At Trialogue’s milestone tenth annual conference, director Cathy Duff presented on a decade of trends and forecasted the next decade of corporate social investment (CSI) in South Africa. Despite uncertainty and tougher trading conditions in almost every sector of the economy, corporate South Africa continues to demonstrate its commitment to CSI. Drawing from Trialogue’s research, Duff said that CSI expenditure in South Africa was estimated to be worth R8.6 billion in 2016, significantly up from R2.9 billion in 2006.
Trialogue interviews around 100 large companies and over 200 non-profit organisations each year, and over the last decade the following key trends have emerged:
1. CSI expenditure has grown
In 2007, Trialogue estimated a R3.2 billion spend on CSI (in nominal terms). In 2016, this figure was R8.6 billion. There was a significant increase in CSI expenditure in 2007, as a result of the implementation of the B-BBEE codes and, until 2013, Trialogue consistently found that total CSI expenditure was growing in real terms. However, in 2014 and 2015, CSI expenditure experienced negative growth in real terms, and growth was flat in 2016.
2. Non-cash giving has increased
Non-cash giving as a portion of total CSI spend increased over the 10 year period – from 6% in 2006 to 13% in 2016. Product and service donations accounted for the vast majority of this type of giving. In 2016, 29% of companies reported figures for these donations, which equalled 19% of their total giving. By comparison, only 11% of companies quantified the value of their employees’ volunteering time, which accounted for less than 1% of their total giving. Trialogue expects a continued increase in non-cash giving as more companies quantify volunteering time.
3. Less CSI expenditure going to Gauteng
CSI expenditure continues to be concentrated nationally (32% in 2009; 37% in 2016), in Gauteng (29% in 2009; 20% in 2016), and in the Western Cape (6% in 2009; 11% in 2016). In 2016, companies gave to an average of three provinces, compared to four in 2015. Only 13% of respondents reported international giving in 2016 and spent 4% of their CSI expenditure on such interventions.
4. Education has received an increasing share of spend
Education has always been the most supported sector, and this has increased significantly over the past ten years. Over 90% of companies supported the sector in 2016, and the sector’s share of total CSI spend increased from 33% in 2006 to 48% in 2016. Education is followed in popularity by support for community development (17% of CSI spend in 2006; 15% in 2016) and health (which has received a declining share of spend – from 16% in 2006 to 9% in 2016). Within the education sector, most funding continues to go to school-level education (51% in 2016, 53% in 2007). Support for early childhood development causes has increased, from 11% of total spend on education in 2007, to 17% in 2016 – as corporates realise that earlier interventions have strong longer term impact.
Among smaller companies, education similarly receives the majority of CSI spend. In this group, however, the second most-supported sector is orphans and vulnerable children, according to Nation Builder.
5. Expenditure on NPOs has decreased
Although NPOs remain the preferred channel through which companies direct their CSI expenditure, the proportion of respondents giving to NPOs declined from a high of 100% in 2014 to 82% in 2016. For the first time in 2016, the proportion of CSI funding going to NPOs was below half of total CSI spend (45%), significantly lower than in 2011 (57%). Instead, direct corporate support for government institutions (including schools, universities, hospitals and clinics) has increased, with 80% of companies giving to these organisations in 2016. This type of giving accounted for over a third of total CSI spend in 2016 (34%); significantly up from 27% in 2011. Such support includes scholarships and bursaries. In line with these findings, within its NPO sector research, Trialogue has found that companies now account for less NPO income each year, declining from 18% to 15% over the last ten years.
6. More companies have employee volunteering programmes
In 2007 less than half (46%) of companies had formal volunteering policies. In 2016, 70% of companies had formal employee volunteering programmes. Company-organised volunteering initiatives were the most common type of initiative, with 84% of companies running these in 2016, up from 52% in 2011.
7. The number of companies that claim to undertake some form of M&E has increased
In 2006, less than half of companies were conducting any form of monitoring and evaluation (M&E). By 2016, 94% claimed to be doing it. In Trialogue’s experience, most companies monitor their CSI spend, but in recent years there has been an increased interest in implementing effective evaluation frameworks.
8. Many of the same companies are rated highly for CSI
Anglo American, for example, has retained its position as the company perceived to have the most developmental impact: it was rated first in 2007 and in 2016. Other companies that have been in the top 10 across the years include SAB, Old Mutual, MTN and Telkom.
9. CSI has become more strategic
Companies have become more strategic in their social investment, which has become more focused and more closely aligned to their core business. An increasing number of companies aim to achieve both social and business impact from their CSI expenditure and, as such, have become more proactive in selecting which programmes to support.
10. CSI is growing amongst SMEs and in the rest of Africa
Based on research conducted by Nation Builder, the motivation for CSI between small and large companies is different: CSI is often far more personal for smaller companies, rooted in the convictions of the founder or CEO.
Based on emerging trends, Duff forecasted the following for the next ten years in CSI:
1. Increasing integration of CSI into the business
Companies will move beyond CSI, to social innovation. The use of terms such as ‘CSI’ and ‘sustainability’ will fade, with these practices simply becoming a part of normal business. Responsibility for implementing these programmes will increasingly sit within operations and, as such, both the terminology and the profession itself will change.
2. More focussed CSI
Many companies currently have varied focus areas. Trialogue expects this to decline as companies choose to support fewer sectors. It is expected that the sectors that will gain are education and skills, job creation and small business support.
3. Involvement in advocacy work
Companies will not be able to shy away from this for much longer. Consumers and employees – younger generations in particular – expect companies to take a stand on issues.
4. Greater employee engagement
Employees expect and want to work for companies that hold values similar to their own.
5. More consumer buy-in
Companies are expected to make consumers increasingly aware of what they are doing. Consumers, in turn, are moving towards environmentally and socially responsible companies.
6. Increasing collaboration
Addressing social issues is complex and requires long-term commitment and comprehensive collaboration between different sectors of society. Initial emphasis on these elements needed for impact in development have already been seen, and is expected to increase.
7. More innovative finance
There will be a growing shift from grant financing to more business-minded funding and thinking. This will include social impact bonds, loan finance and social enterprises.
8. Rise of technology and data
Ninety percent of the African population has a mobile phone. It is anticipated that, over the next decade, most of these mobile phones will be smart phones. This can have a huge impact in terms of delivery of products and services. Growing insight on how people access and use information, products and services will also impact how companies plan, measure and monitor progress.
9. Greater transparency
This has already changed significantly in the last 20 years and will continue to do so. With social media, the speed and extent to which information can be shared, companies will have to become increasingly transparent in order to build and maintain trust with their stakeholders.
10 . Increased professionalisation of CSI
As CSI becomes more strategic, the profession itself will become more central to the business.