Corporate community investment and development- Africa 2013

Corporate Social InvestmentCorporate Community Investment

Community RelationsSocio Economic Development

Next Generation ConsultantsReana Rossouw

Summary of the latest African Trends2013

Next Generation Consultants

The last six years…..

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2006: A surge in corporate giving

2007: Corporate giving rises moderately

2008: A gloomy outlook 2009: Businesses buckle up 2010: Businesses set flat giving

budgets 2011: No increase in giving 2012: Cash giving decline,

product giving (in kind) increases

Next Generation Consultants3

Trend 1: Recessionary Times - 2012

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49% of giving was Charitable -- defined as reactive community giving for which little or no business benefit is expected. Ex. Disaster relief

47% of giving was for Community Investment -- defined as proactive grants that simultaneously aid long-term business goals and serve a critical community need. Ex. Multi-year grants and flagship programs

24% of giving was Commercial - defined as giving in which benefit to the business is the primary motivation. Ex. Cause marketing and directed giving to organisations as requested by clients or customers.


Trend 1: Recessionary Times - 2013

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While some companies may start new community investment projects this year, many are winnowing the causes they support in favour of fewer, bigger, higher-profile grants to fewer organisations.

Companies are now zeroing in on social issues that threaten their bottom lines, like people’s ill health, high transportation costs, or diminishing fresh water.

They are also focusing on causes that help them tap into new markets, appeal to their customers emotions, and use their employees’ skills, time and contributions.


Trend 2: Strategic Giving

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Varying trends by industry Some industries, such as Energy, Utilities, Materials, and IT,

provide more than 50% of their funding as direct corporate cash.

Financial and Industrial companies provide nearly 50% of their charitable funding through their foundations.

Healthcare companies provide nearly half of their giving as non-cash contributions. Most staggering of all, Pharmaceutical companies on average provide almost 90% of their total giving in the form of non-cash donations.

Economic development is the new darling Green programs are in fashion Cost benefit analysis of investments are serious

considerations Measuring impact and return is critical Reporting of corporate giving is highly variable, with

relatively low take up of any one standard measure, ‑making accurate assessment of the complete picture difficult


Trend 3: Operational Focus

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Significant Emphasis on Strategy and Restructuring 68% of grantmakers are revising their grantmaking structure and strategy in response

to several developments, including natural disasters, government legislation, the external business environment i.e. environmental or social risks, and shifting business objectives

Changing Perspectives on Publicising Giving While 71% of giving departments used PR as a communications strategy, 35%

leveraged marketing or advertising to raise awareness, and 26% issued annual community relations/corporate responsibility reports/sustainability and integrated reports

Decentralised Decision Making 26% of companies managed their giving departments exclusively from corporate

headquarters, 20% incorporated local or regional management into areas of their corporate grantmaking programs, and 54% operated through a hybrid model of the two

Popularity of Flagship Programs 55% of giving departments engaged in one or more flagship campaigns, which are

defined as significant initiatives that are a central focus of a company’s grantmaking.


Trend 3 – Operational Focus Continue

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Programs serving basic needs i.e. Community/Welfare and Economic Development, were the only two focus areas that experienced an increase in corporate cash contributions.

Companies became more targeted in their giving, rather than spreading corporate funding across multiple social issues. Furthermore, the number of grants per program area (Rand value) of these grants increased.

As one way to maintain grant funding levels and reduce administrative expenses, 53% of companies reduced their management and program costs

participation and raised limits for the corporate match.


Trend 4: The BIG Issues

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More Demand for Outcomes: The biggest trend is a growing demand to 1) articulate what results

companies hope their investments will achieve and 2) track whether those results are actually happening

Decreasing Emphasis on Non-profit “Overhead”: The bane of the non-profit sector is the meaningless and destructive public

perception that you can separate non-profit programs from the administrative costs ...But the good news is that more and more companies are coming to realise that you can’t just invest in programs without the staff, infrastructure and fundraising to make those programs happen

More Advocacy for the Sector as a Whole: The development sector has long been a fractured grouping of organisations

of various sizes, business models, and issue areas. It has been almost impossible to organise the disparate sector to fight for better government regulations, improved public perception, more funding. But that tide is starting to turn


Trend 4: The BIG Issues - Continue

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Savvier Donors: Because non-profits are getting more savvy, donors are as well. In

addition to an increasing demand for proof of outcomes, donors are slowly starting to understand the difference between two kinds of money in the sector: revenue and capital

Increased Efforts to Rate and Compare Non-profits: As non-profit outcomes are increasingly in demand, donors become

savvier, and the “non-profit overhead” distinction diminishes, we will increasingly evaluate non-profits based on the results they achieve, not on how they spend their money

Therefore The non-profit sector will go through a revaluing process Technology will play a major role for both non-profits and their

supporters The world is shrinking and grantmaking borders are broadening


Trend 5: Anti-Trends

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It’s all about the Economy: As the world works its way through an epic economic crisis,

jobs and the economy continue to be very much on consumers’ minds.

