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The state of CSI

Wednesday, April 6th 2011

As the new head of consulting at GreaterCapital, one of my first challenges was to re-think the format of our CSI Forums. We wanted to create a more compelling platform that encouraged peer learning and challenged some questionable CSI practices. And to make it a more practical learning experience, we are recording these invaluable leadership insights with the intention of publishing a guide to good practice at the end of the year. CSI has become a serious profession and I feel there is an enormous need for a proper framework to be put in place.

I was therefore encouraged that the themes at the recent Tshikululu Serious Social Investment Conference I attended, dovetailed with many of the topics we’ve chosen to cover in our Social Investment Leadership Forums. Especially as Tshikululu has a well-earned reputation for bringing genuine developmental expertise into the CSI space.

This was a good indicator that we are addressing the key challenges in this dynamic sector. It was also a concerning reminder that these issues are clearly permeating the sector as a whole. What struck me about topics such as, ‘Ethical choices of social investors’ and ‘How your work helps NGO’s and how you can harm them’, is the glaring reality that certain CSI practices are damaging people’s lives.

Alarming practices
This is not meant to cast a shadow across the whole sector - GreaterCapital continues to be inspired by the thoughtful and committed CSI practitioners and projects we come across in our work. However, there are some alarming practices that we have also witnessed:

CSI spend to government officials’ pet projects in order to influence access to tenders
CSI spent on infrastructure for schools where there are no teachers
Marketing budgets running into the millions to draw attention to projects where the company has only committed R100,000
PR and marketing agendas driving CSI in a way that has virtually no benefit to the community
NGO’s that are persuaded to scale operations in order to replicate and even geographically relocate a good model, only to be left with a massive crisis when the company changes their social investment focus a few years later. Decisions based on the company’s CSI strategy, and the organisation’s desperate funding needs, are not necessarily sound development practice. .

CSI is an opportunity for business to play a role in South Africa’s long term success as a nation and to ensure that we don’t just look after the current generation, but have the wisdom to positively influence the next. To use CSI simply as a leverage tool to win more clients or make friends in high places is short-sighted and an indictment on corporate leadership.

Research and best practice
CSI is a profession and should be treated like any other. Those working in the field should either have a sound combination of development and business experience or accept that they have much to learn and commit to learning from those who genuinely have the best interests of disadvantaged communities at heart.

There are wonderful examples of partnerships between companies, NGO’s and government that have yielded fantastic results because they were done with the right intention, comprehensive research and best practice as their foundation. These are the examples we should be looking for and trying to emulate.

Code of good practice
I will therefore boldly end by saying that there is bad practice creeping into corporate social investment and my question is: where do we draw the line? I believe that a code of good practice is needed and companies should be operating within an accepted framework, just as they would in any other area of good corporate governance. If we don’t put this in place soon, CSI will continue to have carte blanche with no accountability to those whose lives it impacts.

