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Towards Best Practice
 Social Investment and
Community Development
          2011
 Next Generation Consultants
       Reana Rossouw
Day One
• Session One
  – An introduction and
    contextual overview
• Session Two
  – Best practice in Africa
• Session Three
  – Trends, Drivers,
    Challenges
• Session Four
  – Getting Started and
    Making it work
Introduction

Contextual Overview
Definitions in Practice
CSI in the context of definitions
                              Corporate Social Investment
                              (CSI)
                              How we care for the well being of
                              the communities in which we
                              operate – (by investing resources
                              into communities through CSI
                              programme management)




  Corporate Governance                                            Corporate Social
  How CSI is managed –                                            Responsibility (CSR) now
  through accountable,                     CSI                    superseded by Corporate
  responsible, transparent,            Definitions                Sustainability
  ethical investment                                              How CSI contribute to
  practices                                                       mitigating economical,
                                                                  environmental and social
                                                                  impacts and risks


                               Corporate Citizenship
                               How CSI contributes to
                               managing internal and external
                               stakeholder relationships both
                               up and downstream
New terminology
• CSR – an overarching value-based framework
   – (the corporates contribution to a society’s sustainable
     development goals)
• CSI – a voluntary social giving activity
   – (strong developmental theme – improving the lives of under-
     privileged and previously disadvantaged communities)
• SED – A discretionary transformation framework
   – (emphasises developmental initiatives that equip
     disenfranchised individuals with skills and/or resources to play
     an active role in the economy)
• LED – A mandatory framework
   – (Social and Labour Plan to secure ongoing licence to operate –
     Mineral and Petroleum Resources Development Act – focus on
     job creation with measurable outcomes)
• Corporate Sustainability
   – Managing risk, impact, influence and control
Strategic CSI
                       Align strategic
 Measurable
                            and
    Return
                        Operational
On Investment
                       business and
     for
                           Brand
  Company
                        imperatives


                 CSI

  Align and
                       Measurable
   support
                        Impact on
government
                       Society and
Priorities and
                       Environment
 Community
    needs
Progress towards Best Practice

Traditional    In Kind            Social          Strategic          Systemic
Philanthropy   Grantmaking        Entrepreneur-   Investments        Socio
Donations/     Products,          ship            Aligned with       Economic
Cheques        services, skills   Financial       core business      Development
                                  resources,      interests, brand   Collaborative
                                  operational     values,            Partnerships,
                                  advice &        competencies,      influencing
                                  expertise,      and                policy,
                                  access to       government         contributing
                                  markets         goals              advocacy and
                                  (trade)                            high impact
                                                                     change
Towards Sustainable CSI

         Charity                              Create New       Create
                         Business as          Value            competitive
                         Usual                FLAGSHIPS        advantage
Social
Value
Add
                                              Mitigate Risks
         Compliance                           Impacts          Do no harm
                         Do what is           Control Costs
                         required             Sustainability
                                              Strategy



                      Shareholder Value Add
Strategic CSI means…
     best practice
   • Formalised approach/documented strategy
   • Regular reporting and communication (internal &
     external)
   • Active Senior management/board involvement
   • Alignment to core business and operational
     business
   • Working in collaborative partnerships
   • Dedicated CSI
     staff/team/department/foundation/Trust
   • Regular stakeholder consultation and
     engagement
   • Employee involvement and recognition
   • Regular monitoring, evaluation and impact
     assessment
   • Replication of successful projects
   • Development of best practice guidelines
   • Sharing lessons and insights
New perspectives on CSI

   Regulation is a key driver
CSI and BEE


                                       Generic scorecard or
Turnover greater than R35m             Approved Sector Charter
                                       applies



Turnover between                       Simplified Scorecard applies
                                       Choice of 4 of 7 elements
R5m and R35m                           All elements weigh 25%



 Turnover less                         Exempt from BEE
 than R5m                              And are recognised
                                       As Level 4 contributors
CSI and the BEE Scorecard (cont‟d)
Direct     Equity Ownership           20%   Encourages the sharing of equity and voting
Empower-                                    rights with black people and black women
ment


           Management                 10%   Encourages senior black decision making at
                                            executive board and senior top management
                                            levels
Employ-    Employment Equity          15%   Encourages companies to identify and recruit
ment                                        black people at professional, middle and lower
Equity                                      management positions
           Skills Development         15%   Encourages companies to develop black talent
                                            through spending on skills development and
                                            learnerships
Indirect   Preferential Procurement   20%   Measures the extent to which enterprises
Empower-                                    procure from BEE compliant companies.
ment                                        Encourages spend on SME’s and Black owned
                                            companies
           Enterprise Development     15%   Encourages development or expansion of
                                            SME’s and black owned companies

           Socio Economic             5%    Encourages initiatives intended to directly
                                            provide black people who are natural persons
                                            with means of generating income for
                                            themselves
CSI and the BEE Scorecard
• Residual Element – Code 700 Socio Economic Development – 5
  points – target 1% of NPAT or 0.125% of turnover
• Key Principles
    – Aimed at natural black persons, communities where at least 75% are
      natural black persons or rural infrastructure development.
       • Rural development programs
       • Health, HIV/Aids programs
       • Education support
       • Environment support
       • Arts & Culture
       • Sport
• Aims to encourage initiatives intended to directly provide black
  people who are natural persons with means of generating income for
  themselves
• SED is defined as: “monetary or non-monetary contributions actually
  initiated or implemented in favour of beneficiaries …with the specific
  objective of facilitating sustainable access to the economy for
  those beneficiaries”
CSI and the BEE Scorecard (cont‟d)
• Enterprise Development – Code 600 – 15 points – 3% of NPAT or
  0.375% of turnover
• Key Principles
   – Provision of seed capital
   – Professional/consulting services
   – Licencing/registration fees
   – Industry specific levies
   – IT services
   – Payments made to 3rd parties to perform enterprise development
     on their behalf
   – Preferential credit facilities/guarantees/better payment terms
   – Training/mentoring
   – Enterprise Development unit
• Aims to encourage development or expansion of black, small medium
  enterprises
• Specifically aimed at supplier development in most organisations
Impact of Charters & BEE Codes
•   Increased communication of CSI
•   More formalised approach to CSI
•   New/Refined CSI Strategy
•   Greater board/management involvement
•   Increased/decreased expenditure on CSI
•   Restructuring of CSI department
•   Change in focus area/project selection
•   Change in beneficiary/recipient communities
Impact of JSE SRI Index
• Increase in non-public information disclosure
• Most companies now committing to sustainability and
  corporate responsibility – understand the imperative
• Sustainability Reports starting to be structured according to
  Index Criteria
• Distinction between real performance and window dressing
  becoming clearer
• Still lacking some understanding about specific issues such as
  the difference between direct and indirect impacts
• CSI measurement now becoming critical
• Clear guidelines for focus areas and impact
• External reporting (and therefore results) now drive CSI
  communications
Impact of Sustainability Reporting
• Accounting – accurately
  valuing the CSI contribution
• Accuracy – measuring input
  and outputs
• Data collection – measuring
  impact of investment
• Indicators – development of
  indicators for measurement -
  impact on society, environment
  or economic impact
• Strong uptake of GRI, and real
  increase in assurance/
  verification
• Different reporting styles
   – Section of annual report
   – Section of sustainability
      report and integrated report
   – Separate
      social/environmental/ESG
      report
   – Separate CSI report
Sustainability Reporting on CSI
•   Top 3 indicators for Education and Training
     – 1. Number of people benefited/reached by the education initiatives
     – 2. Amount of money invested/donated in the education initiatives
     – 3. Number of education-related activities (e.g. seminar, classes, conferences etc.) held
•   Top 3 indicators for Philanthropy and Charitable Giving
     – 1. Sum of money donated/raised/contributed to community initiatives
     – 2. Percentage or number of people (organizations) granted/sponsored/supported/covered by
        the donated services
     – 3. Number or quantity of scholarships/material/services donated (no value of money
        indicated)
•   Top 3 indicators for Community Services and Employee Volunteering
     – 1. Number of people/organizations/projects benefited, served or implemented
     – 2. Number of volunteers
     – 3. Number of volunteering hours
•   Top 5 indicators for Total Community Expenditure
     – 1. Amount of money spent in community investment
     – 2. Percentage of profit/revenue/income spent in community investment
     – 3. Percentage increase of money spent on social investment, compared to last year
     – 4. Number of people benefited in community investment activities
     – 5. Number of projects developed and completed
•   Top 3 indicators for Community Engagement and Dialogue
     – 1. Number of visitors, audience and participants reached
     – 2. Percentage/number of sites where community engagement activities were performed
     – 3. Frequency of meetings
CSI in Africa

A local and continental overview
         of the practice
Continental Context
•   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
          •   Being recipients of development aid meant
              that we did not necessarily understood,
              engaged or were part of the development
              process
     – 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)
• Large foundations
North Africa     – 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
West & East & Central Africa
           •   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
Southern Africa
Trends (1) - Regional
• 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
Trends (2) –
     Market Based Approaches - Innovation
• 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
•
                 Trends (3) – New Influences
    Greater emphasis on
    measurement of impact
     – (Sustainability reporting – GRI
       G3.1)
•   Growth in volunteerism
     – Global networking, social
       networks/media
     – Recession – leverage and
       extend funds
•   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
Trends (4) - Legislation
• Motivation has changed
  – Compliance with Broad Based Black Economic
    Empowerment – BBBEE Act
  – Compliance with industry based regulation
     • SLP, LED (Mining) & ED (BEE) , Financial Access
       (Financial Charter), Education
  – Impact of Johannesburg Stock Exchange Socially
    Responsible Investment Index (JSE-SRI)
  – Sustainability Reporting have become Integrated
    Reporting (King III)
• Companies have become very sensitive to
  socio economic development – the value,
  expectations, requirements and impact
Trends (5) – Financial Crises
• Good News
   – 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
• Bad News
   – More pressure on
                                            Trends (5)
     developmental assistance
   – Donors not living up to pledges   Financial Crises
   – 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
Trends (6) - Business
• 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
  – Emphasis on ROI and impact
  – Challenges in enabling
    environment – compliance focused
    investment and giving
Trends (7) – Focus Areas
• 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
Issues
• 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
  chance
   – How do we deal with future
     challenges if we are not meeting
     today’s requirements and issues
Towards the Future
• 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
Follow the money

