South African companies invested R9.7 billion in corporate social investment (CSI) in 2018. But how do local companies shape up compared to the rest of the world when it comes to corporate giving? Leading local CSI and sustainability consultancy Trialogue has matched up its SA research findings with those reported by its global partner, CECP: The CEO Force for Good.
1. US giving has grown faster than SA
Total estimated CSI spend in SA grew 2.5% in real terms from 2017 to 2018. The most common reason given for growth was project requirements. When spend declined, this was mostly attributed to decreasing profits.
For US companies, strong financial performance underpinned a 15% increase in real terms over the last three years, reaching a record amount of $23.8 billion in 2017. The most common reasons for growth were an increase in disaster relief contributions, strategic review of societal investment areas, and an increase in product or property donations. Where spending decreased, this was due to declining business performance, and fewer product or property donations.
2. SA’s giving as a % of revenue was the lowest among all regions
Most South African companies use net profit after tax (NPAT) ratios to calculate their CSI budgets. They target 1% of NPAT, the amount needed to qualify for maximum BBBEE socio-economic development points. According to Trialogue’s primary research in 2017, local companies spent an average of 1.1% of NPAT on CSI, down from 1.7% in 2015.
While not directly comparable, Giving Around the Globe calculations indicate that SA giving is relatively low. The report shows median giving as a percentage of revenue for 18 African companies, all of which are South African, to be the lowest among all regions. Latin America and the Caribbean had the highest median giving as a percentage of revenue (0.21%), followed by the US (0.13%) and Europe (0.11%).
3. SA and US differ in major sector donations
Among SA companies, the mining, financial and retail sectors together accounted for just under two-thirds (62%) of total CSI spend. Mining alone accounted for over 30% of total CSI spend.
Among US companies, healthcare had the highest median cash giving (driven mainly by pharmaceutical companies), followed closely by consumer staples (mainly manufacturing companies). Budget cuts in the banking industry, however, contributed to the financial sector contributing less.
4. SA and US companies spend on education, health, community development
Education remained the most popular SA cause, followed by social and community development and health. Top US development sectors were similar. They included education, health and social services, and community and economic development. Disaster relief grew most, although this was off a relatively low base.
US companies had an average of 1.4 funding programme areas in 2017. In contrast, SA companies supported projects in an average of 4.5 sectors in 2018.
5. US companies are seeking deeper partnerships
Trialogue’s 2018 research found that most SA companies (67%) supported between 11 and 50 projects. Only 5% of firms supported fewer than five projects. The number of companies supporting over 51 projects declined from 18% in 2017 to 12% in 2018.
US companies sought deeper partnerships, making fewer investments of larger amounts. They also tended to work with fewer non-profit organisations – the median number of recipient organisations (per full-time CSI employee) fell from 52 in 2015 to 38 in 2017.
6. SA companies lead in measurement
Almost all SA companies (99%) measured the outputs of one or more of their CSI projects. Over two-thirds claimed to measure impact (the broader long-term consequences of the project) of at least one project.
Compared to three years ago, more US companies measured social outcomes and/or impacts. In a three-year matched set, 84% of companies reported measuring social outcomes and/or impacts of at least one project in 2017 compared to 81% in 2015.
Only 18% of US companies measured outcomes/impacts on all grants. This contrasts to respondents in Trialogue’s survey in which over half of SA companies (57%) reported measuring project outcomes for all grants, regardless of size.
7. SA and US measure business value of employee engagement programmes
In SA, community/beneficiary benefit was the most commonly measured employee engagement benefit (measured by 55% of companies), followed by benefits to NPOs (41%). The business value measured included impact on company
reputation (39%), brand value (32%), HR retention (23%) and HR development (15%).
The percentage of US companies measuring the business value of their employee engagement practices increased to 33% in 2017. US measuring tools included return on investment trackers, employee satisfaction surveys, rating volunteer activities, correlation between business and employee engagement metrics, and more.
8. Companies offering pro bono services increased in SA and US
The percentage of SA companies offering pro bono services increased to 37% in 2018, from 26% in 2017. Pro bono in the US increased to 61% in 2017, up from 54% in 2015. In line with this, paid-release time also increased for both countries.
The number of SA companies offering time off for individuals to volunteer during work hours increased to 65% in 2018, from 58% in 2017. Paid-release time offered by US companies also increased to 66% in 2017, from 58% in 2015.
9. SA an outlier in international giving and volunteering
There were significant regional variations in giving to international end-recipients. Asia and Europe had the highest percentage, with Africa the lowest. The figures are even lower in Trialogue’s research: only 7% of South African companies surveyed in 2018 supported projects outside of South Africa, and these projects received less than 1% of total CSI expenditure.
10. Foreign companies support international volunteering
African companies were the only ones that did not offer paid-release time to international employees. In 2017, 50% of European companies offered paid release time to international employees, followed by Asian (33%) and Latin American companies (33%).
To read more: This information was sourced from Trends in global corporate giving, in the Trialogue Business in Society Handbook 2018. To download the full Handbook at no charge, go to https://trialogue.co.za/publications/.