Submitted by Bridgit Evans: Head of GreaterCapital Consulting

> Join the debate at the next Social Investment Leaders Forum

Comments

Limont Lehman
on 4/5/11
1. CSI spend to government officials’ pet projects in order to influence access to tenders Of course this sounds like a problem on the surface, but any codes of practice should be wary of clamping down too heavily on CSI initiatives that are of strategic importance to the organisation. There can be little chance that CSI spend will be sustainable if there is not a health measure of self interest involved in it. Put another way, in order for CSI spend to be justified, it needs to have social impact AND be of strategic importance to the organisation in the medium term. CSI spend that gives an organisation preferred access to future commercial opportunities makes sense, and should be embraced. In my view it is only a problem when the CSI spend itself generates limited, dubious or unsustainable social benefits that this becomes an issue. Of course this will be a difficult balance to strike in practice, but a necessary one for the future of the industry. 2. Marketing budgets running into the millions to draw attention to projects where the company has only committed R100,000 Again the issue revealed here speaks to my first topic. I think it is important that corporates should be able to blow their own horn when they have committed CSI spend to impactful causes. The ability to do this keeps them self interested, and tracking advertising campaigns may even allow them to assess their customers’ reaction to their CSI spend. These processes reinforce the ability of an organisation to spend its CSI funds in a manner that aligns with their strategic objectives. Spending more on marketing than was originally spent on the initiative may seem deplorable, but is this still so when one considers that marketing money is spent to generate sales, and not to promote social causes. The amount of money spent on marketing should be related to the increased sales it can generate, that makes commercial sense. Codes that are too restrictive on this point might actually deter corporates from spending sizeable amounts on CSI. 3. To use CSI simply as a leverage tool to win more clients or make friends in high places is short-sighted and an indictment on corporate leadership. Yes I agree, but one cannot lose sight of the fact that corporations exist to make profits for their shareholders and sustain livelihoods for their employees. They can only do this by investing in initiatives that make sound commercial sense, from a long term perspective. No doubt CSI can make sounds commercial sense, and increasingly so, but corporates should be encouraged to blow their trumpets about this type of spend. This allows them to capitalise on their good deeds, and also creates the opportunity for others to make public their failures of shortcomings with regard to CSI spend. Perhaps this would be a better mechanism for making sure corporates spend their CSI funds to maximise both the social and business impact?
Limont Lehman
on 4/5/11
1. CSI spend to government officials’ pet projects in order to influence access to tenders Of course this sounds like a problem on the surface, but any codes of practice should be wary of clamping down too heavily on CSI initiatives that are of strategic importance to the organisation. There can be little chance that CSI spend will be sustainable if there is not a health measure of self interest involved in it. Put another way, in order for CSI spend to be justified, it needs to have social impact AND be of strategic importance to the organisation in the medium term. CSI spend that gives an organisation preferred access to future commercial opportunities makes sense, and should be embraced. In my view it is only a problem when the CSI spend itself generates limited, dubious or unsustainable social benefits that this becomes an issue. Of course this will be a difficult balance to strike in practice, but a necessary one for the future of the industry. 2. Marketing budgets running into the millions to draw attention to projects where the company has only committed R100,000 Again the issue revealed here speaks to my first topic. I think it is important that corporates should be able to blow their own horn when they have committed CSI spend to impactful causes. The ability to do this keeps them self interested, and tracking advertising campaigns may even allow them to assess their customers’ reaction to their CSI spend. These processes reinforce the ability of an organisation to spend its CSI funds in a manner that aligns with their strategic objectives. Spending more on marketing than was originally spent on the initiative may seem deplorable, but is this still so when one considers that marketing money is spent to generate sales, and not to promote social causes. The amount of money spent on marketing should be related to the increased sales it can generate, that makes commercial sense. Codes that are too restrictive on this point might actually deter corporates from spending sizeable amounts on CSI. 3. To use CSI simply as a leverage tool to win more clients or make friends in high places is short-sighted and an indictment on corporate leadership. Yes I agree, but one cannot lose sight of the fact that corporations exist to make profits for their shareholders and sustain livelihoods for their employees. They can only do this by investing in initiatives that make sound commercial sense, from a long term perspective. No doubt CSI can make sounds commercial sense, and increasingly so, but corporates should be encouraged to blow their trumpets about this type of spend. This allows them to capitalise on their good deeds, and also creates the opportunity for others to make public their failures of shortcomings with regard to CSI spend. Perhaps this would be a better mechanism for making sure corporates spend their CSI funds to maximise both the social and business impact?
Andile Ncontsa
on 4/5/11
Hi B I am wondering if there is a difference between grant making & corporate social investment. In my view, philanthropic foundations would fall under the grant making category, while CSI Foundations or Departments, do not. Their primary responsibility is to the company, like you have put it eloquently in your article “Rewarding brands for good”. Part of the problem in “CSI discourse” is that for a long time, the line between the two has been blurred. What do you think? Regards & all the best with your new responsibilities Andile

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Limont Lehman

Limont Lehman

Andile Ncontsa