CSI was R11bn last year. But is business staying usefully connected to social need?

The Rotary Club of South Africa recently invited V&A Waterfront’s head of social impact, Henry Mathys, to join a panel of distinguished speakers that also included Mayor Geordin Hill-Lewis and Judge Dennis Davis. In this extract from Henry’s talk, he engages with the evolution of understanding about business’s social responsibilities.

Since 1997, there has been a more than threefold increase in the number of NPOs and civil society organisations stepping in to try to compensate for government’s failures to address social issues. The Department of Social Development reports that from approximately 70 000 registered NPOs then, there were more than 220 000 by 2020.

The corporate world is stepping up, too. Trialogue’s Business in Society handbook for 2022 says total CSI spend last year amounted to R10.9bn, a more than seven-fold increase from 1998’s R1.5bn.

But how is that working for South Africa?

FROM CHARITABLE GIVING TO ACTIVE ENGAGEMENT

What used to be referred to as Corporate Social Responsibility has evolved significantly. From an initial focus on straight philanthropy, which involved companies making charitable donations, today’s Corporate Social Investment (CSI) shifts the focus to active investment in social initiatives that aligned with a company’s business strategy.

With CSI, companies began to factor in how investments in social initiatives could have a positive impact on their own long-term success, driven by an acceptance that businesses have a responsibility to contribute to the communities in which they operate. In 2019, 75% of South African companies had a CSI budget, with the majority allocating between 1% and 3% of their net profit.

More recently, the concept of Shared Value has emerged as a further evolution.

Shared Value goes beyond CSI, as it also involves creating a sustainable business model that benefits both the company and society – it identifies areas where a company’s business objectives align with the social needs of the community, and develops initiatives that create value for both. Additionally, and critically, Shared Value looks at the entire ecosystem, recognising that no entity can solve an issue alone, but that interdependent role-players need to collaborate to address these issues together. It’s a more complex approach, but also provides more systemic solutions.

It’s been widely adopted by, for example:

• Old Mutual’s Masisizane Fund, which has invested in over 170 small businesses
• the Woolworths Farming for the Future programme, which has supported over 500 farmers
• the Nestlé Creating Shared Value programme through which the company has invested the equivalent of over R4bn in more than 1 000 projects around the world ranging from sustainable agriculture to improving access to water and healthcare
• Pick n Pay’s programme which reaches into education, health, food security, community development and sustainability and environmental initiatives

My own company, the V&A Waterfront, formally adopted a Shared Value Ecosystem strategy, and established SOLVE@Waterfront to show how the approach can work in practice. SOLVE offers a framework for collaboration between stakeholders from the private sector, government, academia, and civil society who are able to use the Waterfront neighbourhood as a ‘petri dish’ to develop and test solutions. Examples are access to employment opportunities, and addressing inequities in the food ecosystem and the oceans economy by leveraging technology, innovation, and entrepreneurship.

Many more of South Africa’s blue chip corporates have bought into the shared value approach. These include Absa, Investec, Hollard, Sasol, Volkswagen, Tiger Brands, and FNB.

Over time, the CSI/social impact sector has evolved into a professional and mature space. Companies now have dedicated divisions, and many organisations are taking a systemic approach, working to understand the underlying issues, and collaborating to develop solutions. Although reporting remains a challenge, there is a noticeable shift from a “tick-box” mentality to genuine engagement.

STAYING CONNECTED

At the same time, it remains essential that grassroots organisations and community projects be involved. Typically, they have a deep understanding of specific needs and can deliver targeted solutions. They are often the first point of contact for community members, and are uniquely positioned to provide support where it’s needed.

And they fulfil a unique function in arresting the decline of our country’s moral fibre, a complex issue. Our long history of racial segregation and inequality has created deep social and economic divides, which in turn have contributed to a lack of social cohesion and a breakdown in moral values. I believe it it is crucial to sustain community centres and grassroots non-profits as they play their vital role in rebuilding social cohesion.

They need financial support: 78% of South African NPOs have an annual income of less than R1 million.

This may in part be because as the private sector focus shifts to larger, strategic partnerships, it may have left smaller grassroots organisations with fewer resources, in turn leading to an increase in NPO numbers as communities band together to address their challenges, with each getting a smaller slice of the pie. I would argue that corporates need to consider this, also incorporating and funding smaller, community-based and grassroots organisations as delivery partners. In so doing, corporates will also support job creation and stimulate localised economic resilience in areas that historically have been marginalised.

At the Waterfront, we have found what we consider to be an elegant mechanism for this which we call the Our Community Programme. Through this programme, we provide small grants for which our staff members – indeed, any member of the public – can apply. The intended use can be anything from renovating a community centre to supporting a child’s educational bursary. Effectively, this puts CSI into the hands of people who are closest to social challenges, with clear projects and funding to support them.

This was also the inspiration behind the evolution of our Busker’s Programme into a focused entrepreneurship and development programme through which buskers access skills development, music workshops and mentors/coaches. We are extremely proud that last month (April 2023) one of our buskers, Micaela Kleinsmith, won Apple TV+s’ inaugural “My Kind of Country” competition, a Reese Witherspoon production.

The recognition that ecosystems, societies, and economies are interconnected and require holistic solutions is an important step forward. And the rewards are great.