South Africa: Corporate social investment
More than ten years after South Africa’s first democratic elections in 1994, apartheid’s social and economic legacy remains. The majority of its nearly 45 million people continue to live in conditions resembling those of a decade ago. The bulk of the country’s wealth remains in the hands of a small percentage of the population. Though corporate giving is one of the largest sources of funding for civil society,[2] companies remain reluctant to address inequalities and take on social justice grantmaking.
Ironically, it was apartheid, and its consequent social unrest and threat to the economy, that provided the first real stimulus for corporate social investment (CSI). After the 1976 student uprisings in Soweto, several companies banded together to establish the Urban Foundation, which focused on urban development, housing and education in black townships. At about the same time, the Sullivan Principles were introduced, requiring American companies to justify their presence in the country by contributing to local communities, which encouraged more formalized giving by the private sector in general. In 1984-85, the groundswell of the liberation movement against apartheid and the international attention it brought provided a further stimulus to corporate giving.
However, while the Urban Foundation supported community centres, education and training in black townships, it disposed of relatively small financial resources, and did little to dismantle the system that kept black people in those townships in the first place. Other efforts to pool company funds (the Joint Education Trust (JET), formed in 1992, and the Business Trust, formed in 1999) similarly focused more on service delivery than on attacking the root causes of problems. While JET did contribute to the development of government policies and programmes throughout the 1990s, it focused primarily on educational service delivery. The Business Trust’s main focus was on job creation, education and crime. Although it was established jointly by the private sector and government, it appears as yet to have focused little on policy reform.
CSI in South Africa today
Overall, the picture has changed little. The 2004 CSI Handbook covers issues such as knowledge management, employee involvement, evaluation, communications and sustainability, but there is no discussion of policy reform or advocacy. As of 2003/04, CSI funds have gone predominantly to education and training (46 per cent) and health and social development (24 per cent), with the remainder going to a combination of job creation, sports, environment, arts and culture, safety and security, and housing (in descending order of size of contribution).
Over the past four years, with companies recognizing the impact of HIV/AIDS, there has been a significant increase in funding for health and social development. One example is provided by Anglo American’s programme, principally directed towards its 13,900 employees. Initially focused on education and prevention, this has now grown to include voluntary testing and counselling as well as anti-retroviral (ARV) therapy, a controversial stance in South Africa, given the government’s initial reluctance to recognize the need for ARVs (see p58). Another example is Absa Bank, which has over 2,500 employees participating in its ‘give as you earn’ campaign, which deducts contributions from employees’ monthly salary. The contributions are then matched by the Absa Foundation (the separate organization responsible for the bank’s CSI) and given to NGOs focused on HIV/AIDS treatment and care.
These HIV/AIDS programmes represent some of the most creative and forward-thinking elements of CSI, but they hardly amount to social justice grantmaking. The private sector has been hesitant to fund advocacy organizations such as the Treatment Action Campaign. In general, the emphasis is on service delivery. Relatively few CSI initiatives advocate major policy reform or fund organizations that provide a voice for those who are usually outside the arena of policy formation. CSI has not tended to promote public debate on issues such as economic policy and the development of a social safety net that could result in greater attention to social justice. Nor has it paid much attention to rural areas or the needs of women.
Why is CSI not focused on the most marginalized?
An urban focus
Most companies are urban-based and their development efforts reflect this. In 2003, two-thirds of CSI spending was targeted towards urban and peri-urban areas, with only 34 per cent targeted towards rural communities. Given the high levels of poverty in rural areas, this funding pattern is in almost inverse proportion to need.
An insular focus
Fifteen per cent of funds from CSI programmes focus on company employees and their families and another 49 per cent on the communities in which the companies operate. While this may seem logical, it also means that those people and communities who have little or no connection to corporate South Africa, as employees or customers, are badly underserved. With the broadly defined unemployment rate at over 40 per cent, CSI is not reaching those who are most marginalized with least access to resources and information.
Promoting the government line
The new government has promoted the concept of public-private partnerships to address social needs and implement government programmes. Companies are encouraged to support this trend in order to achieve greater exposure and win government favour. It is unlikely, therefore, that companies will publicly criticize government policy or support local communities and organizations that do so. Promoting a social justice agenda would inevitably involve this.
Internal considerations
The majority of CSI budgets in South Africa are not determined through a formula, as they are in the UK and the US, which makes them more vulnerable to the arbitrary decisions of management and less likely to be strategically focused. When it comes to evaluation, companies tend to focus on inputs and anecdotal evidence, with little effort to assess developmental impact, lessons learned and implications for policy reform.
