30 September 2026
Dozens of organisations were unfairly punished after a 2023 forensic audit found major problems with how the department appoints, funds and monitors non-profit organisations. Illustration: Lisa Nelson
In 2023, the Gauteng Department of Social Development commissioned a forensic investigation into 46 social welfare organisations, in an attempt to clamp down on corruption and mismanagement.
On Monday, we reported on the findings against Beauty Hub Academy, a beauty school that received R144-million government funding, much of which was funnelled to a for-profit company. On Tuesday, we reported how the same forensic audit left hundreds of vulnerable people stranded when its findings were used to defund dozens of organisations at the start of the 2024/25 financial year. In this article, we take a closer look at the findings against these organisations.
GroundUp has obtained a copy of the draft investigative report by FSG Africa. The introduction to the report acknowledges that the audit was wide in scope and had a limited budget.
Across the board, the auditors found that the department was unable to properly monitor, evaluate or support the organisations it funded. Officials filed financial statements without ever looking at them. Routine site visits were not conducted. Organisations that struggled to meet their targets or to comply with regulations received no support.
The vast majority of the organisations investigated were found to be running competently and providing services for hundreds of people. Yet they were almost all defunded.
The investigators found that officials had a habit of “fiscal dumping”. The department would reach the end of a quarter without having spent the budget, and would then scramble to spend the money as quickly as possible. Officials would contact organisations and, without following proper procurement processes, tell them to purchase certain items or ask them for “wishlists”.
Half the organisations investigated received millions in extra funding this way. Gym equipment was bought and never used. Renovations, not allowed for in department policies, were made. Responding to FSG, organisations said they were following instructions from officials. Yet, benefitting from fiscal dumping was among the findings that saw their funding withdrawn.
The investigations found minor issues that could have easily been rectified, but instead the organisations were defunded. One children’s home had a fire escape blocked by a mattress and fire doors weren’t working properly. Some organisations were found to be non-compliant because the government buildings they were in were non-compliant with health and safety regulations. Organisations that had all the required administrative documents were penalised because the department did not have these in their files.
Kitso Lesedi Community Development was contracted by the Gauteng Department of Social Development (GDSD) to provide social services and food to a City of Tshwane-run homeless shelter in an abandoned City-owned building with no formal beds or facilities and in a terrible condition.
FSG found no serious issues with how Kitso Lesedi provided services, and that it was not contractually responsible for the upkeep of the shelter. Yet funding was abruptly halted and the organisation lambasted by then MEC Mbali Hlophe in the press. Hlophe told GroundUp this year that her statements were based on the inhumane conditions at the shelter.
Kitso Lesedi eventally got a court order to recover its money, and the department has paid them back.
But some organisations had serious findings against them and further investigations were recommended.
The Beauty Hub Academy channelled public funds to a private company run by its directors.
At Inqaba Yokulinda Youth Organisation (IYYO), a child and youth care centre, FSG found reasonable suspicion of fraud and corruption over laptop procurement.
Its director, Buyisiwe Nyathela, provided GroundUp with documents that appear to show there was no fraud or corruption, and that the laptops procured were delivered.
She said the organisation was only informed of the findings in September 2025, almost 18 months after the audit report was handed to the department. The organisation continued receiving funding in the interim.
“We submitted a comprehensive written response to that report. However, our response was not substantively acknowledged or engaged with, and we have never received a final determination from GDSD addressing our representations or informing IYYO that it has been found guilty of fraud or corruption,” said Nyathela.
Department spokesperson Motsamai Motlhaolwa said the organisation is not currently funded, but did not answer questions on whether there had been any asset recovery.
At least two old age homes found to be operating in unsatisfactory conditions continued to be funded after the report. Ratanda Old Age Home, where the report noted unclean rooms with urine odours, residents unkempt, perimeter fencing stolen, and where only 24 of the 48 funded beneficiaries had been physically verified, received R2.8-million in 2024/25.
Motlhaolwa said Ratanda was also funded for 2025/26, but is not currently funded. GroundUp has not been able to reach Ratanda for comment.
Noma’s Care Centre, where facilities smelled strongly of urine and residents were unkempt, received R4.8-million in 2024/25.
Motlhaolwa said it has also been funded for the 2025/26 and current financial years. Noma’s Care Centre could not be reached for comment.
Motlhaolwa did not respond to questions about the current conditions at these organisations.
Life Healthcare’s drug rehab, which GroundUp reported on in 2024, was defunded after the FSG audit found that a non-profit organisation, branded as Life Nkanyisa (formerly Life Esidimeni), was receiving department funding and paying substantial sums to the private healthcare group.
At Daracorp, which received more than R53-million in the space of three years to set up an agricultural project, FSG found irregularities with how it was selected for funding. Daracorp had refused to provide access to the bank statements of Daracorp NPO. Daracorp was cleared of wrongdoing, but has not been funded again.
This is the last of three articles about the Gauteng Department of Social Development’s 2023 forensic audits.
Part 1: Gauteng government’s R144-million gift to beauty training company