Trialogue – CSI Handbook
        13th Edition

      R5.4 (b) = 2010
      R5.1 (b) = 2009
      R4.1 (b) = 2008
      R3.2 (b) = 2007
Hot off the press
• Funding increased by 5.9% - (inflation 5.8% -
  NO real growth)
   – Improved CSI Accounting
   – Broader spectrum of giving/spending
   – CSI Definitions and measurement in state of flux
       •   SED in BEE Codes
       •   LED in Industry Charters
       •   Social & Labour Plan in Mining Charter
       •   Contributions
             – Cash, Non-Cash (product/employee time)
   – BEE Act – more are giving and giving more
   – Spending remains concentrated – top 100
     companies – 70% of all CSI spend
   – SOE and Mining outspending the rest
   – “Facilitate economic inclusion & enterprise
     development” influenced increase at the expense
     of welfare-based spending
   – Big 4 – Education (31%), Social Dev (16%),
     Entrepreneurship (13%), HIV/Aids (11%)
Impact of the recession
        • 14% cut in CSI budgets – 2010
        • 20% cut in 2009
        • 23% cut in 2008
           – More than 50% over last three years
        • 35% of all budgets are spent
          nationally
        • 23% of CSI spend is concentrated in
          Gauteng
        • Remaining 39% of spend is across 8
          provinces
        • Many of the poorest provinces
          (Eastern/Northern Cape) receives
          little funding
        • Spend/budgets now include LTO
          programs i.e. financial literacy -
          banks and access – healthcare and
          financial services, infrastructure -
          mines
Evolving CSI practice
      • Legislation key driver
         – Sector charter, licence to operate,
           stakeholder pressure, reputation, BEE
           Codes
      • Less than half of CSI funding goes to
        NPO’s
         – Direct funding to industry initiatives (eg.
           NBI), direct to government programs,
           directly to schools, universities, hospitals,
           directly to development own programs)
      • Monitoring and Evaluation is gaining
        traction
      • Partnership models is increasing
What’s New
• New Sectoral Classifications
   – Education
   – Social & Community
     Development
   – Health & HIV/Aids
   – Entrepreneurship & Job
     Creation
   – Training, Capacity Building &
     Skills Development
   – Environment
   – Arts & Culture
   – Food Security & Agriculture
   – Sports Development
   – Safety & Security
   – Non-Sector Specific donations
     & Grants
   – Housing & Living Conditions
Popularity   • Education = 32% of all
               funding – but decrease of
               nearly 10% in amounts
             • Health = 16 of total funding%
               - decline of 11%
             • Social and Community
               Development = 10% -
               decline of 16%
             • Food security and agriculture
               – 5% of all funding, increase
               of 4%
             • Enterprise Development =
               10% increase of almost 10%
             • Environment – 8% - increase
               of 3%
             • Remaining 7 categories
               receive less than 5% of
               budgets
•
•
    Supported by 93% of all corporates
    Accounts for 32.4% of all spent
                                                 Education
•   Most funding to school system 29%
    (GR 10 – 12); 28% to GR 1-9),
    bursaries and scholarships – 25%
•   Maths and Science 30%
     – Further education & training (FET 10-
       12)
     – Tertiary education (universities,
       technikons)
     – General education (Gr 1-9)
     – Early Childhood development
     – Adult basic education & training (ABET)
     – Bursaries and university chairs
     – Maths, science and technical education
     – Information technology/computers
     – Infrastructure, buildings, facilities
     – Teacher Development
     – Life skills
     – Curriculum development/course
       materials/text books
     – School governance and functionality
     – Language development
Health & HIV/Aids
• Supported by 64% of all corporates
• Accounts to 16.7% of all spent
   –   Hospices
   –   Primary Healthcare
   –   Training Healthcare workers
   –   Research & Education
   –   Health Infrastructure, equipment & medicines
   –   Specialist care
• HIV/Aids
   – Support - Aids orphan support, testing, home-based care,
     counseling
   – Education & awareness – employee family education,
     community education, health worker training, school-based
     education
   – Treatment – infrastructure provision, provision of medicines
Social and Community
                                       Development
• Supported by 78% of all corporates
• Accounts to 12.5% of all spent
   –   Orphans & vulnerable children
   –   OD & Capacity building
   –   People with disabilities
   –   Feeding schemes
   –   The aged
   –   Victims of violence and abuse
   –   The destitute/homeless/shelters
   –   Disaster relief
   –   Livelihood strategies – Preventative programmes, prisoners
   –   Animal care
   –   Multi-service delivery (multi-purpose centers, etc)
   –   Organisational, Capacity & Community Development
Food Security & Agriculture
• Supported by 35% of
  corporates
• Received 6% of total CSI
  budget
   – Food Relief/Feeding
     Schemes
   – Survivalist farming - Food
     Gardens & Permaculture
   – Small Scale farming
   – Infrastructure, facilities &
     equipment
   – Non-specific general
     donations
Enterprise Development
• Supported by 40% of all
  corporates
• Accounts to 5.6% of all spent
  – Entrepreneurial skills
    development
  – Supporting existing SMMEs
  – Infrastructure and facilities
  – Access to finance and
    resources
  – Outsourcing, procurement and
    sub-contracting
Environment
      • Supported by 49% of all
        corporates
      • Accounts to 6.8% of all
        spent
         – Wildlife conservation
         – Waste management &
           recycling
         – Biodiversity, alien clearing
         – Water conservation,
           wetlands management
         – Urban greening
Training, Capacity Building and
      Skills Development
                • Supported by 44% of
                  all corporates
                • Accounts to 5.2% of
                  all spent
                  – Technical and
                    vocational training
                  – Entrepreneurial
                    training
                  – Capacity building for
                    the non profit sector
Arts & Culture
       • Supported by 35% of
         all corporates
       • Accounts to 4.6% of
         all spent
         – Performing Arts
         – Visual arts
         – Festivals, competitions
           & awards
         – Heritage and culture
         – Craft sector
         – Language & literature
Safety & Security
         • Supported by 21% of all
           corporates
         • Accounts to 2.3% of all
           spent
            – Business against crime
            – Rehabilitation of prisoners,
              victim support, trauma
              counseling, gang-related
              violence, road safety
            – National campaigns,
              community police forums,
              school crime & safety
              programmes
            – Capacity
              building/empowerment
              programmes
Housing & Living Conditions
              • Supported by 19% of all
                corporates
              • Accounts to 3.5% of all
                spent
                 – Facilitating housing
                   development
                 – Employee involvement in
                   home building
                 – Material supply
                 – Water & Sanitation
                 – Energy/energy efficiency
                   initiatives
Sports Development
• Supported by 30% of
  all corporates
• Accounts to 2.2% of
  all spent
  –   Soccer
  –   Rugby
  –   Basketball & Netball
  –   Cricket
  –   Athletics
  –   Sport for disabled
NPO Sector
• Decline in funding:
  – Global financial crises and ensuing economic
    slowdown
  – BEE Codes
• Impact
  – Struggling to survive
  – Closed down
  – Discontinued projects
  – Cut back in service offering
What‟s in/What‟s Out
Sector           What’s In                             What’s Out                      Why

Education        Support of community facilities,      Bursaries for job placement,    Part of company normal
                 bursaries for underprivileged         within the company, crèche      activity as it benefits
                 without employment obligations        facilities for employees        employees directly
Training         Community training, skills            In-company training,            Can be reclaimed under
                 development for unemployed, adult     workplace courses, adult        Seta/Income Tax Act
                 basic education and training in the   basic training and education
                 community                             for employees
Environment      Support of conservation projects;     Operational compliance          Meeting legislated obligations
                 community clean-up projects           aspects such as emissions;      in SA
                                                       rehabilitation requirements
Job Creation     Job creation and small business       Affirmative or small business   Assisting BEE and
                 development projects external to      procurement; outsourcing,       procurement targets to meet
                 the workplace                         retrenchment programs           legislated obligations in SA
Housing          Housing programs for the general      Employee housing benefits       Part of pre-and post 94
                 community                                                             imperatives to benefit
                                                                                       employees
Arts & Culture   Support of developmental              Sponsorship of commercial       Largely for company and/or
                 programs, development of new          events                          staff benefit
                 talent
Health           Support of community clinics,         Occupational health and         Meeting legislated obligations
                 health programs in the community,     safety, workplace AIDS          in SA
                 AIDS awareness and care projects      awareness, clinic facilities
                 in the community, ARV’s for           and ARV’s for employees
                 community
Sport            Support of developmental programs     Sponsorship of commercial       Primarily promotion of
                                                       events or professional teams    company brand rather than
                                                                                       direct impact on sports
                                                                                       development
State of Giving
 South Africa
Giving is big business*
• Listed Companies – R5.6 billion per annum
• Unlisted Companies – R2 billion per annum
• State Owned Enterprises – R1.5 billion per annum
• SMEs – R1 billion per annum
• Individuals – R1 billion per month
• Private Individuals/Family Foundations – R1 billion per
  annum
• International Giving – R2 (3=2010) billion per annum
• NGC estimation = CSI in SA is a R45 billion industry
  and not R5 billion
*NGC own research
Reported Budgets 2010 - m
Absa                       R102    Barloworld                 R7.6    Harmony               R27.6
Acsa                       R24     BHP Biliton                R115    HCI Foundation        R37
Advtech                    R42     Bidvest                    R25.3   Impala Platinum       R61
African Bank               R8.2    British American Tobacco   R30     Imperial Holdings     R13
African Rainbow Minerals   R19.3   De Beers                   R43     Investec              R29
Afrox                      R4.2    Discovery                  R6.3    Liberty               R20
Altech/Altron              R12.4   Eskom Foundation           R79.5   Lonmin                R64
Anglo American             R600    First Rand Group           R101    Massmart Holdings     R20
Anglo Platinum             R245    Foshini Group              R24.3   MTN SA Foundation     R74
AngloGold Ashanti          R21.3   Gold Fields                R15     Murray & Roberts      R21
ArcelorMittal              R40     Grindrod                   R2.3    Nampak                R8
Aveng                      R17     Group 5                    R2.7    Nedbank               R30
Netcare                    R37     Rainbow                    R1.6    Transnet Foundation   R60
New Clicks Holdings        R14.4   Sanlam                     R19     Truworths             R28
Northam Platinum           R9.5    Santam                     R5      Vodacom               R68
Oceana Group               R4.1    Sappi                      R16.3   Woolworths            R297
Old Mutual                 R32     Sasol                      R50     Unilever              R12.3
Palabora Foundation        R32.6   Spar Group                 R6.4    Tongaat Hullet        R15.7
PetroSA                    R44.8   Spier                      R7.9    Standard Bank         R94
Pick & Pay                 R61     Telkom Foundation          R47     Sun International     R20.4
Pioneer Foods              R5.6    Tiger Brands               R25     PPC Cement            R10
Primedia                   R53.7   AVI                        R15.5   Engen                 R18.7
Non Spenders
Multinationals – Telecoms    Nokia, Samsung, Erickson, Siemens
FMCG                         L’Oreal, Revlon, Unilever, Proctor &
                             Gamble
Fast Food                    KFC, MacDonalds, Cadbury’s, Nestle
Financial                    Visa, Mastercard, American Express
                             British Airways, British Telecom
Automotive                   BMW, SAAB, KIA, Honda
Nationals                    Mugg & Bean, Distell, Nando’s, BEE
Fast Food and BEE            Companies – Rainbow and Mvelephanda,
                             Wiphold
Industries                   Media, Property, Services
                             Finance – Asset Management/Investment
                             Medical, Automotive
                             Advertising, Hotels (Protea, City Lodge
                             Direct Selling/Marketing – Amway, etc
Sectors                      Retail - Pep, Ackermans, Stuttafords
                             Pharma – Novartis, Pfizer, Adcock, Aspen
                             Oil/Petroleum – Shell, Total, BP
State Owned Enterprises      National Ports Authorities, Armscor, SAA
Budget Trends
• Included in the budgets of corporates for CSI are:
   – Spent on Events and awards – 45%
   – Monitoring and Evaluation of projects – 43%
   – Marketing and Promotion of CSI programs – 40%
   – CSI Reporting – 34%
   – External Expertise – 30%
   – Own administration – 28%
• SOOOO,
• how much is going to development work?
Other Contributors*

•   Zennex Foundation - R30 m          •   Mott Foundation – R20 million
•   Oprah – R150 m                     •   Bernard van Leer Foundation –
                                           R10 m
•   Bill and Melinda Gates –R642 m
                                       •   Joseph Rowntree Charitable Trust
•   Carnegie Corporation - R200 m          - R10 million
•   Ford Foundation – R78 m            •   Difid Foundation– R30 million
•   MacArthur Foundation – R30 m       •   Shuttleworth Foundation – R50m
                                       •   Family Foundations
•   Rockefeller Foundation - R30 m
                                             – Ackerman Foundation(R40m)
•   Kaiser Family Foundation –               – Oppenheimer (R30m)
    R195m                                    – Murray (R20m)
•   Atlantic Philanthropies – R125 m         – Rupert (R50m)
•   Open Society Foundation – R50m           – Appelbaum (R80m)
•   Kellogg Foundation - R25 m
                                       *NGC Own research
Interesting Finding
• Total Aid in 2008 in m US
  Dollars
   – 700 hundred million USD
• Ten biggest donors in 2008
   – EU Commission – 173 m USD
   – US – 137 m USD
   – UK – 70 m USD
   – Netherlands – 55 m USD
   – Germany – 37m USD
   – France – 28 m USD
   – Global Fund (GFATM) – 26m
     USD
   – Sweden – 23 m USD
   – Denmark – 18 m USD
   – Belgium – 18 m USD
• Together with other CSI funds
  this is a LOT OF MONEY
Foreign Development Aid
•   SA receives around 1/3 of global aid, or around US$30 billion
•   USAID – US$85 million
•   Danida, Cida, AUSAID, DFID – R3.7 billion
•   Largest investors are USAID, European Investment Bank, EU,
    Germany and Sweden
•   What they give – grants, technical assistance and loans
•   The RDP fund acts as a clearing housing for money donated to
    SA.
•   The fund showed refunds since 2002-(R79 million), 2003-
    (R40 million), 2004-R66 million, 2005 – (R72 million), 2006 –
    (R80 million), 2007 – (R79 million), 2008 (R87 million).
•   This is due to capacity problems. More specifically
    delayed requests for funding, unrealistic time frames,
    incomplete and inaccurate financial statements and non
    compliance.
Sectoral Focus of Global Donors
Donor             Sector
European Union    Water, LED, Education

