Business has changed. It has had to change. It can no longer proceed with the gay abandon of the past. It has to be accountable, fair, transparent and responsible.
As this realisation has grown in corporate South Africa, so the Investing in the Future concept has come of age. It is gratifying to have witnessed the challenge so vigorously accepted by local companies.
The winners of this year’s Investing in the Future Awards are worthy, and are not in it for the short haul. An analysis of the winners and finalists reveals that they are all projects that are sustainable and have a long-term future based on empowering. Projects that are leaving behind a footprint, a legacy, foundations on which to build.
Innovation, too, is a hallmark of their success. Innovation indicates growth and development, and then catalytically creates multipliers that empower the project and the community.
Equity investment, by all interested and affected parties, is a critical success factor. An investment, and an interest to make a success of it, breeds success.
Winning projects also adhere to the tenets of the King II report on corporate governance, which identified the ‘triple bottom line” or sustainability — social investment, environmental responsibility and economic profit — as the basis for successful business.
A company is entitled to determine its policy towards sustainability spend. It can be broad ranging and inclusive, dealing with, say, welfare and disaster relief in general. Or it can be exclusive and specific, concentrating only on the provision of, say, housing. It should be aligned to the business.
But this spend is donor expenditure, philanthropic spend. The money, with good governance conditions attached, is released to the governing body of the project. A delivery contract is put in place and outputs monitored. The company claims no business mileage in general and certainly no marketing mileage in particular.
Then there is no tax payable, no value-added tax in the recipient’s hands. Obviously the company is also entitled to limit its own tax liabilities. And it does this via the Section 18 status of the beneficiary.
The winners all displayed this sensitivity. There was no attempt to manipulate a double whammy: claiming good deeds, philanthropic association with a good cause, tax benefits and overt marketing mileage. This cannot be said of all entrants.
To abide by King II, ethics and morality, sustainability investment and investment in the future must be genuine, with no hidden agenda. The corporate social investment (CSI) budget is not a convenient bank to be raided when the operating budgets get depleted.
Now for the flip side. Since the early 1990s sponsorship and cause-related marketing have become weapons wielded in the corporate world.
Sponsorship deserves to be discounted. It is a purchase, very much like any other communications purchase. A product is on offer; following negotiations the product, a rights package, is bought and the whole is used in a multimedia attempt to meet business objectives.
Multimedia, multi-zonal, multi- dimensional — the sponsorship can include exposure and beneficiation for good causes. But the basic business objective remains intact: grow the business, grow the brand. Therefore, pay the tax.
Cause-related marketing developed from classic sponsorship and some of our winners have most effectively used the technique. But then, don’t try to position great and good works and pious deeds as philanthropy. Accept what it is up front: cause related, mutually beneficial and the exploitation of strategic partnerships for the common good. Sponsorship by another name.
There is nothing wrong in pursuing both CSI/sustainability and cause-related marketing. According to King II, ‘Corporate social investment then, unlike cause-related marketing, is all company expenditure, sans employment costs, that does not attract VAT.”
If the awards achieve nothing else, their ability to showcase the corporate ‘secret weapon” of the new millennium is paramount. King II provides companies with a supreme business tool that, effectively and properly used, must benefit the triple bottom line: discriminate carefully between a donation and a sponsorship, and apply a beneficiation process to the sponsorship, converting it to cause-related activity.
Ask yourself three questions: Is it kind? Is it necessary? Is it true?
If the answer is ‘yes” to all three, you are Investing in the Future. If the answer is ‘no” to any one question, stop, re-look and rethink. You aren’t abiding by King II.
This year a fourth dimension has been emerging — good citizenship. In corporate governance terms, this takes the form of the following challenge: have the CSI/sustainability budget controlled by an independent body or board, with a preponderance of non-executive directors and operating to an agreed mandate. That is Investing in the Future indeed.