The National Lottery Board has admitted that it is sitting on R6 billion meant for NGOs and charities across the country.

The admission was made in the Cape High Court on Wednesday during an application lodged by two local NGOs after their funding requests had been turned down by the board's distributing agencies.

The NGOs wanted the court to hear the application urgently.

The funding requests were made to one agency that deals with charities and another with arts and culture. The court also heard that the agencies had been distributing less than a third of the funds earmarked for charities every year.

The R6bn is reflected in the board's records for the last financial year, as the amount available for beneficiaries. It is, however, not clear whether this amount has been accumulating, or since when.

Court papers have revealed that the board's agency for charities allocated R328m to applicants in 2008 and a further R480m last year.

The agency for arts and culture allocated R96m to applicants in 2008 and a further R168m last year.

The NGOs alleged in the court application that the process the agencies followed in adjudicating funding requests was flawed.

In addition, they said the agencies' guidelines were implemented in an inflexible manner so that organisations were disqualified on technical errors.

The Department of Trade and Industry announced this year that amended regulations guiding the requests for funding were expected to be implemented by mid-year.

In Wednesday's court application, the SA Education and Environment Project (SAEP) and Sikhula Sonke asked the court to review and set aside the board's decision not to grant it funding for programmes with children and young adults in Western Cape townships.

SAEP helps children and young adults in historically disadvantaged communities to develop their academic and life skills.

Sikhula Sonke helps young children in Khayelitsha get access to pre-school education and offers accredited training to parents and educare workers. Almost 4 000 children benefited from the organisation's programmes last year.

In court papers, Lorna Jane Keen of the SAEP said the Lottery Board and its agencies had failed to distribute charity money.

"Considering the massive levels of deprivation in communities around South Africa and the numbers of committed organisations trying to make a meaningful contribution, I cannot understand why the (agencies) should be struggling to spend their allocation," she said.

Keen added that it was "inordinately difficult" to get money from other funders because they "rightly" pointed out that NGOs should approach the board.

She said NGOs that could not get funding might have to consider the viability of all their projects.

Wendy Wiemers of Sikhula Sonke said: "Both Sikhula and the organisations that are dependent on it are suffering harm as a result of the actions of the (board) and their failure to properly supervise the functions of the (agencies)."

In court on Wednesday, the NGOs' lawyer, David Borgström, argued that the board had provided insufficient reasons for rejecting the funding requests and that no effort had been made to consider the requests.

Nazeer Cassiem SC, for the Lottery Board, confirmed that the board had not distributed R6bn, but did not argue the merits of the case. Instead, he focused on having it dismissed for lack of urgency.

Acting Judge Takalani Samuel Madima ruled that the matter was not urgent, but added that his decision did not mean he did not consider the plight of the children to be urgent.

The matter was struck off the urgent roll, but the NGOs can now elect to place the matter on the normal court roll.