USAID             Education, democracy and
                  governance, health, environment,
                  economic capacity, employment
Norway            Democracy, higher education,
                  research, environment, natural
                  resources and energy
Sweden            Education, private sector, cultural
                  sector, urban sector, research,
                  HIV/AIDS, capacity building
Netherlands       Justice, youth, education and local
                  government
Denmark           Private Sector Development,
                  HIV/Aids, environment
Private Foreign Foundations
• More than 70 foreign based private foundations in SA
• More than 60 foreign faith based organisations in SA
• More than 100 foreign NGOs in SA
• Function as grantmakers, supporting specific
  programmes and run their own projects
• Providing volunteers, professional services, material
  resources, exchange programs.
• Most popular focus areas education,
  technology/communications, capacity building,
  environment, HIV/Aids & Health, culture, justice,
  women, children, justice/peace/conflict resolution,
  poverty.
Special Funds
•   Initiatives by government to address poverty and development
•   Budget – R55 billion per annum from Government, R5 billion from donors
•   Special Poverty Relief Account
•   Independent Development Trust
•   Isibaya Fund
•   Khula
•   National Development Agency
•   National Lottery Board
•   National Skills Fund
•   Operation Jumpstart Association
•   Ntsika
•   South African Women's Entrepreneur Network
•   Umsobomvu Youth Fund
     – (Replaced by National Youth Development Fund)
•   National Empowerment Fund
•   Local Economic Development Fund
•   uTshani Fund
Public-Private-Partnerships
•   National Business Initiative
•   Business Against Crime
•   Business Trust
•   Joint Education Trust
Trends, Drivers and
Challenges in Grantmaking
2 Perspectives
• Emerging Trends – linked to economic
  crises
• Steadfast Trends – monitored over a
  period of time – 5 years/top 20 most
  influencing trends for the industry overall
1st Perspective
     Emerging Trends linked to economic crises
• Adjustment of budgets
    – No new MOU’s, only focused on committed, signed
      agreements
• Stronger focus on non-cash giving
    – Product and services, volunteer hours, skills, time
• Stronger focus on measurement
    – Monitoring and evaluation and impact assessment
• Stronger focus on new strategy development
    – New focus areas
• Increased employee volunteerism & matched
  giving
    – To try and leverage budgets
• Greater alignment with Sustainability divisions
    – Focus on Enterprise Development and
      Environmental Impact
• Specific industry changes
    – Automotive/Mining/Manufacturing industries in
      decline, declining budgets
• Co-operation is no longer
            a competitive factor
Impacts      – Communities in distress
               needs help, working
               together will leverage funds
          • Industry bodies need to
            address specific issues
             – Unions demand greater
               involvement and assistance
               and recognition of social
               imperatives
          • Communication with
            development partners is
            crucial
             – Consider operational costs
               to ensure successful
               delivery of programmes
          • All stakeholders will watch
            how companies respond to
            economic crises
             – Greater opportunity for
               stakeholder involvement and
               participation
New Patterns and influencers
• Leveraging core assets
   –   Distribution channels
   –   Suppliers – value chain
   –   Access to markets – customers
   –   Access to sustainability – income
       generation – social entrepreneurship
• Impact of climate change
   – Reduced access to water
   – Reduced food production – cost of
     food
   – Need for local producers to reduce
     carbon footprint (importing)
• Sustainability
   – The race to zero carbon impact –
     offsetting carbon emissions
2nd Perspective
       Trends driving innovation
INNOVATION –

Is innovation possible in a
socio economic development context?
Is it fair to expect innovation?

How will we know our solution is innovative?

How will we measure
INNOVATION?
IMPACT?
SUSTAINABILITY?
RETURN ON INVESTMENT?

Is it time for “back to basics” or radical innovation?
Top Trends
• Most influential trends driving innovation

   –   Trend 1 – Social Entrepreneurship
   –   Trend 2 – Commercialisation of CSI
   –   Trend 3 – Influence of Compliance
   –   Trend 4 – The rise of stakeholder engagement
   –   Trend 5 – The pressure to measure
   –   Trend 6 – Bigger, better models of development
   –   Trend 7 – Green is the new black
   –   Trend 8 - Put away the lenses/gloves
   –   Trend 9 – Follow the money
   –   Trend 10 - Hard facts, dangerous half truths and total nonsense
Trend 1 – Social Entrepreneurship
•   The rise of social entrepreneurship   •   Practitioners not ready
     – Mohammad Yunus                          – Current grantmaking criteria does
•   Social entrepreneurs                          not allow flexibility
     – Charles Maisel                          – Cannot fund for-profits
     – Tamzin Ractliff                         – Don’t fund individuals
•   Social Enterprises                         – Fund only specific focus areas
     – Grameen Bank                               notwithstanding real needs
•   Social Venture Capital                     – Risk adverse
     – Sasix                                   – Lack entrepreneurial
                                                  understanding & insight
     – Greater Good                            – One size fits all approach to
•   Social Collaboration                          grantmaking
     – Grow South Africa                       – Discriminate against profitability
                                               – Don’t really understand
•   NOTE:2011                                     sustainability
•   ISSUE OF ENTERPRISE
    DEVELOPMENT!                          •   NOTE 2011:
                                          •   ISSUE OF SOCIAL ENTERPRISE
                                              SOCIAL ENTREPRENEURSHIP


Best Practice in SA – Sasix – Able to raise and distribute R32-m in 36 mths
Trend 2 – Commercialisation of CSI
 • The fortune at the Bottom of       • Driven by business benefits
   the Pyramid                          and future profits
 • Products for poor people           • Increased impact & awareness
 • Making markets work for the          of sustainability and
   poor                                 interconnectedness
 • The next 4 billion                 • Search for double/triple bottom
 • Bringing together the 1st and        line benefits
   2nd economies                          – Financial vs Social Returns
                                          – Financial vs Social vs
 • Cause Related Marketing                  Environmental Impact
 • Flagship Programs                  • Elusive sustainability
 • NOTE 2011:                         • NOTE 2011:
 • ISSUE OF HIGH PROFILE              • MAJOR FMCG COMPANIES
   PROJECTS – OUTSURANCE                – REVENUE MODELS
   / DIAL DIRECT
Best Practice in SA – Nedbank Affinity Program – R2m for NMCF in 6 months,
                        R75 m for WWF in 24 months,
       excluding Sports Development and Arts & Culture Programmes
Trend 3 – The influence of compliance
• Tick box approach                 • Add to burden of
• Legislation are driving             administration both for
  motivation                          grantees and grantors
• Compliance are hard work          • Driving pressure to measure
• The good, the bad and the ugly    • Reporting becomes big
   – Good - everyone now gives      • New strategies/new
   – Bad – once spent 1% NPAT –       budgets/new focus areas/new
     stop                             reporting lines
   – Ugly – Reducing budgets        • Shifts in development – new
• Points drive investments            flavours of the month
• NOTE 2011:                        • Enterprise development at the
                                      cost of social development and
• ISSUE OF „BLACK‟                    welfare
  RECIPIENTS – the poor not
  necessarily classified by         • NOTE 2011:
  race anymore                      • ISSUE OF ASSURANCE AND
                                      GOVERNANCE
 Best Practice in South Africa – Linking Enterprise Development (ED),
 Local Economic Development (LED), and Procurement to CSI spent.
Trend 4 – The rise of stakeholder
engagement & activism
• Product and market                • Ring fencing CSI – The
  stewardship / responsibility        popularity of foundations
• Governance and ethics             • Responsibility, Transparency
• Human rights and gender             and Accountability
  equality                          • Give or else – mentality
• Risk vs reputation                • Communities are becoming
• Giving vs getting                   aware
• Food vs fuel                      • Issues and reputation become
• Humanities vs Humanitarians         obstacles to giving
• NOTE 2011:                        • NOTE 2011:
• ISSUE OF LABOUR UNIONS            • ABILITY TO USE CSI FOR
  AND GOVERNMENT NON                  RESEARCH AND
  SERVICE DELIVERY                    STAKEHOLDER
                                      ENGAGEMENT

    Best Practice in SA – British American Tobacco – South African
         Breweries, Anglo American – Sustainability Reports
Trend 5 – The pressure to measure
• Reporting requires                         • Practitioners are not
  measurement indicators                       development specialists
• Measurement indicators                     • Practitioners have good hearts
  requires objectives and targets              but not good / expert
• Objectives and targets require               knowledge
  strategic intent                           • Practitioners rely on others and
• Strategic intent requires                    their performance are
  knowledge                                    influenced by issues outside
• NOTE 2011:                                   their control
• CAREFUL OF HOW AND                         • Practitioners don’t understand
  WHAT YOU REPORT –                            how to prove ROI and Impact
  SUSTAINABILITY REPORT                      • NOTE 2011:
                                             • INDICATORS NEED TO BE
                                               ALIGNED WITH THE
                                               STRATEGY OBJECTIVES

Best Practice in Kenya – Kenya Power & Electricity Co in Kiburu - Pro-poor strategy –
  (prepaid meters, ready board, least cost alternative (alternative energy sources),
local sustainability – planting trees – offset carbon footprint, buying poles from local
 communities to provide income opportunities – enterprise development- Focus on
                 environment – carbon trading & energy saving bulbs
                                 – 1m people 18 months
Trend 6 – Bigger, better models of
development
• Marketing is important            • War on ideas
• Communication (PR) is             • Piecemeal approaches will not
  important                           work
• Integration and alignment is      • Effective social change requires
  important                            – long-term commitment
• Proving impact and return is         – willingness to take risks
  important                            – the ability to work across
• It just makes so much sense             sectors and silos
• It becomes the new heart and         – investments in strategic
  sole of our marketing                   research and policy analysis
  campaigns                         • NOTE 2011:
• NOTE 2011:                        • THE ISSUE OF EXIT AND
• IMPACT OF RECESSION ON              SUSTAINABILITY NEEDS TO
  NUMBER OF FOCUS AREAS               BE PRE-DEFINED
  AND DEVELOPMENT
  SECTORS
        Best Practice in Kenya – CFW – Franchised Health Care
        50c for primary health care, 4000 nurses earning $4000 py
Trend 7 – Green is the new black
• Environmental impact is driven     • All companies are adding
  by global agendas                    environmental projects to
• Until now we only focused on         the funding mix
  social impact
• An idea whose time has come        • Agriculture/Food
• The raise of ethical trading and     Security/Green Farming/
  sourcing, fair trade, green          Organic Farming/urban
  trade, eco trade, carbon trade       renewal and greening –
• NOTE 2011:                           the latest CSI
• INTEGRATE CSI WITH                   phenomenon
  SUSTAINABILITY                     • NOTE 2011:
  STRATEGY TO MITIGATE
  AND MANAGE RISK!                   • NOT ALL GREEN
                                       PROJECTS ARE
                                       EQUAL

         Best Practice in SA – Woolworths – Good Food Journey
        Enterprise Development and Procurement, recycling targets
Trend 8 – Put away the gloves
•   Tipping points                    •   Serious questions
     – Absence of Market Standards         – What have we changed
     – Lack of Proven “Return on           – What have we contributed
        Investment”                        – What is our impact
     – Market Fragmentation                – What was the return on
     – Grant Making in Isolation              investment yielded
     – Insufficient Resources              – What access do we have to
     – Various Investors, Various             Knowledge
        Instruments                        – What is our Code of Conduct
     – Tension between                     – Where are the Industry forums &
        competitiveness, Cost of              collaboration
        Capital and Community/             – What about the underdeveloped
        government needs/wants/               Concepts Regarding the
        expectations                          Meaning of “Going to Scale”
     – Market “Insiders” versus            – NOTE 2011 – ARE WE (CSI
        Market “Outsiders”                    INDUSTRY) SUSTAINABLE?
     – Market Hype Versus Vision
        Grounded in Practice

                    Best Practice – Rift Valley – Ghana
                      Flowers, Tea, Coffee, Vegetables
                    From less than $1 a day to $3500 py
Trend 9 – Follow the money
• R40 billion + per annum must       •   New rules of engagement
  yield results                          – Support organisations not
• Donors operate independent of            programs
  each other                             – Use influence not just money
                                         – Experiment, pilot, scale
• Donor motivation varies greatly
                                         – Redefine the spheres of activity
  within the market                      – Influence public policy
• Metrics to assist in identifying       – Cross the borders
  effective organisations are            – Consider politically incorrect
  largely lacking                          investment opportunities to fast
                                           track skills, job creation and
• Information systems to track             poverty alleviation
  effectiveness are lacking          • NOTE 2011:
• NOTE 2011:                         • THE IMPORTANCE OF
• IT IS NOT ABOUT THE                  SOCIAL BASELINE STUDIES
  NUMBERS! BUT THE                     AND STAKEHOLDER
  IMPACT AND SROI                      ENGAGEMENT

          Best Practice in South Africa – SOE in SA – Escom,
          Telkom, Transnet, NDA etc – more than R1b in 2008
Trend 10 - Hard facts, dangerous half
 truths and total nonsense
•   Build to last, great to good              • All we measure is input (how
•   It might help you, if implementing          much we spent) and activities
    it doesn’t kill your organisation first     (what we do) and not impact
•   What is good for them might be              (over time) and we don’t report
    bad for you                                 on ROI
•   Great people and companies                • Creating a Culture of Learning
    succeed despite rather than                  –   Learn from evaluations
    because of some practices                    –   Learn from communities
•   Don’t believe your own brochures,            –   Learn with and from grantees
    PR Materials and Annual/                     –   Learn with and from other funders
    Sustainability Reports
                                                 –   Learn from academic institutions
•   NOTE 2011:                                   –   Learn from professionals
•   WHAT ARE WE DOING                            –   Learning from other types of
    DIFFERENTLY – COMPARED                           information intermediaries
    TO PREVIOUS YEARS?