The Power of Local: It is simple. Tackle things that support people where they live.

It’s the difference between ending hunger—and ending hunger in my community.


Trend 4: Anti-Trends - Continue

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Ethnicity: Communities have become

melting pots – 2013 may well be melting point for civil unrest. Minority vs. Majority funding,

youth development, jobs, skills, income, poverty, income disparity, BEE scorecards and mining, farming, retail, community unrest points to a future where customers not only have a high propensity to support specific causes, they also have high expectations of companies to take on issues that particularly impact them personally.

What a Disaster: Floods in Mozambique,

KZN, Limpopo, burnt down informal settlements, schools without books or other resources. Most companies have disaster response plans in place, and they should. Communities and customers believe disaster relief is a critical issue companies should address


Trend 4: Anti-Trends - Continue

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The era of fair and ethical grantmaking Relationship Reset - Some simple rules:

Transparency (Being clear about your intentions, actions and impacts)

Authenticity (First having, then holding true to core values and principles)

Engagement (Providing a spectrum of ways for stakeholders to contribute and

participate).


Continental Context

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Vastly different models of development Politically very complex operating

environments Long history of development aid

Good News – exposed to international developmental models specifically large developmental agencies – Oxfam, USAID, missionary-faith based organisations and government support agencies – UNDP, Danida etc.

Bad News – capacity and skills not necessary transferred nor have practitioners been involved in program design and program management

Governments received the money – which does not necessarily mean it ended up with the intended beneficiary communities

Development was based on developed economies principles (Western Solutions)


North Africa

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Large foundations Wealthy individuals – Oil Barons –

Aga Khan Foundation Politically complex

Muslim (Faith based) Closed Foundations

War Stricken – aid complexity – who to give to and who actually receive

Large global partnerships Government considerations (political

correctness) Government Recipient


West & East & Central Africa

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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 - Regional

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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


Market Based Approaches - Innovation

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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


New Influences

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Greater emphasis on measurement of impact (Sustainability & Integrated Reporting)

New patterns in giving Increasing focus on indigenous giving and

community development patterns (poor philanthropist), growing diaspora giving

Quest for sustainability Definition of sustainability in socio

economic development context Issue of stakeholder engagement

Social baseline studies, research – evidence based development models to clearly understand impact and requirements of stakeholders


Financial Crises – The Good News

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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


Financial Crises – The Bad News

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More pressure on developmental assistance

Donors not living up to pledges Even though growth in community

foundations numerous NGO’s closing doors Project based funding no operational

support Fewer international donors and

development agencies in Southern Africa Realisation that development takes a long

time – which might be a luxury for some Realisation that development requires

many players and includes many facets More isolated development – less

collaboration More focus on sustainability


New Considerations

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Movement by business into unconventional funding areas Policy, advocacy, human rights,

gender, climate change Partnerships with government and

civil society Longer term investment and support Increase in cross boarder giving and

global philanthropy – as African companies became more global

Challenges in enabling environment – compliance focused investment and giving


Focus Areas

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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


Serious Issues and Questions

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Impact of government funding – social grants Greater dependency creation, less

sustainability, less developmental approaches

Quest for impact and sustainability How do we define sustainability in SED

Scalability and Collaboration How do we move from less than $1 to self

sufficiency and give hope to the youth New issues – food security, water

scarcity, impact of climate change How do we deal with future challenges if

we are not meeting today’s requirements and issues


Towards the Future

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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


New Patterns and Implications

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Resources Insight and knowledge of those we are

trying to serve Importance of needs assessments Soliciting feedback about our efforts Ensuring and listening to external voices

Practices Reduce turnaround and streamline

processes Ensure fair and ethical grantmaking Consider general operating support, multi-

year grants and capacity building support Ensure proper stakeholder engagement Embrace evaluation, monitoring and impact

assessment as learning and improvement mechanisms


Hard facts and dangerous half truths

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What is good for them may be bad for you What is good for you may be bad for them

Development takes time Development requires specialist knowledge and

expertise – the stakes are too high There is no ‘one size fits all’ solution/approach Don’t cherry pick Sustainability may be an oxymoron Give or else mentality War on ideas The truth, the whole truth and nothing but the

truth

Marikana’s Legacy – what we do and what people see

Bad things happen to good companies – Lance Armstrong and the Cancer Association, Mama Jackie and Carte Blanche


Towards the future

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A new narrative: Companies need to view their grantmaking as contributors to break-through

collaborations and innovations that address complex social challenges. Inclusive operating systems:

An “investment portfolio” model aligns giving and rallies corporate assets to benefit society and drive business success.

It’s a profession: Corporate grantmaking is an essential, integrated business leadership function

and is considered a professional field. Improve collaboration, communication, and knowledge sharing:

The corporate grantmaking field enhances its external leverage through a powerful platform for communication and collaboration.

Mobilise “field level” leadership behind this agenda: With individual leaders at its nucleus, the corporate grantmaking field commits

to increasing impact, enhancing value, and supporting transformation.


Questions you have to consider

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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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