Thank you Lebo. Good morning everyone. I am delighted to be standing up here again in front of such a packed room. I hope this is testament to our previous conferences and think that we have an exciting agenda for the next two days. The purpose of my presentation is to give an overview of some of our CSI findings in terms of the size and scope of the sector – and to talk a little about the trends that we see.The two main topics thatI will cover are:CSI expenditure and where it goesStrategic CSI – what it is and how to achieve itThe facts and figures I will talk about are publshed in the 15th edition of the CSI Handbook (which is available for all conference delegates at the Trialogue exhibition stand). As part of the research for the handbook we survey over 100 corporates and close to 200 non-profits each year. The corporate interviews target those companies with the largest CSI expenditure. The non-profit survey is done online and is open to any non-profits. I would like to take this opportunity to thank all of you – corporates and non-profits – that participated in the research.
We estimate that total corporate social investment spend in 2011/12 was R6.9 billion. We use a broad definition of CSICSI includes all contributions to community development outside of core businessIncluding cash, time or donations of products or servicesIncluding expenditure by CSI and other company divisionsincludes SED as defined by dti BEE scorecardincludes a portion of local economic development (except for expenditure on living conditions of employees)If a narrower definition is used, CSI spending only by a dedicated department or function, CSI expenditure amounted to just over R5 billionTrialogue has been measuring CSI expenditure for 15 years. We have seen consistent growth during this time – as you can see from the chart – growth that has consistently exceeded inflation. Real growth in expenditure(inflation-adjusted) less than 3% per annum for first five years (2002 to 2007) – then closer to 10% per annum (2007 – 2012) despite weak economic conditionsLast year - CSI expenditure grew by 11% in nominal terms from 2011 (just over 5% in real terms)A significant portion of this growth is due to a wider definition of CSI (to include, for example donations of goods and services as well as LED) as well as better measurement and reporting by companies.
CSI expenditure is concentrated with the large companiesThe 100 largest CSI spenders account for R4.78 billion of the R6.9 billion spend – almost 70% of the total (much more concentrated than the 80/20 rule)Just 32 companies account for R3.45 bln – which is half total estimated expenditure. Mining companies in particular spent substantial amounts on infrastructure projects in their operating regions. Other large spenders were financial services companies and some large retailers that included the value of the goods and products they donated.Sixteen companies account for half of the CSI expenditure of the top 100
The geographic disbursement of the funds matches the economic footprint of the country with over 50% of respondents supporting projects in Gauteng, KZN, and the Western Cape (as you can see on the left-hand side/red of the chart).The right-hand side of the graph / orange shows that the largest portion of CSI funding goes to national programmes (those in more than 1 province) – 30% of funding followed by 23% to Gauteng, 9% to the Western Cape and 8% to KZNWe also asked NPOs about the geographical allocation of their expenditure and found that they are less likely to support national projects (only 12%).12% of NPO resources to national projects27% to Gauteng32% to W.Cape
Education received the largest portion of CSI funding. This has been consistent over the past tenyears, when education has consistently received between 30 – 40% of total CSI expenditureIn 2011/12Investment in education is above 40% for the first time in 10 years and is supported by 93% of the companiesIn comparison, only 40% of corporates supported projects in the health sector – allocating 12% of fundingThis is a marked decline in spending in health – 2009 research showing ‘Health and HIV/Aids’Supported by 63% of companiesWho invested 19% of CSINPOs also focus resources on social and community development63% involved in social and community development57% in education41% in health
In addition to supporting projects that directly benefit certain people, funders can also choose to support research, linking or advocacy activities. Although more indirect, Trialogue believes that these activities are vital to improving impact by encouraging collaborative problem-solving, the sharing of lessons and the application of best practice. As can be seen some corporates do not fund these activities – most often due to policy constraints but also because of the need for tangible and more immediate results.The good news is that corporates willingness to support developmental research has increased, with almost 60% of corporates now saying they would support it (compared to 40% of respondents in 2011). Support of linkage programmes also increased to over 50%. As the graph shows there is still a reluctance to fund advocacy programmes, possibly due to a general preference to avoid involvement in political agendas.Non-profits were asked a related question and spend about 70% of their time to direct service delivery– the balance of time is allocated evenly to:Networking and forumsDevelopmental researchAdvocacy
