WHAM!’s look at the main findings of Trialogue and Nedbank Private Wealth research.
- CSI state of play
Corporate social investment (CSI) has become de rigueur for South African companies, something that took off after the country’s transition to full democracy in 1994.
“CSI” refers to that part of broader corporate social responsibility that is external to company and employee needs, external to product marketing, and that aims at community development and upliftment. This sometimes includes direct involvement in developmental projects, or can be confined to financial support for organisations and institutions that drive this work.
“CSR” (corporate social responsibility), by contrast, is much broader, and includes what companies do in CSI, enterprise development, skills development programmes, employee benefits in housing and bursaries, community social and labour plans (in mining and independent power energy sectors), industry sector transformation charters, Broad-Based Black Economic Empowerment codes of conduct, Institute of Directors public reporting codes, national “pacts” with government on schooling, procurement, skills, and the “green economy”, through internal company employee volunteerism programmes, and more.
All these things speak to a deep understanding of corporate citizenship that goes beyond the obvious definitions of what constitutes business interest. As then-chairman of Business Leadership SA (and former CEO of AngloGold Ashanti), Bobby Godsell, described it in 2015:
“Being involved in how broader society progresses, taking on things we manage and do well, and looking beyond simply a company’s immediate business activity, is the stuff of good citizenship. It is a bedrock of what long-term empowerment looks like.”
The most comprehensive current overview of CSI expenditure in SA is found in the 2019 Business in Society Handbook, published by Trialogue for the 2018/19 financial year.
Research covers 100 top-spending CSI programmes of JSE-listed companies, multinationals operating in SA, and state-owned enterprises. From this, extrapolations are made to try include smaller CSI programmes in research conclusions.
Trialogue has undertaken this annual research since 1998. CSI spend seems to correlate with economic growth, and with changes in how companies have seen their corporate citizenship role.
Thus there was consistent and often significant growth in real annual CSI spend from 1998 to 2013; reductions in 2014 and 2015; flattening in 2016 and 2017; only slightly recovering in 2018. It flattened again in 2019, at R10.2bn CSI spend.
For institutions and non-profit organisations (NPOs) trying to attract CSI partnerships and related support, the struggle is real, as CSI budgets tend to be committed forward already, and fewer companies are prepared to change their established strategies, focus areas or partnerships than in the years of CSI growth immediately post-1994.
Within this reality sits an entrenched and understandable emphasis by many CSI managers on risk management, in which they often stick with proven relationships rather than looking for experimentation.
Main CSI research results and trends at end-2019:
Industrial sector spend – top three
- Retail and wholesale
- Mining and quarrying
- Financial services.
This is a change to most years past, where mining and quarrying, and then financial, services, were the biggest spenders.
Most supported developmental sectors
- Education (50%)
- Social/community development (15%)
- Food security and agriculture (9%)
- Health ( 7%).
So, fully 81% of CSI spend is concentrated in these four sectors. Development sectors that received less support (in descending order):
- Entrepreneur and small business support
- Disaster relief
- Sports development
- Arts and culture
- Housing and living conditions
- Safety and security
- Social justice and advocacy.
- National: 38%
- Gauteng: 21%
- Western Cape: 10%
- KwaZulu-Natal: 9%
This spread partly reflect companies taking a narrow view of what constitutes business-aligned CSI; and partly follows population settlement patterns.
(Top CSI risks identified by companies)
- Lack of adequate community engagement/inclusivity
- Community expectations
- Risk of project failure
- Financial dependency.
- “CSI is integral to company brand”: 59%
- Companies who measure project outcomes: 72%
CSI strategy, and shared value
Shared value is where social investment brings benefit to both the company and its partners (NPOs, beneficiaries, programme collaborators).
Fully 86% of companies claim to use “shared value” thinking when formulating CSI strategy.
Business benefits of a shared value approach are identified by companies as:
- Brand and company reputation
- Strategic relationships with strategic stakeholders
- Advances staff skills
- Supports retention of critical skills
- Supports market acquisition.
How companies are perceived for their CSI can be a thing of good, credible and consistent comms, but must surely also require sound developmental practices.
Best CSI programmes – perceptions of companies by other companies in 2019:
- Discovery/Old Mutual
- Anglo American
- FirstRand/Standard Bank.
Best CSI programmes – ranked by NPO perceptions in 2019:
- Old Mutual/Vodacom
- Anglo American/Discovery
- FNB/Absa/Investec/Pick n Pay.
Other general things to note
- Only 6% of CSI spend relates to non-cash giving.
- NPOs received more than half (54%) of CSI spend.
- Two-thirds of CSI programmes are managed internally, rather than being outsourced or run through separate legal entities such as trusts or NPCs.
- Philanthropy in SA
CSI practitioners and philanthropists are quite different animals.
CSI practitioners are, by definition, employees of companies or company-linked entities. It’s their job to look at CSI in terms of measuring social-returns-on-investment; impact effectiveness; spend efficiency; project management; stakeholder management; public affairs considerations; brand and reputational risk containment; and so on.
Their careers depend on getting these and associated things right, for it’s not their money that they’re handling.
Philanthropists, on the other hand, are giving away their own money, and often do so “under the radar”. Sometimes it’s channelled through private foundations, sometimes managed by financial institutions on their behalf, often it’s just private (even quixotic) giving by individuals and families.
So, what matters most to philanthropists is sometimes quite different to the things that keep CSI practitioners up at night.