Best Practice - Safaricom Keyna - renewable energy, recycling of handsets,
 providing jobs for physically challenged - Measuring impact on market –
     labor market, rural development, contribution to GDP, leverage of
government resources, development sector capacity and other corporates
Why do CSI Fail? (1)
•   Limited understanding of the often complex local context:
     –   Companies have sometimes commenced community relations, investment and development
         initiatives without fully understanding the socio-cultural context or how their presence
         and actions can affect the complex dynamics between and among local stakeholder
         groups. This has led to a range of unintended consequences, including the exacerbation of
         tensions or creation of conflict among communities
•   Insufficient participation and ownership by local stakeholders:
     –   Delivery of community projects without sufficient involvement of local communities and
         local government in decision making around development priorities has resulted in
         projects with low relevance to local stakeholders (and therefore by implication – low
         impact).
•   A perception of “giving” rather than “investment” (Including lack of
    clear objectives):
     –   The tendency to view community relations, investment and development as charity, rather
         than as an investment linked to the business and operational objectives – has resulted in
         vague mandates and a lack of direction and purpose for socio economic development
         strategies and programs.
•   Detachment from the business:
     –   Community investment and development programs have tended to be planned and
         implemented in isolation from business activities and other day-to-day actions
         affecting stakeholders. This has limited CSI’s effectiveness in helping the company to
         address key social risks and opportunities at the site level or to take advantage of business
         efficiencies and competencies in support of local communities.
Why do CSI Fail? (2)
•   Responding to local requests in an ad hoc manner:
     –   Ad hoc approaches are typically opportunistic and focus on short-term outputs rather than
         catalysing long-term change. The risk, in many cases, is that the sum of all these disparate
         contributions to local causes does not add up to anything that either the company or
         host communities can point to as a tangible or lasting socio economic development
         benefit.

•   Lack of professionalism and business rigor:
     –   Few CSI programs are held to the same standards that companies apply to other
         business investments they make (in terms of professional rigor, a clear business rationale,
         planning and budgeting processes, and accountability for results). This often reflects the low
         priority given to CSI by senior management when there is no perceived link to the company’s
         bottom line.

•   Insufficient focus on sustainability:
     –   It is only in recent years that the sustainability of CSI activities supported by
         companies has become a key factor in project selection and design. In the past, short-
         term objectives took priority over longer-term considerations, and sustainability policies and
         criteria were not given much emphasis.

•   Provision of free goods and services:
     –   While well-intended, the long-term consequences of providing free goods and services, or
         infrastructure for that matter, have not proven to be in the interests of either the company or
         local stakeholders. The lack of requirements for matching contributions (whether
         financial or in-kind) has made it difficult to generate shared ownership or financial
         sustainability, and has instead fostered dependency.
Why do CSI Fail? (3)
•   No exit or handover strategy:
     – Commencing activities without planning in advance for the company‟s eventual
       withdrawal has rendered many company-supported programs unsustainable and
       created difficulties for the company around its “social license to exit” in times of
       financial cutbacks or project end.

•   Overemphasis on infrastructure and under emphasis on
    skills/capacity building:
     – Traditionally, CSI programs have been dominated by company-led, bricks-and-mortar
       types of projects (particularly in the mining industry) with a significant lack of
       investment in the participatory processes, such as skills building, and
       organisational development necessary to affect and maintain long-term change.

•   Lack of transparency and clear criteria:
     – Unclear criteria have led to numerous cases of conflict between and among
       communities over who gets what and why. When transparent criteria are lacking,
       company practice in distributing benefits may be perceived as secretive,
       unpredictable, and susceptible to manipulation.

•   Failure to measure and communicate results:
     – In many cases the effectiveness of CSI programs is unknown because it has not
       been systematically tracked or measured the way most other business activities
       or expenditures would be. Common shortcomings include the lack of proper
       baseline data (i.e. social impact studies) and a focus on measuring the volume of
       spend (inputs) or the number of outputs rather than the actual quality of outcomes.
Getting Started and
  Making it work
Our Approach
• Strategic Review
   –   Business
   –   Brand
   –   Operations
   –   Sustainability
• Internal and External Stakeholder Dialogue
   – Management, Executive, Employees
   – Partners, Beneficiaries, Intermediaries
• Benchmarking
   – Local, Global, Inside and Outside Industry
   – Comparative and Competitive Analysis
   – Industry / Sector Review
• Social Baseline Studies / Sector Specific Research –
  Education, Health, etc.
Group Feedback and Interaction
•   Defining the business case
•   Developing the strategy and policy
•   Developing focus areas
•   Developing grantmaking criteria
•   The process – application, consideration,
    approval, contractual, funding, monitoring/
    evaluation/impact assessment, reporting,
    communication
The Ages and Stages of CSI*
Business Age            Stage of CSI Modus                    Key Enabler   Stakeholder
                                     Operandi                               Target
Greed                   Defensive             Ad Hoc          Investments   Shareholders,
                                              Interventions                 government
                                                                            and employees

Philanthropy            Charitable            Donations       Projects      Communities
Marketing               Promotional           Public          Media         General Public
                                              Relations
Management              Strategic             Management      Codes         Shareholders,
                                              Systems                       NGO’s, CSO’s
Responsibility          Systemic              Business        Products      Regulators and
                                              Models                        Customers


   The Age of Responsibility – CSR 2 – Dr Wayne Visser
Process of Strategic CSI
Assess the   Assess the      Engage           Invest in     Set the         Select          Measure and
business     local           Communities      Capacity      Parameters      implementa-     communi-
case         context                          Building                      tion models     cate results


Business     Socio           Community        Needs         Objectives,     In-house        Baseline
Case         Economic        Planning         Assessment    guiding
             Assessment                                     principles
                                                            and criteria

Risk and     Stakeholders    Assets and       Target        Investment      Multi-          Indicators
opportuni-   and             opportunities    Groups        Areas           stakeholder
ties         networks                                                       partnerships
Core         Institutional   Visioning and    Types of      Exit strategy   Third Party     Community
competen-    mapping         prioritisation   capacities                                    perceptions
cies                                          and skills


Internal     Partners        Expectations     Options and   Budget          Foundation      Return on
Alignment                    management       strategies                                    investment

Project      Environment Gender                                             Hybrid Models   Communica-
Cycle        al Scanning                                                                    tions Strategy
             Industry/
             Competitors
             Benchmarking
Guidelines for Best Practice
•   Set out a 3-5 year plan for the company’s community investments
•   Establish community relations, investment and development strategic objectives that are
    linked to the business case
•   Identify target stakeholder groups and specify eligibility criteria
•   Link the Community Strategy to the local context by drawing upon socio economic
    baseline studies
•   Establish an iterative process of engagement with local stakeholders and partners on
    Community Relations, Investment and Development
•   Draw on the company’s core competencies and resources to support communities
•   Promote cross-functional coordination and accountability for supporting CSI objectives
•   Integrate CSI with other company programs that involve communities (stakeholder
    engagement, grievance process, environmental and social impact management, local
    hiring and contracting as well as Human Rights)
•   Set out criteria and guiding principles against which all Community Investment and
    Development proposals is screened
•   Identify the key program areas in which the company will invest
•   Identify the implementation model and decision-making / governance structures
•   Define roles and responsibilities, budget, scope, and timelines
•   Describe the company’s (and in particular the specific programs) exit / handover and
    sustainability strategies
•   Consider both short-term and long-term objectives
•   Describe how project results will be monitored and communicated
Getting Smarter: Support
         • DO YOU?
           – Devote a portion of the annual
             grantmaking budget to general
             operating support grants
           – Renew one-year grants sometimes,
             often or always
           – Support capacity-building activities
             among grantees
           – Award multiyear grants of two
             years or more sometimes, often or
             always
           – Directly support grantee leadership
             development activities
           – Is your general operating support
             grants greater now than it was three
             years ago
Getting smarter:
         Application practices
• Do you?
  – Have a common (single/standard) application
    form
  – Have financial and other standard applicant
    information available online
  – Accept proposals that were prepared for other
    funders
  – Compensate nonprofits for their time if you
    approached them and requested a proposal –
    but then ultimately rejected it
Getting Smarter:
            Reporting Practices
• Do you?
  – Require final reports often or always
  – Read Grant reports (by at least one, two or three staff
    members)
  – Use Grant reports to foster learning and a useful
    exchange between yourself and the grantees often or
    always
  – Ensure reporting requirements are often or always
    proportionate to the size and type of grant (e.g., a
    one-page report requirement for a small grant or
    event sponsorship)
  – Acknowledge receipt of grant reports within four
    weeks
  – Require Interim reports often or always
  – Have a common grant report form often or always
Getting Smarter: Feedback
         • Do you?
           – Solicit feedback of any kind
             (anonymous or non anonymous)
             from grantees and beneficiaries
             through surveys/interviews/focus
             groups
           – Test/compare the results and
             outcomes of your
             projects/programs against
             benchmarks or results of other
             funders or industry standards
Getting Smarter: Stakeholder
            Engagement
• Do you?
• Meet with grantee leaders to learn more about mutual
  issues and trends from their perspectives
   – Conduct site visits
   – Attend grantee events (e.g., fundraisers, performances)
   – Assess the needs of the communities or field(s) you serve (e.g.,
     through surveys, interviews or focus groups)
   – Bring together funders and grantees to discuss matters of mutual
     interest
   – Invite grantees to address board members sometimes or often
   – Seek external input on grant proposals from representatives of
     recipient communities or other grantees
   – Seek advice from a grantee advisory committee about policies,
     priorities, practices or program areas
   – Delegate funding decision-making power to representatives of
     recipient communities or other grantees
Steps to more strategic
            grantmaking
• Clarify your values (e.g. social justice)
• Create a vision (e.g. health insurance/primary
  education for all South Africans)
• Determine the best way to achieve intended
  results (through research, planning, use of best
  practices, careful execution and follow through)
• Stay focused (it is hard to be strategic when you
  spread yourself too thin)
• Align your resources (your expertise and
  network might be as useful as your money)
CSI – Strategy guidelines
• A strategy that
   – Will support and contribute to positive social change
   – That encourages innovation and creativity in its
     application and interpretation
   – Is so innovative and creative that it becomes a
     competitive differentiator for the company
   – Draws on all the core competencies and resources of
     the company
   – Is easy to understand, execute, communicate,
     monitor and evaluate
   – Will encourage and ensure employees‟ involvement
     and support
   – Is so comprehensive that it will guarantee board, senior
     management and business unit commitment
   – Focus on areas that correlate societal challenges with
     business challenges
   – Is still neatly boxed and clearly defined
CSI policy guidelines
• Support and promote projects with a specific relevance to
  the organisation
• Focus on communities close to areas of business and
  operations
• Collaborate with other funding and development
  agencies to promote and develop CSI (collective effort and
  greater contribution)
• Collaborate with government – (consult and identify need
  for contribution)
• Advise communities on project planning and
  implementation – to ensure project success
• Focus on and strive to consolidate initiatives that derive
  greatest benefit to communities (large scale funding and
  economies of scale – cluster and rank initiatives)
• Audit implementation and accomplishments – ascertain
  results and outcomes
• Review and refine strategy and focus – continuous
  improvement
Strategic Considerations
• Follow an inclusive process that allows all internal
  stakeholders to contribute any resources at their disposal to
  become involved in the CSI strategy
• Follow a proactive approach that encourages communities
  to interact with the organisation in a deeper and more
  meaningful way
• Ensure the involvement of employees in the process
• Ensure that the objectives of the CSI strategy follow ethical
  grant making principals that support integrity, respect, and
  nurture and reflects diversity and cultivates mutual respect,
  with a bottom up approach
• Allow communities to share their needs and requirements
  rather than impose interventions on such communities
• Supports political, economic and social change and
  leave a legacy of empowerment
CSI Practitioners –
     Roles and Responsibilities
• Build and maintain relationships with key stakeholders
• Develop the business case for CSI
• Get top management to understand the benefits of CSI
• Understand the nature of development
• Promote strategic CSI over compliance based CSI
• Document processes, procedures and lessons learnt
• Share development lessons and experiences
• Ensure proper utilisation of all resources
• Promote the integration of CSI into every business unit
• Communicate CSI activities to all stakeholders
• Understand what elements of project management are
  relevant
• Ensure good governance and practices are ingrained
• Ensure success of projects/programmes and
  interventions
Categories of CSI Practitioners
Type                   Characteristics                     Strengths                        Weaknesses
The Helper             Often comes from a                  Often has a good                 May struggle to identify with
                       community development               understanding of community       corporate culture and to align
                       background                          issues and needs                 CSI with core business
                                                                                            practice

The Marketer           Usually comes from a                Has a good grasp of the          May struggle to gain an
                       marketing or communications         company’s interests and is       understanding of and
                       background                          able to get the company          acceptance by community
                                                           brand value for its social       organisations
                                                           investment

