Corporate community investment and development- Africa 2013

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Overview of the latest trends in corporate social investment, corporate community investment from Africa and South Africa - 2013

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Corporate community investment and development- Africa 2013

  1. 1. Corporate Social Investment Corporate Community Investment Community Relations Socio Economic Development Next Generation Consultants Reana Rossouw Summary of the latest African Trends 2013
  2. 2. The last six years….. 20/02/2013Next Generation Consultants12  2006: A surge in corporate giving  2007: Corporate giving rises moderately  2008: A gloomy outlook  2009: Businesses buckle up  2010: Businesses set flat giving budgets  2011: No increase in giving  2012: Cash giving decline, product giving (in kind) increases
  3. 3. Trend 1: Recessionary Times - 2012 20/02/2013Next Generation Consultants3  49% of giving was Charitable -- defined as reactive community giving for which little or no business benefit is expected. Ex. Disaster relief  47% of giving was for Community Investment -- defined as proactive grants that simultaneously aid long-term business goals and serve a critical community need. Ex. Multi-year grants and flagship programs  24% of giving was Commercial - defined as giving in which benefit to the business is the primary motivation. Ex. Cause marketing and directed giving to organisations as requested by clients or customers.
  4. 4. Trend 1: Recessionary Times - 2013 20/02/2013Next Generation Consultants4  While some companies may start new community investment projects this year, many are winnowing the causes they support in favour of fewer, bigger, higher-profile grants to fewer organisations.  Companies are now zeroing in on social issues that threaten their bottom lines, like people’s ill health, high transportation costs, or diminishing fresh water.  They are also focusing on causes that help them tap into new markets, appeal to their customers emotions, and use their employees’ skills, time and contributions.
  5. 5. Trend 2: Strategic Giving 20/02/2013Next Generation Consultants15  Varying trends by industry  Some industries, such as Energy, Utilities, Materials, and IT, provide more than 50% of their funding as direct corporate cash.  Financial and Industrial companies provide nearly 50% of their charitable funding through their foundations.  Healthcare companies provide nearly half of their giving as non-cash contributions. Most staggering of all, Pharmaceutical companies on average provide almost 90% of their total giving in the form of non-cash donations.  Economic development is the new darling  Green programs are in fashion  Cost benefit analysis of investments are serious considerations  Measuring impact and return is critical  Reporting of corporate giving is highly variable, with relatively low take-up of any one standard measure, making accurate assessment of the complete picture difficult
  6. 6. Trend 3: Operational Focus 20/02/2013Next Generation Consultants6  Significant Emphasis on Strategy and Restructuring  68% of grantmakers are revising their grantmaking structure and strategy in response to several developments, including natural disasters, government legislation, the external business environment i.e. environmental or social risks, and shifting business objectives  Changing Perspectives on Publicising Giving  While 71% of giving departments used PR as a communications strategy, 35% leveraged marketing or advertising to raise awareness, and 26% issued annual community relations/corporate responsibility reports/sustainability and integrated reports  Decentralised Decision Making  26% of companies managed their giving departments exclusively from corporate headquarters, 20% incorporated local or regional management into areas of their corporate grantmaking programs, and 54% operated through a hybrid model of the two  Popularity of Flagship Programs  55% of giving departments engaged in one or more flagship campaigns, which are defined as significant initiatives that are a central focus of a company’s grantmaking.
  7. 7. Trend 3 – Operational Focus Continue 20/02/2013Next Generation Consultants7  Programs serving basic needs i.e. Community/Welfare and Economic Development, were the only two focus areas that experienced an increase in corporate cash contributions.  Companies became more targeted in their giving, rather than spreading corporate funding across multiple social issues. Furthermore, the number of grants per program area (Rand value) of these grants increased.  As one way to maintain grant funding levels and reduce administrative expenses, 53% of companies reduced their management and program costs  participation and raised limits for the corporate match.
