Company expenditure on social development, which grew year-on-year over the past decade, stagnated in 2014. Total CSI expenditure by companies in South Africa was estimated at R8.2 billion in 2014. This represents a growth of 4% in nominal terms – a decline of 2% in real terms.
This is the 17th year that Trialogue has conducted its primary research into the corporate social investment sector. The research comprises face-to-face interviews with 99 CSI managers in companies and online surveys with 171 NPOs and is published in The Trialogue CSI Handbook, which was launched to an audience of more than 100 corporate practitioners in Johannesburg on 2 December.
CSI expenditure grew 3% year-on-year between 2001 and 2007, and an impressive 10% year-on-year through the global recession. However, much of this growth can be attributed to how CSI spend is reported, with companies increasingly including non-cash contributions (products, services, employee time, etc). The proportion of non-cash CSI spend in Trialogue’s primary sample continues to increase (from an average of 5% of reported spend in 2012 to 12% in 2014), even as expenditure fails to keep pace with inflation, suggesting that organisations supported by corporate grants are receiving significantly less cash than before.
NPOs finding new survival strategies
Despite the difficult environment, in 2014, more than two-thirds (68%) of NPO respondents reported increased income, compared to 49% in 2013, and up from 33% in 2012.
NPOs in the Trialogue research sample receive an average of 22% of their income from company grants. This is followed by money raised from private individuals (16%) and self-generated income (13%). It was in these two areas that most NPOs realised income growth in 2014.
CSI remains important in the development funding mix
Corporate grantmakers have many demands on them, and tend to spread their resources thinly. In 2014, nearly three-quarters (73%) of respondents supported more than ten organisations, and 12% gave to more than 100 organisations.
When it comes to their flagship programmes companies are making the commitment necessary to realise change – nearly half (49%) of companies supported their CSI biggest project for more than five years. In contrast, nearly one-third (32%) of respondents funded their ‘secondary’ projects for one year or less. Many companies reserve a portion of their budgets for small donations to ad hoc and once-off projects – while less sustainable, these donations are still an important part of the fundraising mix for smaller organisations.
The flattening of CSI expenditure in South Africa is sobering. It challenges corporate funders and NPOs to come up with innovative ways to maintain or even improve their impact in the face of constraints.