South Africa has a rich history of corporate philanthropy which, in his article featured in the 20th edition of The Business in Society Handbook, Paul Pereira dates back to 1889. As Trialogue director Cathy Duff shared at The Trialogue Business in Society Conference 2018, corporate philanthropy has evolved and formalised considerably over the years since. The Black Economic Empowerment scorecard that requires businesses to spend 1% of net profit after tax on corporate social investment (CSI) and the King reports on Corporate Governance for instance, have significantly influenced the way businesses approach their societal, environmental and financial responsibilities.
The evolution of CSI in South Africa
Some of the earliest CSI research, conducted in 1991, revealed some trends that have remained broadly the same, while others have changed. In 1991, for example, most CSI was allocated towards educational projects. This was still the case in 2017. In 1991, companies were supporting anywhere between 20 and 1 000 projects in a year. By contrast, today businesses are supporting smaller numbers of flagship projects.
In her guest foreword to the commemorative 20th edition of Trialogue’s Handbook, founding editor of the publication Vanessa Rockey wrote that “When approaching corporates about the extent of their community funding for the first edition’s primary research, I was frequently met with suspicion. Transparency was rare. There was seldom an employee dedicated to managing this area, which was often relegated to part-time human resources, public relations or marketing functions. Confusion about what constituted community funding was common, with spending varying from the company chairman’s favourite projects, to corporate golf days.” Two decades later, the management of CSI has become more transparent, with companies communicating more openly about their activities. Companies have also shown slow progression towards more strategic CSI.
Current trends in CSI
In its 2017 research into the state of CSI in South Africa, Trialogue found that:
- Total estimated CSI expenditure in 2017 was R9.1 billion. This was concentrated to larger companies, with the top 100 companies (by CSI spend) investing R6.6 billion, or 78% of the total CSI expenditure.
- Companies are increasing their non-cash giving as a proportion of CSI spend. Product and service donations accounted for the vast majority of non-cash giving. These contributions increased from 6% of total CSI in 2011 to 10% of total CSI in 2017.
- In terms of geographic spread, contributions broadly follow the economic footprint of the country. Gauteng received the lion’s share of CSI spend, with 20%, followed by the Western Cape (10%) and KwaZulu-Natal (6%).
- Education remains the most popular sector, receiving 48% allocation of total CSI spend, with social and community development, and health following at 15% and 12% respectively.
- In terms of volunteering, companies most commonly organised staff volunteering days. However, this form of volunteering was not sought after by NPOs, likely due to the burden imposed on them during once-off or ad hoc volunteering days. NPOs preferred fundraising and collection drives, or give-as-you-earn initiatives.
- Most companies (89%) and NPOs (80%) claim to measure the outputs of their CSI projects.
- Asked which companies they believed were having the most developmental impact, fellow companies ranked Vodacom highest, while Nedbank came out tops among NPOs. Asked about the most impactful NPOs, Gift of the Givers was ranked most highly by companies and fellow NPOs – who also ranked CHOC and the SPCA highly.
The future of CSI
Drawing from its two decades of CSI research, Trialogue identified the top 10 trends likely to shape the sector, and responsible business more broadly, in the coming years:
- Increasing integration: CSI will become more integrated with other divisions and functions, to collectively represent business’s interaction with society.
- Greater focus: Companies will scale back on the number of initiatives that they support, to just one or a few flagship programmes that are aligned with the business and supported for extended or indefinite periods.
- Support for social justice: Companies will increasingly be expected to take a stand on the social and political issues of the day.
- Employee engagement: Volunteering will become more sophisticated, with increased matching of company skills, resources and opportunities to the skills and desires of individual employees.
- Stakeholder interaction: Companies will support ongoing and robust engagement with external stakeholders who are included in, or affected by, both business and developmental activities.
- Collective impact: Companies will channel funds to collaborative initiatives in which various organisations with complementary agendas and unique capabilities will partner to achieve common goals.
- Innovative finance: Alternative and blended financing models for development will become commonplace, with combinations of social enterprise, impact bonds, loan financing and crowd funding, in addition to traditional grant funding.
- Application of technology and data: Technology and data-driven solutions, either to advance existing solutions or as delivery mechanisms in their own right, will increasingly be applied to address social issues.
- Applied measurement: Measurement of developmental outcomes, rather than activities, will become an accepted norm and a condition of funding.
- Professionalisation: Acknowledgment of the importance of CSI in supporting business’ interaction and relationship with society will result in CSI becoming a more senior advocacy and coordination position.
While government is the primary agent to address social issues, CSI is a tool with which business can effect social change and, as such, there is a need for companies to shift to a more strategic, collective response.
Image © Brett Eloff