Student No :9712664T MEd School of Education Faculty of Humanities / After the establishment of the first democratic government in South Africa, the Education Ministry committed itself to transforming the education system through developing new policies and legislation aimed at achieving equitable access to education and improving the quality of education. One of the school reform policies is the South African Schools Act (SASA), which is aimed at democratising and improving school education. It does so by devolving responsibilities and powers on schools, thereby promoting more democratic governance of schools by school governing bodies (SGBs), which are comprised of parents, educators, non-teaching staff and learners. The main thrust of this study was to investigate the factors that explain how different rural schools in Bolobedu district (Limpopo Province) interpret and implement the newly-granted SGB powers and responsibilities regarding school finances and budgeting. Four schools, two primary, one junior secondary and one senior secondary, were sampled. At some of them SGBs appeared to be doing well, while at others the SGBs appeared to be overwhelmed by the new task of managing school finances and budgeting. The research instruments used in carrying out this study were interview schedules, documentary data analysis and non-participant observation of SGB meetings. Interviews were conducted with educators, principals, parents and learners (members of SGBs and nonmembers). Triangulation of data is essential for the validity and reliability of a study. This study is regarded as valid and reliable, as there was strong correlation among the responses to most of the questions posed. The interviewees participated willingly in the study and showed complete understanding of the questions. The major deduction from this study is that not all SGBs in disadvantaged rural areas are unable to execute their duties and responsibilities regarding school finances and budgeting, despite being dominated by illiterate parents who have not had the administrative and financial experience to oversee school affairs. The findings indicated that some poorly resourced SGBs were able to execute their duties and responsibilities regarding school finances and budgeting, though there were some constraints. The following factors that assisted and undermined the capacity of schools to assume their financial powers effectively were identified: • School-Community relationship; • SGB capacity; • Internal social capital; and • Leadership strategies.