Neil Robinson says few corporates know how to measure the impac of their social responsibility money.
South African corporates spent almost R8 billion on corporate social investment (CSI) last year. On the other hand, funding for non-profit organisations is drying up, with almost 40 percent less funding available for NPOs than previously.
Crunched between these numbers are the millions of South Africans plagued by what Tracey Henry, chief executive of Tshikululu Social Investments, called “the triple dilemma of poverty, unemployment and inequality”.
And while corporates are mostly spending their money on social development for moral rather than legal reasons, very few of them know how to measure the impact their money is having in the long-term. While the tracking of CSI spending has improved in recent years, there are still gaps in evaluating its efficacy.
Earlier this year, Tshikululu presented results of research it had done into what motivated companies to undertake CSI.
The results showed that social responsibility programmes were generally seen as an extension of a company’s values and culture, and a means of demonstrating their commitment to the development of South Africa. But, while many companies undertook CSI projects long before government or industry regulations demanded them, these projects were often intangible in terms of results, the research found.
Legislation requires that corporates donate 1 percent of their net profit after tax to socio-economic development investment. Many big companies are rigorous about monitoring where the money is going and what it is doing, but others fall short in this area. They’re busy with their core business and their 1 percent is often an afterthought. While the big companies have assigned resources and sometimes entire departments to CSI spending, their closely monitored systems are the exception rather than the rule.
There is a worldwide trend towards better corporate citizenship and an authentic understanding from corporates that they are part of a community or society and cannot simply make profit without also giving something of that back. And help is sorely needed, as the government cannot possibly cope alone with the social ills with which we are beset.
It is an appalling thought that even some of the almost R8bn spent on social development last year could have been frittered away because there was not enough strategic thinking and implementation around where big business is spending their money. Whether their motives are purely moral, or a combination of the moral and legislative imperative, not a cent should be going to waste.
But it does. And it does because businesses do not plan their CSI spending properly. They do not strategise around it. They do not assign staff and resources to the careful planning and execution of social development projects.
The only way to overcome this kind of wastage – which any good business manager would want to avoid at all costs in any other department – is to dedicate time, energy and resources to strategic planning.
When I was working for corporates, I initially assigned the required 1 percent without really knowing what that money was doing. My first foray into the world and work of the NGOs was a pleasing eye-opener. I was astounded by the work that NGOs do with little resources. And I was shocked that so much of the money that they used to do this work came from organisations outside of South Africa.
On top of which there’s not enough Lotto or government money going to NGOs. And demand for their work is always pressing. Without the work that they do, South Africa would be in dire straits. From then on, CSI spending became, for me, about personal social responsibility.
I became increasingly aware of how important it is for corporates to take a real – and measurable – interest in where their moral money is going.
In order for CSI funding to have the impact that it really can and should have, CSI needs to form an integral part of a business strategy – just like human resources, marketing, operation, production, manufacturing and finance. And this should form part of every business, even if it isn’t a corporate heavyweight.
When social investment is positioned like that inside a company, it becomes a part of its functioning and its work will be caught up in the wider net of good governance and management of a business.
That way, efficacy can be monitored and improved where necessary.
Only once the long-term effects of the billions spent are measured and monitored, and they have proven that these projects are sustainable, will these valuable contributions no longer be questionable.
When social spending is afforded due diligence, its effect becomes quantifiable.
This article was first published by The Star on the 28 August 2014, click here to see the original article.