Here’s what we know…
Nedbank Private Wealth – Giving Report IV
Released in April 2020, the Nedbank Private Wealth (Philanthropy Office) Giving Report IV is based on 2018 research into the philanthropy and “good giving” of High Net-Worth Individuals (HNWIs).
The following points are taken from the report:
- One-third of givers had a budget and a strategy for giving. Larger givers were more likely to follow a more formalised approach to giving.
- Most givers (63%) provided general support to their beneficiaries and the relationships were predominantly long-term. Just over half of givers supported most of their beneficiaries for more than five years, while 21% had been supporting them for their entire lives. Only 4% of givers executed their giving through a trust or foundation.
- Over half of givers did not expect any follow-up after making their contributions. Those who did anticipate some form of recognition most commonly expected a thank-you letter or a receipt. More respondents were looking for opportunities to become involved with their recipients in other ways (such as visiting the organisation).
- The proportion of HNWIs giving money, time or goods in 2018 remained high. However, there is a declining trend: 83% in 2018, down from 88% in 2015, 91% in 2012 and 94% in 2010.
- Giving as a family tradition has risen consistently over the four reports, with 20% of givers having reported this as a reason for their giving compared with only 9% in 2010. Family members were the most likely to be consulted when making decisions about to whom to give.
- The proportion of HNWI givers measuring whether their giving had achieved the intended results has risen consistently since the first survey, with 36% having reported doing so in 2018 compared with only 22% in 2010. Marginally more givers in 2018 (36%) were measuring if their giving achieved the desired results compared with 2015 (30%). Of those who did measure, the most common approach was visiting the organisation to observe the impact.
- Most popular channels for identifying beneficiaries:
- Religious organisations
- Personal or family involvement
- Network of friends and peers.
- The characteristics of the giving sample, paired with market sizing data, suggest that the total population of HNWIs in South Africa is approximately 135 700, up from 105 000 in 2015.
- Based on the size of the population, it can be estimated that in 2018 HNWIs donated roughly R6,1bn in cash (2015: R4,2bn), R3,1bn in goods and services (2015: R2,8bn) and 4,3m hours of their time (2015: 3,6m hours).
- By applying the proportion of givers in the sample to the estimated population of HNWIs, it can be estimated that roughly 112 043 HNWIs in the country donated cash, goods or time in 2018 (2015: 92 400).
Qualifying criteria for giving:
- Responding to need (55%)
- Alignment with my interests (48%)
- Proven impact ( 33%)
- Reputation (32%)
- Good governance (24%)
- Opportunity for involvement beyond funding (21%)
- Quality of leadership (17%)
- Sound financial management and sustainability (15%)
- Ability of the organisation to influence (11%).
Post-donation feedback required:
- No further acknowledgement: 51%
- Public acknowledgement/recognition: 2%.
The use of formal structures for giving, such as trusts and foundations, remains uncommon among private givers. Only 15 survey respondents (4% of givers) reported giving through such structures in 2018.
As in previous surveys, among the majority who do not use formal structures, administrative burden and not surpassing a perceived giving threshold were the most likely reasons for not doing so.
Patterns and trends of giving in the corporate sector, through corporate social investment (CSI) are considerably different to those observed in private giving. Giving in the corporate sector was hugely concentrated in the education sector, with 94% of corporates having given to educational causes and the share amounting to around 50% of CSI expenditure.
The social and community development sector is popular among both corporates and HNWI givers, and was the second most popular sector for CSI, with 77% of corporates having given to this sector, which attracted 15% of investment allocations.
Independent Philanthropy Association of SA (Ipasa)
Unsurprisingly, “good giving” in philanthropy is a disparate field. Some philanthropists, however, do collaborate with each other, especially in knowledge-sharing through the Independent Philanthropy Association of SA (Ipasa).
Ipasa is a “voluntary association of independent philanthropists, private foundations and other organisations associated with philanthropy in South Africa. The concept of independence relates to independence from government and the corporate sector in terms of governance”.
- Brendalyn & Ernest E Stempel Foundation
- Rand Merchant Bank (where managing private philanthropy)
- The Standard Bank Tutuwa Community Foundation NPC
- JET Education Services
- Ackerman Family Foundation
- Allan and Gill Gray Foundation
- Ball Family Foundation
- Charles Stewart Mott Foundation
- Cyril Ramaphosa Foundation
- Dalib Investments
- Elma Philanthropies
- Oppenheimer Philanthropies
- Ford Foundation
- The Ford Foundation
- Grindrod Family Centenary Trust
- Kagiso Trust
- Investec (where managing private philanthropy)
- Michael and Susan Dell Foundation
- Millennium Trust
- Oppenheimer Memorial Trust
- Roger Federer Foundation
- Saville Foundation
- Andreas & Susan Struengmann Foundation : Students for a Better Future
- The Fuchs Foundation
- The Harry Crossley Foundation
- The Learning Trust
- The Lewis Foundation
- The Raith Foundation
- The Southern Africa Trust
- The Zenex Foundation
- TK Foundation
- The Chris Otto Foundation Trust.
Compiled by Paul Pereira, May 2020, firstname.lastname@example.org
 Prior to that, South African CSI had been pioneered and largely formalised by the work of the Anglo American and De Beers Chairman’s Fund from 1973.
 Godsell, R., Speech to Nation Builder “In Good Company” conference. Pretoria. August 2015.