  8. 8. Trend 4: The BIG Issues 20/02/2013Next Generation Consultants8  More Demand for Outcomes:  The biggest trend is a growing demand to 1) articulate what results companies hope their investments will achieve and 2) track whether those results are actually happening  Decreasing Emphasis on Non-profit “Overhead”:  The bane of the non-profit sector is the meaningless and destructive public perception that you can separate non-profit programs from the administrative costs ...But the good news is that more and more companies are coming to realise that you can’t just invest in programs without the staff, infrastructure and fundraising to make those programs happen  More Advocacy for the Sector as a Whole:  The development sector has long been a fractured grouping of organisations of various sizes, business models, and issue areas. It has been almost impossible to organise the disparate sector to fight for better government regulations, improved public perception, more funding. But that tide is starting to turn
  9. 9. Trend 4: The BIG Issues - Continue 20/02/2013Next Generation Consultants9  Savvier Donors:  Because non-profits are getting more savvy, donors are as well. In addition to an increasing demand for proof of outcomes, donors are slowly starting to understand the difference between two kinds of money in the sector: revenue and capital  Increased Efforts to Rate and Compare Non-profits:  As non-profit outcomes are increasingly in demand, donors become savvier, and the “non-profit overhead” distinction diminishes, we will increasingly evaluate non-profits based on the results they achieve, not on how they spend their money  Therefore  The non-profit sector will go through a revaluing process  Technology will play a major role for both non-profits and their supporters  The world is shrinking and grantmaking borders are broadening
  10. 10. Trend 5: Anti-Trends 20/02/2013Next Generation Consultants10  It’s all about the Economy:  As the world works its way through an epic economic crisis, jobs and the economy continue to be very much on consumers’ minds.  The Power of Local:  It is simple. Tackle things that support people where they live. It’s the difference between ending hunger—and ending hunger in my community.
  11. 11. Trend 4: Anti-Trends - Continue 20/02/2013Next Generation Consultants21  Ethnicity:  Communities have become melting pots – 2013 may well be melting point for civil unrest.  Minority vs. Majority funding, youth development, jobs, skills, inco me, poverty, income disparity, BEE scorecards and mining, farming, retail, commu nity unrest points to a future where customers not only have a high propensity to support specific causes, they also have high expectations of companies to take on issues that particularly impact them personally.  What a Disaster:  Floods in Mozambique, KZN, Limpopo, burnt down informal settlements, schools without books or other resources. Most companies have disaster response plans in place, and they should. Communities and customers believe disaster relief is a critical issue companies should address
  12. 12. Trend 4: Anti-Trends - Continue 20/02/2013Next Generation Consultants12  The era of fair and ethical grantmaking  Relationship Reset - Some simple rules:  Transparency  (Being clear about your intentions, actions and impacts)  Authenticity  (First having, then holding true to core values and principles)  Engagement  (Providing a spectrum of ways for stakeholders to contribute and participate).
  13. 13. Continental Context 20/02/2013Next Generation Consultants23  Vastly different models of development  Politically very complex operating environments  Long history of development aid  Good News – exposed to international developmental models specifically large developmental agencies – Oxfam, USAID, missionary-faith based organisations and government support agencies – UNDP, Danida etc.  Bad News – capacity and skills not necessary transferred nor have practitioners been involved in program design and program management  Governments received the money – which does not necessarily mean it ended up with the intended beneficiary communities  Development was based on developed economies principles (Western Solutions)
  14. 14. North Africa 20/02/2013Next Generation Consultants14  Large foundations  Wealthy individuals – Oil Barons – Aga Khan Foundation  Politically complex  Muslim (Faith based) Closed Foundations  War Stricken – aid complexity – who to give to and who actually receive  Large global partnerships  Government considerations (political correctness)  Government Recipient
  15. 15. West & East & Central Africa 20/02/2013Next Generation Consultants15  Hundreds of thousands NGO’s & High level of corruption  Big government based foundations – Nigeria Government/Community Foundation (NGCC) – Supported by Oil companies – i.e. Shell  Large multi sectoral partnerships – British/Dutch High commissions, World Bank, United Nations  Integrated Programs – skills, jobs, exports, market based – Niger Delta and Rift Valley  Development Sector has become an industry/career – Third Sector  Companies mainly involved in sponsorships, reputation building type programs  Increased cost of doing business – licence to operate  Scalability a problem – development highly fragmented  Influenced by international development agencies and their agenda’s  Indigenous funding very low and slow – mostly multi national companies  Strokes of brilliance – Foundations (grantmaking) collective fundraising – management fees – capacity building for smaller NGO’s
  16. 16. Southern Africa - Regional 20/02/2013Next Generation Consultants16  South to South exchange (vs. North to South)  Support regional integration (SADC) – cross border investment  Growing role of emerging economies (BRICSA) – global partnerships on government level (no trickle down to industry/practice yet)  Role of China in African Investment (Infrastructure)  Major growth in private philanthropy and its profile and birth of new champions/philanthropists/high net worth individuals  Growth in private , community and family foundations – working across borders  New market based approaches to Socio Economic Development