CSI in South Africa is thus limited in scope, often unstrategic, and emphasizing service delivery not structural reform. Without giving attention to the areas of weakness outlined above, it is unlikely to make any significant contribution to social justice. A set of initiatives that have encouraged greater reflection and improved reporting are described below. They are not specifically aimed at promoting social justice programmes, but it is possible that the greater reflection on the role of companies in society that they encourage could lead in this direction.
Broader corporate accountability needed
CSI needs to be complemented by broader corporate accountability in regard to workplace conditions, approach to the environment and sustainable development. In recognition of this, the UN Global Compact and the Global Reporting Initiative (GRI) encourage a ‘triple bottom line’ approach. There are several developments in South Africa that have built on this approach.
* The King Report on Corporate Governance (King II) Launched in 2002, this provides a South African voluntary code of conduct, which embraces the ‘triple bottom line’ concept.
* The Socially Responsible Investment (SRI) Index Launched in 2004 on the Johannesburg Stock Exchange, this assesses companies on a range of social, environmental and economic issues.
* Broad Based Black Economic Empowerment (BEE) Initially focused on extending black equity participation, predominantly to a small black elite, government now encourages BEE to take a broader approach to empowerment that includes guiding government’s procurement decisions to benefit black-owned companies, development of small businesses, skills development, etc. Unfortunately, to date, BEE has focused on redistribution at the apex rather than at the base.[3]
* Industry charters Developed by several industries (banking, mining and finance), with government encouragement, these provide a scorecard for transformation, featuring issues such as black ownership and control, skills development, financing and procurement, and CSI.
Working through other grantmakers
Working through other types of grantmaker, especially those that focus on human rights and reaching the most marginalized, offers a potential way for companies to give their CSI activities a social justice focus. Possible partner organizations include community foundations and women’s funds, two new institutional forms of philanthropy in South Africa in recent years.
Community foundations
A community foundation pilot programme led by the Southern African Grantmakers Association (SAGA) resulted in the creation of the Greater Rustenburg Community Foundation (GRCF) in Northwest province and the Uthungulu Community Foundation (UCF) in KwaZulu Natal. Both serve populations that are predominantly rural with high levels of poverty. Local corporations have shown great interest in the idea. Billiton (a mining corporation) provided UCF with R5 million in endowment support and Impala Platinum provides support to GRCF. Community foundations can channel CSI funds in a way that permits greater community control and influence on how the funds are spent. It remains to be seen, however, whether this will help shift funds away from charity towards social justice.
Women’s funds
There is even greater potential in the WHEAT (Women’s Hope Education and Training) Trust, a women’s fund in Cape Town, with an explicit social justice agenda. WHEAT focuses on issues of violence against women, women’s rights as human rights, HIV/AIDS and support to local women’s community organizations. WHEAT has tapped corporate funding from the retail and IT industries as well as building a R1 million endowment with contributions predominantly from individuals.
Other local grantmakers
Corporates have also begun to partner with other local grantmakers such as the Social Change Assistance Trust (SCAT) and the Nelson Mandela Children’s Fund (NMCF). SCAT is a grantmaking development agency that funds rural, community-based organizations focusing on human rights, gender equity, HIV/AIDS and local economic development. It has received money from the De Beers Fund and has helped develop Ditikeni, an investment company that is building assets for a set of non-profit organizations, SCAT included. Given its name and profile, NMCF has received numerous corporate contributions. The organization has been affected by political influences but, given its R250 million endowment, may develop greater independence and a stronger social justice emphasis in the future.
Working through local grantmakers such as these could enable companies to reach those communities outside their immediate ambit. If that greater outreach combines with well-designed advocacy campaigns driven by local communities, there is the potential to influence corporate grantmaking for the better.
1. This article is part of a longer paper by Christa Kuljian commissioned by the Global Equity Initiative (GEI) at Harvard University as part of a series on philanthropy and equity in China, India, the Philippines, Brazil and South Africa. The full paper will be available later this year at www.fas.harvard.edu/~acgei/philanthropy.htm. For the purposes of this paper, social justice is defined as promoting advocacy and policy reform to benefit those who are most marginalized in society.
2 According to Mark Swilling and Bev Russell, ‘The Size and Scope of the Non-profit Sector in South Africa’, linked to the Johns Hopkins international comparative study, private sector funding accounts for 25 per cent of all non-profit income in South Africa compared to an average of 11 per cent in 28 other countries in the study.
3 For those interested in a longer analysis of BEE, see ‘Black Economic Empowerment: Elite enrichment or real transformation?’ by Frank Meintjies in the Isandla Development Communique at www.isandla.org.za
* Christa Kuljian is a Visiting Research Fellow at the Centre for Policy Studies in Johannesburg. She can be contacted at [email protected]
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