South African companies directed R7.8 billion in cash, goods and services to corporate social investment (CSI) in 2012/13, according to Trialogue’s annual research, released this week. Some company reputations clearly benefit from this. But few are able to tell just how effective their social investments are in fostering positive societal change.
The estimate of almost R8 billion in CSI spend this year draws on the analysis of our primary research with 103 corporates conducted between June and August 2013, along with the annual reports of larger companies and state-owned enterprises.
The 2013 CSI spend of R7.8 billion represents nominal growth of 13% over the previous year (R6.9 billion), or 8% in real terms. Growth in real terms has been particularly evident since 2007. Over the past six years, real growth has averaged 10% per annum, compared to only 3% for the period 2001 to 2007. This is in part due to a broader range of what expenditure is included in CSI, such as quantification of employee hours and license-to-operate spending. Trialogue estimates the amount spent exclusively through CSI departments at R6.4 billion. On average 83% of CSI department budgets are spent on direct project costs.
Large companies continue to account for the biggest share of CSI expenditure. The top100 companies in terms of CSI expenditure spent over R5.4 billion in 2013, representing just under 70% of total social investment. The mining, financial services and retail sectors together account for nearly two-thirds (65%) of total CSI expenditure. Mining companies spent an average R62 million each on CSI this year.
Trialogue’s primary research revealed that moral imperative is a significant driver of CSI (mentioned by 84% of companies), with reputation management coming a close second (mentioned by 60%). Forty-four percent of companies say the dti’s broad-based black economic empowerment (BBBEE) codes are an important consideration and this is reinforced by the finding that 41% of companies determine their CSI budget according to net-profit after tax (NPAT). The BBBEE codes call for 1% of NPAT to be directed to socio-economic development, however companies, on average, spend 1.4% of NPAT on CSI. Fifty-five percent of companies increased their CSI expenditure in 2013, while for another 20% their budgets remained the same.
The question remains: What impact is this spend making? It is hard to know. Trialogue’s primary research shows that while CSI departments understand the importance of gathering and analysing evidence around their developmental work, few companies fund or conduct useful research to inform their work.
When it comes to monitoring and evaluating (M&E) projects that they fund, almost all companies do site visits and track project activities, but less than half do baseline surveys. Eighty percent of companies claim to measure beneficiary numbers, but only 42% could provide a figure. The evidence suggests that CSI departments would find it difficult to apply lessons from previous projects or attribute success to their particular projects, as the necessary information has not been gathered in the first place.
While four in ten companies include M&E in their CSI budgets, only 2% of budgets, on average, are directed to it. As for spending on research: One in five of companies dedicate some budget to this, but they spend less than 1% of their total budget on it.
In the “CSI Matters” fora that Trialogue runs every quarter, practitioners cited a number of reasons for this disconnect between intentions and the resources dedicated to research. These included time constraints, a lack of in-house skills in gathering and analysing data, and disinterest in developmental research at senior levels in the organisation.
This is why, when communicating externally, just 41% of companies can share CSI projects’ outputs and only 25% can talk about the impact of their work. However, being able to demonstrate that a company has made a real difference enhances credibility with the public and, as the research has shown us, reputation matters.
In 2013, both corporate and NPO respondents were asked to name up to three companies that, in their perception, are achieving the most developmental impact through their CSI activities. Among corporate respondents, Anglo American and Nedbank received the most number of mentions (joint top nomination), followed by SAB Miller (second) and MTN (third). Those mentioned most frequently by NPOs were Anglo American (first), Nedbank (second) and Old Mutual and Vodacom in joint third place. For these companies, clear communication of the good work that they are doing through CSI – often backed by good M&E – is paying off.
– Rockey is director of Trialogue. First published in Business Day, 4 December 2013