There has been significant media coverage of non-profits losing income and closing down. Our research was not that clear cut. Although more non-profits that we surveyed experienced a decline in income than an increase, the amount experiencing a decline was well less than half (38% of non-profits experienced a decline in income in 2011/12). The largest average decrease in income was experienced by NPOs in the R500 000 to R1 million income bracketSaying that, the average size of increase in income experienced by the non-profits was 1%. Taking inflation into account, this average income “increase” in fact represents a net real decline in year-on-year revenue.These results differ from those of Greater Good, whose survey found that: Eighty percent of NPOs experienced funding cuts in 2011/12. Almost half have had up to 50% of their funding cutFunding cuts have come from all major funding sources with the National Lotteries Board topping the list (44%), followed by corporate (39%) and individual donors (37%) Over 64% respondents reportedly cut services to their beneficiaries as result of funding cuts More than 43% of the respondents indicated that they had formally retrenched 7 612 permanent, contract, part-time and volunteer staffCurrent financial position was slightly more encouraging: 35.9% indicated that they had enough operating cash to cover 6 months of service-related expenses, 17.8% had enough for more than 6 months. However, 17.2% had no operating cash at all whilst 29% had enough to cover just one month of service-related expenses
Sowe recognise that the funding situation for non-profits is deteriorating and many are experiencing a decline. But it is worth noting that non-profits have a variety of income sources, each with their own characteristics and criteria. In the sample that we surveyed, corporates contributed almost a quarter of non-profit funding, while government contributed just over 20%. Foreign donors – both private and government – contributed close to a fifth of income. Self-generate income was still a relatively small portion of income at 8%. This topic will be explored further in the ‘supporting enterprise’ stream of this conference.Other includes interest, membership fees, lottery funds
So while corporates make up close to a quarter of non-profit fundings, non-profits are the largest group of recipients of CSI funding.Over 90% of corporates contribute to NPOs, which received 55% of the total corporate CSI budgetGovernment institutions – including hospitals, schools and universities – are funded by over 60% of corporates and received a quarter of CSI funds. Support provided directly to governement, to for-profit service providers and to industry initiatives, together accounted for 10% of funding.Other incudes programmes managed and run in-house
All companies support project costs, but our survey found that a quarter of companies will not fund operating costs. This is a major issue for non-profits which, like corporates, depend on staff management and overheads to survive. As a result over 40% of non-profits surveyed funded their operating costs through separate fundraising and or income-generation projects.I would like to encourage corporates to fund operating costs, at least at a level proportionate the the project costs they fund. No organisation can run without overheads and, when investing in the stock market, for example, it is not possible to specify that your invesment is not used for overheads.The vast majority of corporates do not support endowment funds and this is an area for separate fundraising initiatives make more sense.
Consistent trends with 2011 research include:
This matrixshows the different approaches by CSI departments. If a grantmaking or donation approach is adopted, the company typically has criteria for funding, funds many projects and cannot expect to measure developmental impact. At best they can ask for documentation from the project to assess objectives, fit to company conditions of grant, check monitor the funds spent, and do site visits. Reports will typically be anecdotal on what funds were spent on.Social investment implies a deliberate developmental return. Here companies should work out the developmental objectives, the role that their support plays, and what interim or final indicators can be set up to check progress and ultimate delivery.Social leadership implies refining development methodologies through lessons learnt and then influencing others – the measures may then focus on the extent to which new methodologies are taken up and rolled out (with support of others)I’d ask all the corporates in the audience to place their CSI programme, and indeed their individual projects, on this matrix. This matrix is significant to non-profits in that it advocates that they think about how their projects/programmes/brand can benefit the company / potential donor they would like to work with. Think of how you as an organisation could benefit from the assets of companies, their products/services/skills, as well as how you could offer volunteering opportunities or other initiatives.