The Problem Solver     Often comes into CSI as a           Has the experience and           May end up alienating others
The Purist             specialist in an area of            resources necessary to           in the process of addressing
                       interest or with regard to a        address a particular need or     the need owing to his or her
                       perceived need of a                 issue within the community       expertise and specialist
                       community                                                            knowledge of the subject
                                                                                            matter

The Incidentalist      The CSI function is only one        Is often chosen on the basis     May not have the time and
                       of a number of other roles          of proximity to the leaders of   support to develop a well-
                       that he or she fulfils within the   the company                      conceptualized CSI model
                       company

The Purist             Been there                          They have the knowledge          Know everything
The Professional CSI   Done that                           and the experience.              My model/project/legacy
Practitioner           Know everyone                       Can walk the talk and interact   Knowledge is power
                       Know all the rules                  at all levels.                   Don’t need to learn
                       Know all the legislation            Have developed best practice     Don’t contribute to
                                                           development models.              learning/knowledge/ industry
                       Very clear on what is
                       right/wrong/ what is needed                                          – best practice
Towards the Future
• It's more ambitious: Today's
                         grantmakers are tackling giant
The Future of Giving     issues, from remaking African
                         education to curing cancer.
                       • It's more strategic: Donors are
                         taking the same systematic
                         approach they used to compete in
                         business, laying out detailed plans
                         that get at the heart of systemic
                         problems, not just symptoms.
                       • It's more global: Just as business
                         doesn't stop at national borders,
                         neither does charitable giving.
                         Donors like B. Gates to George
                         Soros and Bono have sweeping
                         international agendas.
                       • It demands results: The new
                         grantmakers and philanthropists
                         attach a lot of strings. Recipients
                         are often required to meet
                         milestone goals, to invite
                         foundation members onto their
                         boards, and to produce
                         measurable results--or risk losing
                         their funding
The Future of Grantmaking
• More scrutiny from legislators and
  regulators
• More skepticism from consumers and
  the general public regarding motivation
  and impact of corporate giving,
  particularly cause marketing initiatives
• More integration of corporate
  grantmaking with the larger Corporate
  Sustainability agenda
• More requests from nonprofit
  organisations, both large and small, to
  help close budget gaps, particularly from
  social service providers facing more
  people in need every day
• More pressure from internal
  management to cut costs, and possibly
  even grantmaking budgets
• More emphasis on the role of
  companies as global citizens, with an
  obligation to help those in developing
  countries affected by HIV/AIDS and
  other global health issues
Challenges for 2011
•   Aligning the giving program more closely with the business needs.
•   Desired impacts are not being achieved – social problems persist and
    may even be worsening
•   Government has changed its involvement – organisations can no longer
    rely on government as a source of funding or support (resources) –
    disillusionment with government as a partner is growing
•   The challenge of global giving is putting more pressure on funders and
    their already diminishing budgets
•   Education issues, diversity and environment/sustainability are gaining
    in importance. Issues that are declining in importance include culture and
    the arts, faith-based organisations, alumni giving and global
    disease/pandemics.
•   Asia is receiving the bulk of the attention. There is much less interest in
    Africa.
•   The top three management priorities are the relationship to the broader
    corporate citizenship/sustainability agenda, measurement of results such as
    impact and return on investment and volunteerism.
•   The two biggest changes in corporate giving programs observed since
    2007 are the greater alignment of giving programs with the business and
    cuts in budget and staff
Tipping Points or Flux
• Tough questions
   – How is contributions spent
   – How much is being spent
   – Are we making a
     contribution or facilitating
     change
   – Are we entering a tick box
     mindset
   – Are we getting better at it,
     can we measure our
     impact
   – Are we talking about the
     same things
Carrots & Sticks
     • Are practitioners between a
       rock and hard place – do
       they have influence?
        – Are we strategic
        – Are we entering moral
          and ethical debates
     • Developers &
       implementers vs facilitators
     • The Achilles Heel -
       Measurement
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

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Towards Best Practice - Community Investment and Development - 2011

