Tendani Nelwamondo, a senior socioeconomic development specialist at the Industrial Development Corporation, is involved in the establishment and management of community and employee trusts. The empowerment of broad-based entities aims to improve the socioeconomic livelihoods of the communities and employees. Nelwamondo discusses how these community trusts should be established and effectively run.
When is a community trust appropriate?
Community trusts are appropriate at any time and at any stage. Communities are sitting on a lot of resources and if corporations are wise, they will look at how best to support their communities in leveraging these resources to create opportunities for establishing community trusts.
If someone identifies an opportunity on community land, it is always appropriate for it to be a community trust investment, either by developing it themselves, or at any other subsequent stages. There are mushrooming malls, housing developments and opportunities in forestry, agriculture, mining, and renewables. Communities must be proactive in identifying investment opportunities and partners, and attracting investors, and companies must be willing to help them to do so.
What are some of the components needed to establish sound community trusts?
The first step in establishing a community trust is to define objectives, then develop the scope of activities by planning with the community. A key piece of legislation in the governing of community trusts is the Trust Property Control Act of 1988. Those hoping to establish such a trust should familiarise themselves with this law when setting up the trust’s rules, deeds and objectives.
The next step is to appoint a committee, the trustees. If the community trust must comply with broad-based ownership requirements, at least 50% of trustees must be independent, the chair must be independent, 25% of trustees must be women and 50% must be black.
Education, training and expertise are also important considerations when assembling the board of trustees. I recommend that trustees must have a certain level of education, for example, a degree as a starting point, but this can be brought down to a diploma, certificate or matric if the person has experience or knowledge. Trustees should also have a strong understanding of community development.
They must be provided with or seek out education and training opportunities to understand the things that they need to deliver on, trust management, corporate governance, financial management, compiling community development plans, and then, very importantly, they must gain an understanding of how to feed back to community beneficiaries.
How can tensions be managed, with regard to perceptions of who is represented and excluded from the revenue flow?
If feedback is provided regularly to the community, there won’t be tensions. If tensions have already emanated, identify the cause: who is complaining, and why? If it is because the board doesn’t have the capacity to deliver, look for ways to remove incompetent trustees, and work out how to deliver, going forward. The trust deeds should provide guidelines on how to deal with conflict.
But it really does come down to frequent and transparent communication. For example, if there is a five-year plan
that details when some towns in the community will benefit, then those communities will understand that their turn is coming.
Should community trusts respond to a broad range of issues, or focus on specific projects?
A socioeconomic needs assessment should be carried out to identify which challenges need to be addressed when the dividends are realised. It is also important to identify what community needs are already being addressed by Government. The funder shouldn’t go in saying “we want to deliver education” if education is already being delivered, but infrastructure is lacking. It must be driven by the needs of the specific community.
How should investors go about identifying relevant communities?
When looking to invest, I believe that investors should go for their closest communities. That makes it relevant and easier to track how those communities are impacted by projects. Communities residing within a five-kilometre radius would be more relevant as project beneficiaries. If there are no relevant communities within a five-kilometre radius, then it would be prudent to identify communities within a 10-kilometre radius, and beyond, if necessary. However, I also believe that communities need to identify their own opportunities and should be going out to find investors, rather than the other way around.