I hope that has provided you with some context for the conference. We are hoping that you will learn new things at this conference that can be used to make your CSI – or your relationship with your corporate donors – more strategic.Thank you.
Cathy duff state of csi 2013-05
The state of CSICathy Duff
CSI expenditure continues to grow andamounted to R6.9 billion in 20120123456782001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012CSIexpenditure(Rbillion)Nominal(R6.9 bn)Real(adjustedforinflation)Source: CSI Handbook 15th EditionEstimation based on analysis of published and researched CSI expenditure figures
The top 100 companies accounted for 69%of the total estimated CSI expenditure626%1024%1421%2919%4110%Number of top 100 companies % expenditure (R4.78 billion)1000Source: CSI Handbook 15th Edition
Education continues to receive the mostsupport and largest share of CSI spend100 80 60 40 20 0 20 40 60OtherNon-sector specific donations and grantsHousing and living conditionsSafety and securitySports developmentArts and cultureEnvironmentEnterprise developmentFood security and agricultureHealthSocial and community developmentEducation% corporate support % corporate expenditureSource: CSI Handbook 15th EditionN = 108
The willingness to fund developmental researchincreased from 37% (2011) to 59% (2012)50 40 30 20 10 0 10 20 30 40 50 60Advocacy programmesCo-ordinating or linkage programmesDevelopmental research% corporates not willing to support % corporates willing to supportSource: CSI Handbook 15th EditionN = 108
Almost 40% of NPOs experienced adecrease in income in 2011/1233%29%38%Increase Stay the same Decrease% NPO responseSource: CSI Handbook 15th EditionN = 149
Corporate contributions make up almost aquarter of NPO funding0 5 10 15 20 25OtherIntermediary NPOsSelf-generatedForeign governmentsTrusts/foundationsForeign private donors/organisationsPrivate individualsGovernmentCorporates% NPO responseSource: CSI Handbook 15th EditionN = 124
NPOs receive the greatest share ofcorporate funding100 80 60 40 20 0 20 40 60OtherTo industry initiativesTo for-profit service providersTo other for-profit organisationsTo government departmentsTo government institutionsTo NPOs% corporate response % corporate expenditureSource: CSI Handbook 15th EditionN = 103
A quarter of the surveyed companies do notsupport NPO operating costs80 60 40 20 0 20 40 60 80 100Endowment fundStart-up costsCapital costsBeneficiary-specific supportOperating costsCapacity and growth costsProject specific costs% corporates not willing to support % corporates willing to supportSource: CSI Handbook 15th EditionN = 108
What the numbers tell us• CSI shows significant growth, attributed to betterand more inclusive accounting of CSI spend• Companies are one of the most significant sources ofsupport for NPOs• National projects receive the largest share of CSIbudgets• Education is the recipient of the mostspend, followed by social and communitydevelopment, and health
Strategic CSI implies a convergence ofinterests between business and societySocialBenefitEconomic BenefitPure businessPure philanthropyCombined social andeconomic benefit
Corporates adopt various approaches to CSI14SocialbenefitCorporate benefitCharitable donationsPR managementGrantmakingSocial investmentSocial leadershipStrategic CSIReputationmanagementHighHighLowLow
• A cost• Separate function• Strong external influence• Limited alignment to business• Reactive project selection• No M&E• Mostly cash• Limited communication• Voluntary• No collaboration• An investment• Integrated into the business• Strong corporate influence• Clear points of alignment• Proactive project selection• Effort to engage in M&E• Cash, in-kind & time• Marketing and increased transparency• Legislative recognition• Talk of collaborationStrategic CSIIncidental CSIAs a function, CSI is becoming more strategic15