  • 1. Towards Best Practice Social Investment and Community Development 2011 Next Generation Consultants Reana Rossouw
  • 2. Day One • Session One – An introduction and contextual overview • Session Two – Best practice in Africa • Session Three – Trends, Drivers, Challenges • Session Four – Getting Started and Making it work
  • 4. CSI in the context of definitions Corporate Social Investment (CSI) How we care for the well being of the communities in which we operate – (by investing resources into communities through CSI programme management) Corporate Governance Corporate Social How CSI is managed – Responsibility (CSR) now through accountable, CSI superseded by Corporate responsible, transparent, Definitions Sustainability ethical investment How CSI contribute to practices mitigating economical, environmental and social impacts and risks Corporate Citizenship How CSI contributes to managing internal and external stakeholder relationships both up and downstream
  • 5. New terminology • CSR – an overarching value-based framework – (the corporates contribution to a society’s sustainable development goals) • CSI – a voluntary social giving activity – (strong developmental theme – improving the lives of under- privileged and previously disadvantaged communities) • SED – A discretionary transformation framework – (emphasises developmental initiatives that equip disenfranchised individuals with skills and/or resources to play an active role in the economy) • LED – A mandatory framework – (Social and Labour Plan to secure ongoing licence to operate – Mineral and Petroleum Resources Development Act – focus on job creation with measurable outcomes) • Corporate Sustainability – Managing risk, impact, influence and control
  • 6. Strategic CSI Align strategic Measurable and Return Operational On Investment business and for Brand Company imperatives CSI Align and Measurable support Impact on government Society and Priorities and Environment Community needs
  • 7. Progress towards Best Practice Traditional In Kind Social Strategic Systemic Philanthropy Grantmaking Entrepreneur- Investments Socio Donations/ Products, ship Aligned with Economic Cheques services, skills Financial core business Development resources, interests, brand Collaborative operational values, Partnerships, advice & competencies, influencing expertise, and policy, access to government contributing markets goals advocacy and (trade) high impact change
  • 8. Towards Sustainable CSI Charity Create New Create Business as Value competitive Usual FLAGSHIPS advantage Social Value Add Mitigate Risks Compliance Impacts Do no harm Do what is Control Costs required Sustainability Strategy Shareholder Value Add
  • 9. Strategic CSI means… best practice • Formalised approach/documented strategy • Regular reporting and communication (internal & external) • Active Senior management/board involvement • Alignment to core business and operational business • Working in collaborative partnerships • Dedicated CSI staff/team/department/foundation/Trust • Regular stakeholder consultation and engagement • Employee involvement and recognition • Regular monitoring, evaluation and impact assessment • Replication of successful projects • Development of best practice guidelines • Sharing lessons and insights
  • 10. New perspectives on CSI Regulation is a key driver
  • 11. CSI and BEE Generic scorecard or Turnover greater than R35m Approved Sector Charter applies Turnover between Simplified Scorecard applies Choice of 4 of 7 elements R5m and R35m All elements weigh 25% Turnover less Exempt from BEE than R5m And are recognised As Level 4 contributors
  • 12. CSI and the BEE Scorecard (cont‟d) Direct Equity Ownership 20% Encourages the sharing of equity and voting Empower- rights with black people and black women ment Management 10% Encourages senior black decision making at executive board and senior top management levels Employ- Employment Equity 15% Encourages companies to identify and recruit ment black people at professional, middle and lower Equity management positions Skills Development 15% Encourages companies to develop black talent through spending on skills development and learnerships Indirect Preferential Procurement 20% Measures the extent to which enterprises Empower- procure from BEE compliant companies. ment Encourages spend on SME’s and Black owned companies Enterprise Development 15% Encourages development or expansion of SME’s and black owned companies Socio Economic 5% Encourages initiatives intended to directly provide black people who are natural persons with means of generating income for themselves
  • 13. CSI and the BEE Scorecard • Residual Element – Code 700 Socio Economic Development – 5 points – target 1% of NPAT or 0.125% of turnover • Key Principles – Aimed at natural black persons, communities where at least 75% are natural black persons or rural infrastructure development. • Rural development programs • Health, HIV/Aids programs • Education support • Environment support • Arts & Culture • Sport • Aims to encourage initiatives intended to directly provide black people who are natural persons with means of generating income for themselves • SED is defined as: “monetary or non-monetary contributions actually initiated or implemented in favour of beneficiaries …with the specific objective of facilitating sustainable access to the economy for those beneficiaries”
  • 14. CSI and the BEE Scorecard (cont‟d) • Enterprise Development – Code 600 – 15 points – 3% of NPAT or 0.375% of turnover • Key Principles – Provision of seed capital – Professional/consulting services – Licencing/registration fees – Industry specific levies – IT services – Payments made to 3rd parties to perform enterprise development on their behalf – Preferential credit facilities/guarantees/better payment terms – Training/mentoring – Enterprise Development unit • Aims to encourage development or expansion of black, small medium enterprises • Specifically aimed at supplier development in most organisations
  • 15. Impact of Charters & BEE Codes • Increased communication of CSI • More formalised approach to CSI • New/Refined CSI Strategy • Greater board/management involvement • Increased/decreased expenditure on CSI • Restructuring of CSI department • Change in focus area/project selection • Change in beneficiary/recipient communities
  • 16. Impact of JSE SRI Index • Increase in non-public information disclosure • Most companies now committing to sustainability and corporate responsibility – understand the imperative • Sustainability Reports starting to be structured according to Index Criteria • Distinction between real performance and window dressing becoming clearer • Still lacking some understanding about specific issues such as the difference between direct and indirect impacts • CSI measurement now becoming critical • Clear guidelines for focus areas and impact • External reporting (and therefore results) now drive CSI communications
  • 17. Impact of Sustainability Reporting • Accounting – accurately valuing the CSI contribution • Accuracy – measuring input and outputs • Data collection – measuring impact of investment • Indicators – development of indicators for measurement - impact on society, environment or economic impact • Strong uptake of GRI, and real increase in assurance/ verification • Different reporting styles – Section of annual report – Section of sustainability report and integrated report – Separate social/environmental/ESG report – Separate CSI report
  • 18. Sustainability Reporting on CSI • Top 3 indicators for Education and Training – 1. Number of people benefited/reached by the education initiatives – 2. Amount of money invested/donated in the education initiatives – 3. Number of education-related activities (e.g. seminar, classes, conferences etc.) held • Top 3 indicators for Philanthropy and Charitable Giving – 1. Sum of money donated/raised/contributed to community initiatives – 2. Percentage or number of people (organizations) granted/sponsored/supported/covered by the donated services – 3. Number or quantity of scholarships/material/services donated (no value of money indicated) • Top 3 indicators for Community Services and Employee Volunteering – 1. Number of people/organizations/projects benefited, served or implemented – 2. Number of volunteers – 3. Number of volunteering hours • Top 5 indicators for Total Community Expenditure – 1. Amount of money spent in community investment – 2. Percentage of profit/revenue/income spent in community investment – 3. Percentage increase of money spent on social investment, compared to last year – 4. Number of people benefited in community investment activities – 5. Number of projects developed and completed • Top 3 indicators for Community Engagement and Dialogue – 1. Number of visitors, audience and participants reached – 2. Percentage/number of sites where community engagement activities were performed – 3. Frequency of meetings
  • 19. CSI in Africa A local and continental overview of the practice
  • 20. Continental Context • 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 • Being recipients of development aid meant that we did not necessarily understood, engaged or were part of the development process – 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)
  • 21. • Large foundations North Africa – 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
  • 22. West & East & Central Africa • 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
  • 23. Southern Africa Trends (1) - Regional • 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
  • 24. Trends (2) – Market Based Approaches - Innovation • 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
  • 25. Trends (3) – New Influences Greater emphasis on measurement of impact – (Sustainability reporting – GRI G3.1) • Growth in volunteerism – Global networking, social networks/media – Recession – leverage and extend funds • 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
  • 26. Trends (4) - Legislation • Motivation has changed – Compliance with Broad Based Black Economic Empowerment – BBBEE Act – Compliance with industry based regulation • SLP, LED (Mining) & ED (BEE) , Financial Access (Financial Charter), Education – Impact of Johannesburg Stock Exchange Socially Responsible Investment Index (JSE-SRI) – Sustainability Reporting have become Integrated Reporting (King III) • Companies have become very sensitive to socio economic development – the value, expectations, requirements and impact
  • 27. Trends (5) – Financial Crises • Good News – 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
  • 28. • Bad News – More pressure on Trends (5) developmental assistance – Donors not living up to pledges Financial Crises – 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
  • 29. Trends (6) - Business • 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 – Emphasis on ROI and impact – Challenges in enabling environment – compliance focused investment and giving
  • 30. Trends (7) – Focus Areas • 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
  • 31. Issues • 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 chance – How do we deal with future challenges if we are not meeting today’s requirements and issues
  • 32. Towards the Future • 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
  • 33. Follow the money Trialogue – CSI Handbook 13th Edition R5.4 (b) = 2010 R5.1 (b) = 2009 R4.1 (b) = 2008 R3.2 (b) = 2007
  • 34. Hot off the press • Funding increased by 5.9% - (inflation 5.8% - NO real growth) – Improved CSI Accounting – Broader spectrum of giving/spending – CSI Definitions and measurement in state of flux • SED in BEE Codes • LED in Industry Charters • Social & Labour Plan in Mining Charter • Contributions – Cash, Non-Cash (product/employee time) – BEE Act – more are giving and giving more – Spending remains concentrated – top 100 companies – 70% of all CSI spend – SOE and Mining outspending the rest – “Facilitate economic inclusion & enterprise development” influenced increase at the expense of welfare-based spending – Big 4 – Education (31%), Social Dev (16%), Entrepreneurship (13%), HIV/Aids (11%)
  • 35. Impact of the recession • 14% cut in CSI budgets – 2010 • 20% cut in 2009 • 23% cut in 2008 – More than 50% over last three years • 35% of all budgets are spent nationally • 23% of CSI spend is concentrated in Gauteng • Remaining 39% of spend is across 8 provinces • Many of the poorest provinces (Eastern/Northern Cape) receives little funding • Spend/budgets now include LTO programs i.e. financial literacy - banks and access – healthcare and financial services, infrastructure - mines
  • 36. Evolving CSI practice • Legislation key driver – Sector charter, licence to operate, stakeholder pressure, reputation, BEE Codes • Less than half of CSI funding goes to NPO’s – Direct funding to industry initiatives (eg. NBI), direct to government programs, directly to schools, universities, hospitals, directly to development own programs) • Monitoring and Evaluation is gaining traction • Partnership models is increasing
  • 37. What’s New • New Sectoral Classifications – Education – Social & Community Development – Health & HIV/Aids – Entrepreneurship & Job Creation – Training, Capacity Building & Skills Development – Environment – Arts & Culture – Food Security & Agriculture – Sports Development – Safety & Security – Non-Sector Specific donations & Grants – Housing & Living Conditions
  • 38. Popularity • Education = 32% of all funding – but decrease of nearly 10% in amounts • Health = 16 of total funding% - decline of 11% • Social and Community Development = 10% - decline of 16% • Food security and agriculture – 5% of all funding, increase of 4% • Enterprise Development = 10% increase of almost 10% • Environment – 8% - increase of 3% • Remaining 7 categories receive less than 5% of budgets
  • 39. • • Supported by 93% of all corporates Accounts for 32.4% of all spent Education • Most funding to school system 29% (GR 10 – 12); 28% to GR 1-9), bursaries and scholarships – 25% • Maths and Science 30% – Further education & training (FET 10- 12) – Tertiary education (universities, technikons) – General education (Gr 1-9) – Early Childhood development – Adult basic education & training (ABET) – Bursaries and university chairs – Maths, science and technical education – Information technology/computers – Infrastructure, buildings, facilities – Teacher Development – Life skills – Curriculum development/course materials/text books – School governance and functionality – Language development
  • 40. Health & HIV/Aids • Supported by 64% of all corporates • Accounts to 16.7% of all spent – Hospices – Primary Healthcare – Training Healthcare workers – Research & Education – Health Infrastructure, equipment & medicines – Specialist care • HIV/Aids – Support - Aids orphan support, testing, home-based care, counseling – Education & awareness – employee family education, community education, health worker training, school-based education – Treatment – infrastructure provision, provision of medicines
  • 41. Social and Community Development • Supported by 78% of all corporates • Accounts to 12.5% of all spent – Orphans & vulnerable children – OD & Capacity building – People with disabilities – Feeding schemes – The aged – Victims of violence and abuse – The destitute/homeless/shelters – Disaster relief – Livelihood strategies – Preventative programmes, prisoners – Animal care – Multi-service delivery (multi-purpose centers, etc) – Organisational, Capacity & Community Development
  • 42. Food Security & Agriculture • Supported by 35% of corporates • Received 6% of total CSI budget – Food Relief/Feeding Schemes – Survivalist farming - Food Gardens & Permaculture – Small Scale farming – Infrastructure, facilities & equipment – Non-specific general donations
  • 43. Enterprise Development • Supported by 40% of all corporates • Accounts to 5.6% of all spent – Entrepreneurial skills development – Supporting existing SMMEs – Infrastructure and facilities – Access to finance and resources – Outsourcing, procurement and sub-contracting
  • 44. Environment • Supported by 49% of all corporates • Accounts to 6.8% of all spent – Wildlife conservation – Waste management & recycling – Biodiversity, alien clearing – Water conservation, wetlands management – Urban greening
  • 45. Training, Capacity Building and Skills Development • Supported by 44% of all corporates • Accounts to 5.2% of all spent – Technical and vocational training – Entrepreneurial training – Capacity building for the non profit sector
  • 46. Arts & Culture • Supported by 35% of all corporates • Accounts to 4.6% of all spent – Performing Arts – Visual arts – Festivals, competitions & awards – Heritage and culture – Craft sector – Language & literature
  • 47. Safety & Security • Supported by 21% of all corporates • Accounts to 2.3% of all spent – Business against crime – Rehabilitation of prisoners, victim support, trauma counseling, gang-related violence, road safety – National campaigns, community police forums, school crime & safety programmes – Capacity building/empowerment programmes
  • 48. Housing & Living Conditions • Supported by 19% of all corporates • Accounts to 3.5% of all spent – Facilitating housing development – Employee involvement in home building – Material supply – Water & Sanitation – Energy/energy efficiency initiatives
  • 49. Sports Development • Supported by 30% of all corporates • Accounts to 2.2% of all spent – Soccer – Rugby – Basketball & Netball – Cricket – Athletics – Sport for disabled
  • 50. NPO Sector • Decline in funding: – Global financial crises and ensuing economic slowdown – BEE Codes • Impact – Struggling to survive – Closed down – Discontinued projects – Cut back in service offering
  • 51. What‟s in/What‟s Out Sector What’s In What’s Out Why Education Support of community facilities, Bursaries for job placement, Part of company normal bursaries for underprivileged within the company, crèche activity as it benefits without employment obligations facilities for employees employees directly Training Community training, skills In-company training, Can be reclaimed under development for unemployed, adult workplace courses, adult Seta/Income Tax Act basic education and training in the basic training and education community for employees Environment Support of conservation projects; Operational compliance Meeting legislated obligations community clean-up projects aspects such as emissions; in SA rehabilitation requirements Job Creation Job creation and small business Affirmative or small business Assisting BEE and development projects external to procurement; outsourcing, procurement targets to meet the workplace retrenchment programs legislated obligations in SA Housing Housing programs for the general Employee housing benefits Part of pre-and post 94 community imperatives to benefit employees Arts & Culture Support of developmental Sponsorship of commercial Largely for company and/or programs, development of new events staff benefit talent Health Support of community clinics, Occupational health and Meeting legislated obligations health programs in the community, safety, workplace AIDS in SA AIDS awareness and care projects awareness, clinic facilities in the community, ARV’s for and ARV’s for employees community Sport Support of developmental programs Sponsorship of commercial Primarily promotion of events or professional teams company brand rather than direct impact on sports development
