Business social spend down in 2010

The way in which business responds to broader societal needs is often innovative and remarkable.

This includes its work in corporate social investment (CSI), sometimes in response to the department of trade and industry’s codes of good practice and agreed industrial sector charters, enterprise development in terms of Code 600 of the BEE codes of good practice, social entrepreneurship support as an alternative for-profit activity with a social cause, select sponsorships and through formalised staff volunteer programmes.

This month’s release by Cape Town’s Trialogue of its estimate of R5.4-billion in CSI spend in South Africa this year means that this is the first in 10 years without an increase in CSI. But even to match last year’s amount, companies have included all sorts of non-core CSI items, such as expenditure on infrastructure required by licensing agreements, all-in social and labour plans, product and volunteer provision to good causes, and so forth. Not-for-profit organisations now receive only 37% of CSI, leaving one to think that pure CSI spend has declined substantially.

Trialogue put this down to the recession, but I imagine that the imperatives of the industrial sector charters, licensing and various transformation initiatives, along with a sometimes simplistic notion of “business alignment” of CSI and “brand/product returns” dictating CSI spend, would account for much of the change. Whatever it is, it is certainly profound. Then there are the community trusts (often ignored in CSI analyses) that are increasingly popular as a vehicle for driving broad-based BEE.

But there is very limited documented knowledge about the frequency of their use, their fitness for the purpose, or on the factors that enable or constrain their eff ectiveness. Our own research suggests that the realization of the developmental objectives described in the BBBEE codes of good practice persistently eludes community trusts and that even the immediate outcome for private enterprise—meeting the ownership target obligation—is inherently problematic. This isn’t to castigate business.

After all, poverty alleviation to scale can only come through substantial and sustained economic growth, and it is government’s primary responsibility to address matters of basic poverty, justice, the protection of all human rights and to set policy for the acceleration of economic growth with consequent job creation. In this, it’s a given that success is more likely through sound partnerships between the public and private sectors.

Indeed, we must recognise that the biggest positive impact that any business can make on community upliftment is to run its own affairs well, to make profits, expand markets, provide employment, create products of use, meet its corporate responsibilities and pay taxes. That said, let me concentrate on the socioeconomic development (mainly through CSI) that formal business undertakes in societal transformation. How companies actually translate their CSI activities in working models can be categorised into three broad sectors.

Firstly, there are the “pet projects”. This relates to straight-forward grants driven by a particular individual in the company who has an interest in a particular cause. Then there are the more broad-based and more widely used models of social investments that involve funding, but not necessarily partnerships, with beneficiary organisations. This approach tends to be more reactive than proactive, which doesn’t necessarily make it ineffective.

Lastly, there are “shared value creation” programmes. These are programmes driven by clear strategy and that need ongoing engagement with partner benefi ciaries, along with extensive monitoring, evaluation and reporting. These programmes are sometimes also aligned to broader business needs, such as increasing the number of relevant specialists in the economy or in creating sustainable jobs in a company’s employee base communities.

We have seen an increase in support for shared value creation programmes. This is to the good but it is also important that we don’t support these types of interventions to the exclusion of the important work that NGOs deliver, which may not seem strategic and aligned to business imperatives, but that nevertheless hold the often delicate fabric of society together.

Some key CSI lessons:

  • Back champions. Successful people are what count.

  • Don’t respond to need alone. The needs are endless and you need to ensure that you “back a winning horse”.

  • Apply sound business principles when considering social investment. Social investment is not “warm or fuzzy”.

  • Focus on the outputs as opposed to inputs. Check impact.

  • Adopt an inclusive, partnership approach in funding relationships.

  • Have patience—social development is not for sissies. There is no magic formula to address the myriad challenges in society.

  • Recognise the complexities of marginalised and vulnerable communities. Money is not in itself the answer.

  • Be bold—there is no “one-sizefi ts-all” approach but there is space to apply different models of engagement and support. This is with the proviso that we document lessons and share them.

  • Resources are scarce and developmental needs sometimes seem insuperable. So we need to be targeted, clear in our approach and aware of the benefits of the “long haul”. There are rarely any short cuts to sound development and the bells-and-whistles approach mostly fails. Remain aware of the limits of your understanding of local dynamics, and always apply best-practice principles in what you set out to do.

Regardless of the model we follow, or the value of the contribution, it is important to do it well from the start and to incorporate four key pillars of success. These include insistence on strong governance of CSI work and sound processes to ensure that the right structures are in place for effective decision-making, accountability and reporting.

Secondly, our work needs to be informed by sound research on national and local policies and programmes and use a strategy that guides decision-making. Donors are constantly inundated with requests for funding and must have clear strategies and guidelines that not only reduce the number of unsolicited funding appeals, but also save NGOs the expensive bother of applying for support to the wrong places.

Critically, CSI needs to be informed first and foremost by developmental agendas as opposed to simple business needs. Though business can and should receive acknowledgement for its contributions, this should not be its deciding factor. Lastly, we need to constantly review, monitor, evaluate and report on this work. That way lies understanding and future efficiencies. Looking to 2011, one cannot help but notice that “capacity building” has become a common buzz word in the donor and development world.

The essence of this lies in actions to improve NGO effectiveness. This makes it similar to normal business concepts of organisational development, organisational effectiveness and/or organisational performance management. But when we think of these concepts in the development sector we sometimes forget the lessons of business and insist on quick fi xes to often complex problems. And it’s easy to say that “enhancing sustainability” should be the key focus of any capacity-building activity without always thinking through what this should mean.

In some cases, donors expect it to mean that NGOs generate their own income and so become financially independent. But the vast majority of NGOs will not be able to achieve this goal, and their work often demands that they shouldn’t. For these, sustainability pro bably means something else—the ability, consistently, continuously and efficiently to raise, manage and deploy funds with which to implement programmes and to achieve set goals that ultimately benefit the communities in which they operate. It means the running of their operations to greatest efficiency and thus best societal effect.

This understanding of what sustainability means is critical, and support for in-depth organisational capacity support, though often vital to NGO success, must always work off this understanding. Driven by proactive, dedicated grantmakers in true partnerships with an involved NGO leadership, capacity building is work that can have a much longer-term beneficial effect on organisational stability, growth and positive social change than mere funding alone. Done well, it can build a stronger civil society as a strong legacy to our future.

Tracey Henry is chief executive of Tshikululu Social Investments (

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