The SA landscape has always been peppered with philanthropists. From the time of the old families - the Oppenheimers, the Gordons, the Ackermans and the Applebaums - there has been a culture of giving. And more recently, with the institution of charters and empowerment codes, the private sector has been giving money to all needy sectors of SA society.
It is not enough, of course. With the kind of poverty and underdevelopment in this country and on this continent, it may never be enough. And now that we are facing a global recession, high interest rates, high inflation, a battered stock market and depressed company earnings, the outlook for philanthropy and corporate social investment is not rosy.
On the other hand, we've had many of the large luxury-goods makers around the world saying that their target market was still buying and not feeling the crunch.
When it comes to the philanthropic families in SA, their wealth has been accumulating for decades, if not centuries. This means that even with the JSE plunging, they still have a lot of cash on hand. But for the companies that engage in genuine social investment - rather than just using it to market themselves - times are tough, profitability is falling and it will be harder to justify costly social responsibility programmes to shareholders.
Carole Mason, who looks after some of Investec's social responsibility programmes, brought up the issue of whether certain initiatives were sustainable, because giving is not much good if it can't be relied on by the people who need the help.
One project that impressed her was the Outsurance pointsmen project. It has had a lot of visibility since the power crisis first affected SA, and it helps with traffic flow in severely congested areas. "But whether this is sustainable over the long term, or even should be, is questionable," Mason says.
Malcolm Gray, a senior portfolio manager at Investec Asset Management, says he does not think philanthropic or corporate spending on social development was curtailed in 2008. He says earnings are still peaking. But in future, since " social investment spending is normally a percentage of earnings, it is likely to fall." A major issue for SA will be whether the financial sector charter is gazetted and turned into law. The charter demands that all financial services firms dedicate 0,5% of their aftertax profit to corporate social investment projects.
By means of these projects billions of rand are funnelled into needy areas of the SA economy every year. But if the charter is not gazetted, this requirement will fall away, and the financial services industry will have to follow the department of trade and industry's broad-based black economic empowerment codes instead.
These codes are not designed for specific industries. They will increase the black ownership targets for financial companies and come with their own demands for spending on social development. As the Harvard Group of economists pointed out in their report on SA's economy, the local market has become too hung up on ownership, rather than seeing social development as a much broader topic. But the unions and the new government have derided the Harvard Group's report and it seems we may well stick to the ownership ideals.
But Mason says the financial sector has matured way beyond basic charter requirements when it comes to corporate social investment. "Many companies spend more than the charter requires because they recognise social spending as a business imperative... In any event, even if the charter is not gazetted, the codes also contain a corporate social spending requirement, which is, in fact, higher than that under the charter."
Gray says his discussions so far point to the issue being very much a function of leadership and fundamental commitment to the substance and principles of the charter. "The failure to gazette it might undermine the scale, but I think the social pressure remains, and many will continue with their current commitments," he says.
It is possible that organisations will spend less on social development next year with the economy expected to slow, but Mason believes many will strive to keep their spending at the same level because of their true commitment to society's transformation.
But non governmental organisations (NGOs) might find it harder to raise money next year. This is not just because of a possible reduction in corporate spending but also because corporate social investment divisions will become more focused. "NGO s will need to accept that resources will be constrained but, even where these are unchanged, they will need to become more efficient and assure enhanced service delivery to ensure their survival," Mason said.
But NGOs in SA have already learnt to cope with less donor money. In the past 10 years, as SA's economy made some fundamental and structural changes, the country was viewed as less needy than many others. Donor funding went to other countries, and when it came to SA it went into very specific projects requiring detailed report-backs. Though this increased accountability within NGOs, it made it difficult for them to fund their administration and certain less "sexy" projects. But those which have survived thus far mostly got the formula right.
Gray adds that a growing group of social entrepreneurs is emerging and putting forward convincing and sustainable models. "I think there will be some really high-impact winners. My worry is with more traditional NGOs. I think there will be some pressures on those organisations," he says.
With the potential downturn in donor and corporate funds (if not philanthropic funds) the end recipient will suffer the most. In SA terms, that means poverty in communities, among people in rural areas and townships, and on city streets.
"In an environment where government, for capacity reasons, has not been able to make any real dent in the socio economic legacy it inherited in 1994, any meaningful resource constraints on funders' ability to assume, or supplement, government's role by means of its social investment spending will merely serve to compound the overall need in this country," Mason says.
There are no easy solutions. But if SA's legislation continues to push for social development and Gray is right about the growing numbers of socially minded entrepreneurs, then all is not lost. Many people like to give and economic downturns will not take away that basic human principle.
- Bonorchis is editor at large, Business Day