  • 52. State of Giving South Africa
  • 53. Giving is big business* • Listed Companies – R5.6 billion per annum • Unlisted Companies – R2 billion per annum • State Owned Enterprises – R1.5 billion per annum • SMEs – R1 billion per annum • Individuals – R1 billion per month • Private Individuals/Family Foundations – R1 billion per annum • International Giving – R2 (3=2010) billion per annum • NGC estimation = CSI in SA is a R45 billion industry and not R5 billion *NGC own research
  • 54. Reported Budgets 2010 - m Absa R102 Barloworld R7.6 Harmony R27.6 Acsa R24 BHP Biliton R115 HCI Foundation R37 Advtech R42 Bidvest R25.3 Impala Platinum R61 African Bank R8.2 British American Tobacco R30 Imperial Holdings R13 African Rainbow Minerals R19.3 De Beers R43 Investec R29 Afrox R4.2 Discovery R6.3 Liberty R20 Altech/Altron R12.4 Eskom Foundation R79.5 Lonmin R64 Anglo American R600 First Rand Group R101 Massmart Holdings R20 Anglo Platinum R245 Foshini Group R24.3 MTN SA Foundation R74 AngloGold Ashanti R21.3 Gold Fields R15 Murray & Roberts R21 ArcelorMittal R40 Grindrod R2.3 Nampak R8 Aveng R17 Group 5 R2.7 Nedbank R30 Netcare R37 Rainbow R1.6 Transnet Foundation R60 New Clicks Holdings R14.4 Sanlam R19 Truworths R28 Northam Platinum R9.5 Santam R5 Vodacom R68 Oceana Group R4.1 Sappi R16.3 Woolworths R297 Old Mutual R32 Sasol R50 Unilever R12.3 Palabora Foundation R32.6 Spar Group R6.4 Tongaat Hullet R15.7 PetroSA R44.8 Spier R7.9 Standard Bank R94 Pick & Pay R61 Telkom Foundation R47 Sun International R20.4 Pioneer Foods R5.6 Tiger Brands R25 PPC Cement R10 Primedia R53.7 AVI R15.5 Engen R18.7
  • 55. Non Spenders Multinationals – Telecoms Nokia, Samsung, Erickson, Siemens FMCG L’Oreal, Revlon, Unilever, Proctor & Gamble Fast Food KFC, MacDonalds, Cadbury’s, Nestle Financial Visa, Mastercard, American Express British Airways, British Telecom Automotive BMW, SAAB, KIA, Honda Nationals Mugg & Bean, Distell, Nando’s, BEE Fast Food and BEE Companies – Rainbow and Mvelephanda, Wiphold Industries Media, Property, Services Finance – Asset Management/Investment Medical, Automotive Advertising, Hotels (Protea, City Lodge Direct Selling/Marketing – Amway, etc Sectors Retail - Pep, Ackermans, Stuttafords Pharma – Novartis, Pfizer, Adcock, Aspen Oil/Petroleum – Shell, Total, BP State Owned Enterprises National Ports Authorities, Armscor, SAA
  • 56. Budget Trends • Included in the budgets of corporates for CSI are: – Spent on Events and awards – 45% – Monitoring and Evaluation of projects – 43% – Marketing and Promotion of CSI programs – 40% – CSI Reporting – 34% – External Expertise – 30% – Own administration – 28% • SOOOO, • how much is going to development work?
  • 57. Other Contributors* • Zennex Foundation - R30 m • Mott Foundation – R20 million • Oprah – R150 m • Bernard van Leer Foundation – R10 m • Bill and Melinda Gates –R642 m • Joseph Rowntree Charitable Trust • Carnegie Corporation - R200 m - R10 million • Ford Foundation – R78 m • Difid Foundation– R30 million • MacArthur Foundation – R30 m • Shuttleworth Foundation – R50m • Family Foundations • Rockefeller Foundation - R30 m – Ackerman Foundation(R40m) • Kaiser Family Foundation – – Oppenheimer (R30m) R195m – Murray (R20m) • Atlantic Philanthropies – R125 m – Rupert (R50m) • Open Society Foundation – R50m – Appelbaum (R80m) • Kellogg Foundation - R25 m *NGC Own research
  • 58. Interesting Finding • Total Aid in 2008 in m US Dollars – 700 hundred million USD • Ten biggest donors in 2008 – EU Commission – 173 m USD – US – 137 m USD – UK – 70 m USD – Netherlands – 55 m USD – Germany – 37m USD – France – 28 m USD – Global Fund (GFATM) – 26m USD – Sweden – 23 m USD – Denmark – 18 m USD – Belgium – 18 m USD • Together with other CSI funds this is a LOT OF MONEY
  • 59. Foreign Development Aid • SA receives around 1/3 of global aid, or around US$30 billion • USAID – US$85 million • Danida, Cida, AUSAID, DFID – R3.7 billion • Largest investors are USAID, European Investment Bank, EU, Germany and Sweden • What they give – grants, technical assistance and loans • The RDP fund acts as a clearing housing for money donated to SA. • The fund showed refunds since 2002-(R79 million), 2003- (R40 million), 2004-R66 million, 2005 – (R72 million), 2006 – (R80 million), 2007 – (R79 million), 2008 (R87 million). • This is due to capacity problems. More specifically delayed requests for funding, unrealistic time frames, incomplete and inaccurate financial statements and non compliance.
  • 60. Sectoral Focus of Global Donors Donor Sector European Union Water, LED, Education USAID Education, democracy and governance, health, environment, economic capacity, employment Norway Democracy, higher education, research, environment, natural resources and energy Sweden Education, private sector, cultural sector, urban sector, research, HIV/AIDS, capacity building Netherlands Justice, youth, education and local government Denmark Private Sector Development, HIV/Aids, environment
  • 61. Private Foreign Foundations • More than 70 foreign based private foundations in SA • More than 60 foreign faith based organisations in SA • More than 100 foreign NGOs in SA • Function as grantmakers, supporting specific programmes and run their own projects • Providing volunteers, professional services, material resources, exchange programs. • Most popular focus areas education, technology/communications, capacity building, environment, HIV/Aids & Health, culture, justice, women, children, justice/peace/conflict resolution, poverty.
  • 62. Special Funds • Initiatives by government to address poverty and development • Budget – R55 billion per annum from Government, R5 billion from donors • Special Poverty Relief Account • Independent Development Trust • Isibaya Fund • Khula • National Development Agency • National Lottery Board • National Skills Fund • Operation Jumpstart Association • Ntsika • South African Women's Entrepreneur Network • Umsobomvu Youth Fund – (Replaced by National Youth Development Fund) • National Empowerment Fund • Local Economic Development Fund • uTshani Fund
  • 63. Public-Private-Partnerships • National Business Initiative • Business Against Crime • Business Trust • Joint Education Trust
  • 65. 2 Perspectives • Emerging Trends – linked to economic crises • Steadfast Trends – monitored over a period of time – 5 years/top 20 most influencing trends for the industry overall
  • 66. 1st Perspective Emerging Trends linked to economic crises • Adjustment of budgets – No new MOU’s, only focused on committed, signed agreements • Stronger focus on non-cash giving – Product and services, volunteer hours, skills, time • Stronger focus on measurement – Monitoring and evaluation and impact assessment • Stronger focus on new strategy development – New focus areas • Increased employee volunteerism & matched giving – To try and leverage budgets • Greater alignment with Sustainability divisions – Focus on Enterprise Development and Environmental Impact • Specific industry changes – Automotive/Mining/Manufacturing industries in decline, declining budgets
  • 67. • Co-operation is no longer a competitive factor Impacts – Communities in distress needs help, working together will leverage funds • Industry bodies need to address specific issues – Unions demand greater involvement and assistance and recognition of social imperatives • Communication with development partners is crucial – Consider operational costs to ensure successful delivery of programmes • All stakeholders will watch how companies respond to economic crises – Greater opportunity for stakeholder involvement and participation
  • 68. New Patterns and influencers • Leveraging core assets – Distribution channels – Suppliers – value chain – Access to markets – customers – Access to sustainability – income generation – social entrepreneurship • Impact of climate change – Reduced access to water – Reduced food production – cost of food – Need for local producers to reduce carbon footprint (importing) • Sustainability – The race to zero carbon impact – offsetting carbon emissions
  • 69. 2nd Perspective Trends driving innovation INNOVATION – Is innovation possible in a socio economic development context? Is it fair to expect innovation? How will we know our solution is innovative? How will we measure INNOVATION? IMPACT? SUSTAINABILITY? RETURN ON INVESTMENT? Is it time for “back to basics” or radical innovation?
  • 70. Top Trends • Most influential trends driving innovation – Trend 1 – Social Entrepreneurship – Trend 2 – Commercialisation of CSI – Trend 3 – Influence of Compliance – Trend 4 – The rise of stakeholder engagement – Trend 5 – The pressure to measure – Trend 6 – Bigger, better models of development – Trend 7 – Green is the new black – Trend 8 - Put away the lenses/gloves – Trend 9 – Follow the money – Trend 10 - Hard facts, dangerous half truths and total nonsense
  • 71. Trend 1 – Social Entrepreneurship • The rise of social entrepreneurship • Practitioners not ready – Mohammad Yunus – Current grantmaking criteria does • Social entrepreneurs not allow flexibility – Charles Maisel – Cannot fund for-profits – Tamzin Ractliff – Don’t fund individuals • Social Enterprises – Fund only specific focus areas – Grameen Bank notwithstanding real needs • Social Venture Capital – Risk adverse – Sasix – Lack entrepreneurial understanding & insight – Greater Good – One size fits all approach to • Social Collaboration grantmaking – Grow South Africa – Discriminate against profitability – Don’t really understand • NOTE:2011 sustainability • ISSUE OF ENTERPRISE DEVELOPMENT! • NOTE 2011: • ISSUE OF SOCIAL ENTERPRISE SOCIAL ENTREPRENEURSHIP Best Practice in SA – Sasix – Able to raise and distribute R32-m in 36 mths
  • 72. Trend 2 – Commercialisation of CSI • The fortune at the Bottom of • Driven by business benefits the Pyramid and future profits • Products for poor people • Increased impact & awareness • Making markets work for the of sustainability and poor interconnectedness • The next 4 billion • Search for double/triple bottom • Bringing together the 1st and line benefits 2nd economies – Financial vs Social Returns – Financial vs Social vs • Cause Related Marketing Environmental Impact • Flagship Programs • Elusive sustainability • NOTE 2011: • NOTE 2011: • ISSUE OF HIGH PROFILE • MAJOR FMCG COMPANIES PROJECTS – OUTSURANCE – REVENUE MODELS / DIAL DIRECT Best Practice in SA – Nedbank Affinity Program – R2m for NMCF in 6 months, R75 m for WWF in 24 months, excluding Sports Development and Arts & Culture Programmes
  • 73. Trend 3 – The influence of compliance • Tick box approach • Add to burden of • Legislation are driving administration both for motivation grantees and grantors • Compliance are hard work • Driving pressure to measure • The good, the bad and the ugly • Reporting becomes big – Good - everyone now gives • New strategies/new – Bad – once spent 1% NPAT – budgets/new focus areas/new stop reporting lines – Ugly – Reducing budgets • Shifts in development – new • Points drive investments flavours of the month • NOTE 2011: • Enterprise development at the cost of social development and • ISSUE OF „BLACK‟ welfare RECIPIENTS – the poor not necessarily classified by • NOTE 2011: race anymore • ISSUE OF ASSURANCE AND GOVERNANCE Best Practice in South Africa – Linking Enterprise Development (ED), Local Economic Development (LED), and Procurement to CSI spent.
  • 74. Trend 4 – The rise of stakeholder engagement & activism • Product and market • Ring fencing CSI – The stewardship / responsibility popularity of foundations • Governance and ethics • Responsibility, Transparency • Human rights and gender and Accountability equality • Give or else – mentality • Risk vs reputation • Communities are becoming • Giving vs getting aware • Food vs fuel • Issues and reputation become • Humanities vs Humanitarians obstacles to giving • NOTE 2011: • NOTE 2011: • ISSUE OF LABOUR UNIONS • ABILITY TO USE CSI FOR AND GOVERNMENT NON RESEARCH AND SERVICE DELIVERY STAKEHOLDER ENGAGEMENT Best Practice in SA – British American Tobacco – South African Breweries, Anglo American – Sustainability Reports
  • 75. Trend 5 – The pressure to measure • Reporting requires • Practitioners are not measurement indicators development specialists • Measurement indicators • Practitioners have good hearts requires objectives and targets but not good / expert • Objectives and targets require knowledge strategic intent • Practitioners rely on others and • Strategic intent requires their performance are knowledge influenced by issues outside • NOTE 2011: their control • CAREFUL OF HOW AND • Practitioners don’t understand WHAT YOU REPORT – how to prove ROI and Impact SUSTAINABILITY REPORT • NOTE 2011: • INDICATORS NEED TO BE ALIGNED WITH THE STRATEGY OBJECTIVES Best Practice in Kenya – Kenya Power & Electricity Co in Kiburu - Pro-poor strategy – (prepaid meters, ready board, least cost alternative (alternative energy sources), local sustainability – planting trees – offset carbon footprint, buying poles from local communities to provide income opportunities – enterprise development- Focus on environment – carbon trading & energy saving bulbs – 1m people 18 months
  • 76. Trend 6 – Bigger, better models of development • Marketing is important • War on ideas • Communication (PR) is • Piecemeal approaches will not important work • Integration and alignment is • Effective social change requires important – long-term commitment • Proving impact and return is – willingness to take risks important – the ability to work across • It just makes so much sense sectors and silos • It becomes the new heart and – investments in strategic sole of our marketing research and policy analysis campaigns • NOTE 2011: • NOTE 2011: • THE ISSUE OF EXIT AND • IMPACT OF RECESSION ON SUSTAINABILITY NEEDS TO NUMBER OF FOCUS AREAS BE PRE-DEFINED AND DEVELOPMENT SECTORS Best Practice in Kenya – CFW – Franchised Health Care 50c for primary health care, 4000 nurses earning $4000 py
  • 77. Trend 7 – Green is the new black • Environmental impact is driven • All companies are adding by global agendas environmental projects to • Until now we only focused on the funding mix social impact • An idea whose time has come • Agriculture/Food • The raise of ethical trading and Security/Green Farming/ sourcing, fair trade, green Organic Farming/urban trade, eco trade, carbon trade renewal and greening – • NOTE 2011: the latest CSI • INTEGRATE CSI WITH phenomenon SUSTAINABILITY • NOTE 2011: STRATEGY TO MITIGATE AND MANAGE RISK! • NOT ALL GREEN PROJECTS ARE EQUAL Best Practice in SA – Woolworths – Good Food Journey Enterprise Development and Procurement, recycling targets
  • 78. Trend 8 – Put away the gloves • Tipping points • Serious questions – Absence of Market Standards – What have we changed – Lack of Proven “Return on – What have we contributed Investment” – What is our impact – Market Fragmentation – What was the return on – Grant Making in Isolation investment yielded – Insufficient Resources – What access do we have to – Various Investors, Various Knowledge Instruments – What is our Code of Conduct – Tension between – Where are the Industry forums & competitiveness, Cost of collaboration Capital and Community/ – What about the underdeveloped government needs/wants/ Concepts Regarding the expectations Meaning of “Going to Scale” – Market “Insiders” versus – NOTE 2011 – ARE WE (CSI Market “Outsiders” INDUSTRY) SUSTAINABLE? – Market Hype Versus Vision Grounded in Practice Best Practice – Rift Valley – Ghana Flowers, Tea, Coffee, Vegetables From less than $1 a day to $3500 py
  • 79. Trend 9 – Follow the money • R40 billion + per annum must • New rules of engagement yield results – Support organisations not • Donors operate independent of programs each other – Use influence not just money – Experiment, pilot, scale • Donor motivation varies greatly – Redefine the spheres of activity within the market – Influence public policy • Metrics to assist in identifying – Cross the borders effective organisations are – Consider politically incorrect largely lacking investment opportunities to fast track skills, job creation and • Information systems to track poverty alleviation effectiveness are lacking • NOTE 2011: • NOTE 2011: • THE IMPORTANCE OF • IT IS NOT ABOUT THE SOCIAL BASELINE STUDIES NUMBERS! BUT THE AND STAKEHOLDER IMPACT AND SROI ENGAGEMENT Best Practice in South Africa – SOE in SA – Escom, Telkom, Transnet, NDA etc – more than R1b in 2008
  • 80. Trend 10 - Hard facts, dangerous half truths and total nonsense • Build to last, great to good • All we measure is input (how • It might help you, if implementing much we spent) and activities it doesn’t kill your organisation first (what we do) and not impact • What is good for them might be (over time) and we don’t report bad for you on ROI • Great people and companies • Creating a Culture of Learning succeed despite rather than – Learn from evaluations because of some practices – Learn from communities • Don’t believe your own brochures, – Learn with and from grantees PR Materials and Annual/ – Learn with and from other funders Sustainability Reports – Learn from academic institutions • NOTE 2011: – Learn from professionals • WHAT ARE WE DOING – Learning from other types of DIFFERENTLY – COMPARED information intermediaries TO PREVIOUS YEARS? Best Practice - Safaricom Keyna - renewable energy, recycling of handsets, providing jobs for physically challenged - Measuring impact on market – labor market, rural development, contribution to GDP, leverage of government resources, development sector capacity and other corporates
