-In the early 1980s, anti-apartheid civil society organizations grew as a result of President P.W. Botha’s liberalization of the political system.  His reform movement nonetheless retained repressive elements, and the state-civil society relationship throughout the 1980s remained adversarial, with a hostile legal and financial environment for NGOs (Habib 675-77).  Oppositional social movements spawned by community-based organizations were integral in bringing about the end of apartheid in 1994. <membersonly>
+In the early 1980s, anti-Apartheid civil society organizations grew as a result of President P.W. Botha’s liberalization of the political system.  Nonetheless, his reform movement retained repressive elements, and the state-civil society relationship throughout the 1980s remained adversarial, with a hostile legal and financial [[Environmental NGOs|environment]] for NGOs (Habib 675-77).  Oppositional social movements spawned by community-based organizations were integral in bringing about the end of Apartheid in 1994. <membersonly>
 With the transition to democracy in the post-apartheid period, South African civil society evolved into three groups: formal NGOs; informal, survivalist community-based organizations (CBOs); and so-called “social movements” (Habib 678-683).  Government support for formal NGOs was first enshrined in the 1994 Resource Development Programme spearheaded by President Nelson Mandela.  Since then, the government has sought to create an enabling environment for NGOs, first by repealing repressive legislation and opening the door for legitimate protest, and later by introducing a variety of legislation regarding NGO registration and tax benefits, which will be discussed in further detail below.  The result has been an increasing partnership between these organizations and the state on policy development, implementation and service delivery, as well as growing criticism of the professionalization and commercialization of NGOs from both within and outside the sector (Habib 679).

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-==History of the nonprofit sector in South Africa==
+==History of the Nonprofit Sector in South Africa==
-The nonprofit sector in South Africa has a long history.  The beginnings of civil society arose during the colonial period with various religious, cultural, and welfarist community-based groups. In addition, the European colonial powers brought their own organizations with them from the seventeenth through the nineteenth centuries (Swilling and Russell 67).
+The nonprofit sector in South Africa has a long [[History of the NGO Sector|history]].  The beginnings of civil society arose during the colonial period with various religious, cultural, and welfarist community-based groups. In addition, the [[Europe]]an colonial powers brought their own organizations with them from the seventeenth through the nineteenth centuries (Swilling and Russell 67).
 During the twentieth century, the nonprofit sector developed further through a corporatist  pact between the British elite and Afrikaner  middle class (Swilling and Russell 68).  Large, formalized non-governmental organizations (NGOs) dealing with health and social services emerged for the exclusive care of the white community.  At the same time, grassroots community-based organizations arose in the black community in order to provide basic services.  These groups were often survivalist and stood in opposition to segregation and later apartheid.   For the most part, the white-run government tolerated these organizations, except during periods of active political repression like the 1960s.