  17. 17. Market Based Approaches - Innovation 20/02/2013Next Generation Consultants17  Bottom of Pyramid – BOP - Models  Micro credit movement  Venture philanthropy – Seed Capital  Social entrepreneurs and entrepreneurship  Impact Investment  New players – outsourced, insourced, hybrid, intermediary solutions
  18. 18. New Influences 20/02/2013Next Generation Consultants18  Greater emphasis on measurement of impact  (Sustainability & Integrated Reporting)  New patterns in giving  Increasing focus on indigenous giving and community development patterns (poor philanthropist), growing diaspora giving  Quest for sustainability  Definition of sustainability in socio economic development context  Issue of stakeholder engagement  Social baseline studies, research – evidence based development models to clearly understand impact and requirements of stakeholders
  19. 19. Financial Crises – The Good News 20/02/2013Next Generation Consultants29  Debate about aid / development effectiveness  Focus more on trade and investment approaches  Policy implementation and systemic reform – focussing on specific issues - education, health, job creation  Multi-sectoral partnerships  New developmental models - social impact investing, cause related marketing, industry based investments, large scale, new innovation in program design  More focus on measurement – impact and return
  20. 20. Financial Crises – The Bad News 20/02/2013Next Generation Consultants30  More pressure on developmental assistance  Donors not living up to pledges  Even though growth in community foundations numerous NGO’s closing doors  Project based funding no operational support  Fewer international donors and development agencies in Southern Africa  Realisation that development takes a long time – which might be a luxury for some  Realisation that development requires many players and includes many facets  More isolated development – less collaboration  More focus on sustainability
  21. 21. New Considerations 20/02/2013Next Generation Consultants21  Movement by business into unconventional funding areas  Policy, advocacy, human rights, gender, climate change  Partnerships with government and civil society  Longer term investment and support  Increase in cross boarder giving and global philanthropy – as African companies became more global  Challenges in enabling environment – compliance focused investment and giving
  22. 22. Focus Areas 20/02/2013Next Generation Consultants22  Job Creation  More for Enterprise Development, SME Development, Skills development  Environment  More funding – renewable energy, mitigate impact, carbon off setting/trading, water  Education  Less funding for ECD, Schools, Bursaries, FET and subject specific (Science, Maths, Technology)  Health  Less for HIV/Aids – government refocusing and business follows  Overall  Industry specific funding – Mines – Infrastructure (Schools, clinics), Pharmaceutical – Health/Primary health care, Petroleum – Environmental, FMCG – BOP
  23. 23. Serious Issues and Questions 20/02/2013Next Generation Consultants23  Impact of government funding – social grants  Greater dependency creation, less sustainability, less developmental approaches  Quest for impact and sustainability  How do we define sustainability in SED  Scalability and Collaboration  How do we move from less than $1 to self sufficiency and give hope to the youth  New issues – food security, water scarcity, impact of climate change  How do we deal with future challenges if we are not meeting today’s requirements and issues
  24. 24. Towards the Future 20/02/2013Next Generation Consultants24  Innovation and Creativity to solve Africa’s problems  Responsiveness and Responsibility of everyone to solve Africa’s problems  Scalability and Focus to solve particular problems endemic to the African Continent
  25. 25. New Patterns and Implications 20/02/2013Next Generation Consultants25  Resources  Insight and knowledge of those we are trying to serve  Importance of needs assessments  Soliciting feedback about our efforts  Ensuring and listening to external voices  Practices  Reduce turnaround and streamline processes  Ensure fair and ethical grantmaking  Consider general operating support, multi-year grants and capacity building support  Ensure proper stakeholder engagement  Embrace evaluation, monitoring and impact assessment as learning and improvement mechanisms
  26. 26. Hard facts and dangerous half truths 20/02/2013Next Generation Consultants36  What is good for them may be bad for you  What is good for you may be bad for them  Development takes time  Development requires specialist knowledge and expertise – the stakes are too high  There is no ‘one size fits all’ solution/approach  Don’t cherry pick  Sustainability may be an oxymoron  Give or else mentality  War on ideas  The truth, the whole truth and nothing but the truth  Marikana’s Legacy – what we do and what people see  Bad things happen to good companies – Lance Armstrong and the Cancer Association, Mama Jackie and Carte Blanche
  27. 27. Towards the future 20/02/2013Next Generation Consultants27  A new narrative:  Companies need to view their grantmaking as contributors to break- through collaborations and innovations that address complex social challenges.  Inclusive operating systems:  An “investment portfolio” model aligns giving and rallies corporate assets to benefit society and drive business success.  It’s a profession:  Corporate grantmaking is an essential, integrated business leadership function and is considered a professional field.  Improve collaboration, communication, and knowledge sharing:  The corporate grantmaking field enhances its external leverage through a powerful platform for communication and collaboration.  Mobilise “field level” leadership behind this agenda:  With individual leaders at its nucleus, the corporate grantmaking field commits to increasing impact, enhancing value, and supporting transformation.
  28. 28. Questions you have to consider 20/02/2013Next Generation Consultants28
  29. 29. Please note: This presentation is part of a larger body of research and knowledge. This information is the property of Next Generation Consultants and may not be copied or used without express permission. More tools, articles and training information is available at www.nextgeneration.co.za 20/02/2013Next Generation Consultants29

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