  • 81. Why do CSI Fail? (1) • Limited understanding of the often complex local context: – Companies have sometimes commenced community relations, investment and development initiatives without fully understanding the socio-cultural context or how their presence and actions can affect the complex dynamics between and among local stakeholder groups. This has led to a range of unintended consequences, including the exacerbation of tensions or creation of conflict among communities • Insufficient participation and ownership by local stakeholders: – Delivery of community projects without sufficient involvement of local communities and local government in decision making around development priorities has resulted in projects with low relevance to local stakeholders (and therefore by implication – low impact). • A perception of “giving” rather than “investment” (Including lack of clear objectives): – The tendency to view community relations, investment and development as charity, rather than as an investment linked to the business and operational objectives – has resulted in vague mandates and a lack of direction and purpose for socio economic development strategies and programs. • Detachment from the business: – Community investment and development programs have tended to be planned and implemented in isolation from business activities and other day-to-day actions affecting stakeholders. This has limited CSI’s effectiveness in helping the company to address key social risks and opportunities at the site level or to take advantage of business efficiencies and competencies in support of local communities.
  • 82. Why do CSI Fail? (2) • Responding to local requests in an ad hoc manner: – Ad hoc approaches are typically opportunistic and focus on short-term outputs rather than catalysing long-term change. The risk, in many cases, is that the sum of all these disparate contributions to local causes does not add up to anything that either the company or host communities can point to as a tangible or lasting socio economic development benefit. • Lack of professionalism and business rigor: – Few CSI programs are held to the same standards that companies apply to other business investments they make (in terms of professional rigor, a clear business rationale, planning and budgeting processes, and accountability for results). This often reflects the low priority given to CSI by senior management when there is no perceived link to the company’s bottom line. • Insufficient focus on sustainability: – It is only in recent years that the sustainability of CSI activities supported by companies has become a key factor in project selection and design. In the past, short- term objectives took priority over longer-term considerations, and sustainability policies and criteria were not given much emphasis. • Provision of free goods and services: – While well-intended, the long-term consequences of providing free goods and services, or infrastructure for that matter, have not proven to be in the interests of either the company or local stakeholders. The lack of requirements for matching contributions (whether financial or in-kind) has made it difficult to generate shared ownership or financial sustainability, and has instead fostered dependency.
  • 83. Why do CSI Fail? (3) • No exit or handover strategy: – Commencing activities without planning in advance for the company‟s eventual withdrawal has rendered many company-supported programs unsustainable and created difficulties for the company around its “social license to exit” in times of financial cutbacks or project end. • Overemphasis on infrastructure and under emphasis on skills/capacity building: – Traditionally, CSI programs have been dominated by company-led, bricks-and-mortar types of projects (particularly in the mining industry) with a significant lack of investment in the participatory processes, such as skills building, and organisational development necessary to affect and maintain long-term change. • Lack of transparency and clear criteria: – Unclear criteria have led to numerous cases of conflict between and among communities over who gets what and why. When transparent criteria are lacking, company practice in distributing benefits may be perceived as secretive, unpredictable, and susceptible to manipulation. • Failure to measure and communicate results: – In many cases the effectiveness of CSI programs is unknown because it has not been systematically tracked or measured the way most other business activities or expenditures would be. Common shortcomings include the lack of proper baseline data (i.e. social impact studies) and a focus on measuring the volume of spend (inputs) or the number of outputs rather than the actual quality of outcomes.
  • 84. Getting Started and Making it work
  • 85. Our Approach • Strategic Review – Business – Brand – Operations – Sustainability • Internal and External Stakeholder Dialogue – Management, Executive, Employees – Partners, Beneficiaries, Intermediaries • Benchmarking – Local, Global, Inside and Outside Industry – Comparative and Competitive Analysis – Industry / Sector Review • Social Baseline Studies / Sector Specific Research – Education, Health, etc.
  • 86. Group Feedback and Interaction • Defining the business case • Developing the strategy and policy • Developing focus areas • Developing grantmaking criteria • The process – application, consideration, approval, contractual, funding, monitoring/ evaluation/impact assessment, reporting, communication
  • 87. The Ages and Stages of CSI* Business Age Stage of CSI Modus Key Enabler Stakeholder Operandi Target Greed Defensive Ad Hoc Investments Shareholders, Interventions government and employees Philanthropy Charitable Donations Projects Communities Marketing Promotional Public Media General Public Relations Management Strategic Management Codes Shareholders, Systems NGO’s, CSO’s Responsibility Systemic Business Products Regulators and Models Customers The Age of Responsibility – CSR 2 – Dr Wayne Visser
  • 88. Process of Strategic CSI Assess the Assess the Engage Invest in Set the Select Measure and business local Communities Capacity Parameters implementa- communi- case context Building tion models cate results Business Socio Community Needs Objectives, In-house Baseline Case Economic Planning Assessment guiding Assessment principles and criteria Risk and Stakeholders Assets and Target Investment Multi- Indicators opportuni- and opportunities Groups Areas stakeholder ties networks partnerships Core Institutional Visioning and Types of Exit strategy Third Party Community competen- mapping prioritisation capacities perceptions cies and skills Internal Partners Expectations Options and Budget Foundation Return on Alignment management strategies investment Project Environment Gender Hybrid Models Communica- Cycle al Scanning tions Strategy Industry/ Competitors Benchmarking
  • 89. Guidelines for Best Practice • Set out a 3-5 year plan for the company’s community investments • Establish community relations, investment and development strategic objectives that are linked to the business case • Identify target stakeholder groups and specify eligibility criteria • Link the Community Strategy to the local context by drawing upon socio economic baseline studies • Establish an iterative process of engagement with local stakeholders and partners on Community Relations, Investment and Development • Draw on the company’s core competencies and resources to support communities • Promote cross-functional coordination and accountability for supporting CSI objectives • Integrate CSI with other company programs that involve communities (stakeholder engagement, grievance process, environmental and social impact management, local hiring and contracting as well as Human Rights) • Set out criteria and guiding principles against which all Community Investment and Development proposals is screened • Identify the key program areas in which the company will invest • Identify the implementation model and decision-making / governance structures • Define roles and responsibilities, budget, scope, and timelines • Describe the company’s (and in particular the specific programs) exit / handover and sustainability strategies • Consider both short-term and long-term objectives • Describe how project results will be monitored and communicated
  • 90. Getting Smarter: Support • DO YOU? – Devote a portion of the annual grantmaking budget to general operating support grants – Renew one-year grants sometimes, often or always – Support capacity-building activities among grantees – Award multiyear grants of two years or more sometimes, often or always – Directly support grantee leadership development activities – Is your general operating support grants greater now than it was three years ago
  • 91. Getting smarter: Application practices • Do you? – Have a common (single/standard) application form – Have financial and other standard applicant information available online – Accept proposals that were prepared for other funders – Compensate nonprofits for their time if you approached them and requested a proposal – but then ultimately rejected it
  • 92. Getting Smarter: Reporting Practices • Do you? – Require final reports often or always – Read Grant reports (by at least one, two or three staff members) – Use Grant reports to foster learning and a useful exchange between yourself and the grantees often or always – Ensure reporting requirements are often or always proportionate to the size and type of grant (e.g., a one-page report requirement for a small grant or event sponsorship) – Acknowledge receipt of grant reports within four weeks – Require Interim reports often or always – Have a common grant report form often or always
  • 93. Getting Smarter: Feedback • Do you? – Solicit feedback of any kind (anonymous or non anonymous) from grantees and beneficiaries through surveys/interviews/focus groups – Test/compare the results and outcomes of your projects/programs against benchmarks or results of other funders or industry standards
  • 94. Getting Smarter: Stakeholder Engagement • Do you? • Meet with grantee leaders to learn more about mutual issues and trends from their perspectives – Conduct site visits – Attend grantee events (e.g., fundraisers, performances) – Assess the needs of the communities or field(s) you serve (e.g., through surveys, interviews or focus groups) – Bring together funders and grantees to discuss matters of mutual interest – Invite grantees to address board members sometimes or often – Seek external input on grant proposals from representatives of recipient communities or other grantees – Seek advice from a grantee advisory committee about policies, priorities, practices or program areas – Delegate funding decision-making power to representatives of recipient communities or other grantees
  • 95. Steps to more strategic grantmaking • Clarify your values (e.g. social justice) • Create a vision (e.g. health insurance/primary education for all South Africans) • Determine the best way to achieve intended results (through research, planning, use of best practices, careful execution and follow through) • Stay focused (it is hard to be strategic when you spread yourself too thin) • Align your resources (your expertise and network might be as useful as your money)
  • 96. CSI – Strategy guidelines • A strategy that – Will support and contribute to positive social change – That encourages innovation and creativity in its application and interpretation – Is so innovative and creative that it becomes a competitive differentiator for the company – Draws on all the core competencies and resources of the company – Is easy to understand, execute, communicate, monitor and evaluate – Will encourage and ensure employees‟ involvement and support – Is so comprehensive that it will guarantee board, senior management and business unit commitment – Focus on areas that correlate societal challenges with business challenges – Is still neatly boxed and clearly defined
  • 97. CSI policy guidelines • Support and promote projects with a specific relevance to the organisation • Focus on communities close to areas of business and operations • Collaborate with other funding and development agencies to promote and develop CSI (collective effort and greater contribution) • Collaborate with government – (consult and identify need for contribution) • Advise communities on project planning and implementation – to ensure project success • Focus on and strive to consolidate initiatives that derive greatest benefit to communities (large scale funding and economies of scale – cluster and rank initiatives) • Audit implementation and accomplishments – ascertain results and outcomes • Review and refine strategy and focus – continuous improvement
  • 98. Strategic Considerations • Follow an inclusive process that allows all internal stakeholders to contribute any resources at their disposal to become involved in the CSI strategy • Follow a proactive approach that encourages communities to interact with the organisation in a deeper and more meaningful way • Ensure the involvement of employees in the process • Ensure that the objectives of the CSI strategy follow ethical grant making principals that support integrity, respect, and nurture and reflects diversity and cultivates mutual respect, with a bottom up approach • Allow communities to share their needs and requirements rather than impose interventions on such communities • Supports political, economic and social change and leave a legacy of empowerment
  • 99. CSI Practitioners – Roles and Responsibilities • Build and maintain relationships with key stakeholders • Develop the business case for CSI • Get top management to understand the benefits of CSI • Understand the nature of development • Promote strategic CSI over compliance based CSI • Document processes, procedures and lessons learnt • Share development lessons and experiences • Ensure proper utilisation of all resources • Promote the integration of CSI into every business unit • Communicate CSI activities to all stakeholders • Understand what elements of project management are relevant • Ensure good governance and practices are ingrained • Ensure success of projects/programmes and interventions
  • 100. Categories of CSI Practitioners Type Characteristics Strengths Weaknesses The Helper Often comes from a Often has a good May struggle to identify with community development understanding of community corporate culture and to align background issues and needs CSI with core business practice The Marketer Usually comes from a Has a good grasp of the May struggle to gain an marketing or communications company’s interests and is understanding of and background able to get the company acceptance by community brand value for its social organisations investment The Problem Solver Often comes into CSI as a Has the experience and May end up alienating others The Purist specialist in an area of resources necessary to in the process of addressing interest or with regard to a address a particular need or the need owing to his or her perceived need of a issue within the community expertise and specialist community knowledge of the subject matter The Incidentalist The CSI function is only one Is often chosen on the basis May not have the time and of a number of other roles of proximity to the leaders of support to develop a well- that he or she fulfils within the the company conceptualized CSI model company The Purist Been there They have the knowledge Know everything The Professional CSI Done that and the experience. My model/project/legacy Practitioner Know everyone Can walk the talk and interact Knowledge is power Know all the rules at all levels. Don’t need to learn Know all the legislation Have developed best practice Don’t contribute to development models. learning/knowledge/ industry Very clear on what is right/wrong/ what is needed – best practice
  • 102. • It's more ambitious: Today's grantmakers are tackling giant The Future of Giving issues, from remaking African education to curing cancer. • It's more strategic: Donors are taking the same systematic approach they used to compete in business, laying out detailed plans that get at the heart of systemic problems, not just symptoms. • It's more global: Just as business doesn't stop at national borders, neither does charitable giving. Donors like B. Gates to George Soros and Bono have sweeping international agendas. • It demands results: The new grantmakers and philanthropists attach a lot of strings. Recipients are often required to meet milestone goals, to invite foundation members onto their boards, and to produce measurable results--or risk losing their funding
  • 103. The Future of Grantmaking • More scrutiny from legislators and regulators • More skepticism from consumers and the general public regarding motivation and impact of corporate giving, particularly cause marketing initiatives • More integration of corporate grantmaking with the larger Corporate Sustainability agenda • More requests from nonprofit organisations, both large and small, to help close budget gaps, particularly from social service providers facing more people in need every day • More pressure from internal management to cut costs, and possibly even grantmaking budgets • More emphasis on the role of companies as global citizens, with an obligation to help those in developing countries affected by HIV/AIDS and other global health issues
  • 104. Challenges for 2011 • Aligning the giving program more closely with the business needs. • Desired impacts are not being achieved – social problems persist and may even be worsening • Government has changed its involvement – organisations can no longer rely on government as a source of funding or support (resources) – disillusionment with government as a partner is growing • The challenge of global giving is putting more pressure on funders and their already diminishing budgets • Education issues, diversity and environment/sustainability are gaining in importance. Issues that are declining in importance include culture and the arts, faith-based organisations, alumni giving and global disease/pandemics. • Asia is receiving the bulk of the attention. There is much less interest in Africa. • The top three management priorities are the relationship to the broader corporate citizenship/sustainability agenda, measurement of results such as impact and return on investment and volunteerism. • The two biggest changes in corporate giving programs observed since 2007 are the greater alignment of giving programs with the business and cuts in budget and staff
  • 105. Tipping Points or Flux • Tough questions – How is contributions spent – How much is being spent – Are we making a contribution or facilitating change – Are we entering a tick box mindset – Are we getting better at it, can we measure our impact – Are we talking about the same things
  • 106. Carrots & Sticks • Are practitioners between a rock and hard place – do they have influence? – Are we strategic – Are we entering moral and ethical debates • Developers & implementers vs facilitators • The Achilles Heel - Measurement
  • 107. 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