Investing in collaboration can take us further
South Africa is a nation with long-standing and profound social challenges, all in need of address. Today, as much has half of the population lives in poverty and more than a third are unemployed. It was against a similarly stark backdrop that the Covid-19 pandemic struck, doubling down on poverty, unemployment and inequality. Yet, as we struggled to manage the crisis, our response held a kernel of hope for the way we might face our current and future social needs.
Government, business, philanthropic organisations, civil society and individuals rallied, demonstrating through the Solidarity Fund just what is possible when we harness our resources and collaborate to serve a shared end. Mobilising diverse resources and support, the initiative provided a potential blueprint for future collaborative social development efforts.
“One of the fundamental challenges to ongoing collaborative initiatives is a deeper appreciation for the time and financial resources such efforts require. Historically, philanthropic organisations have been more willing than companies to invest in such processes. Companies tend to shy away from funding strategic and collaborative processes in favour of visible programmatic work. Without corporate appetite to driving the process, potentially valuable collaborative initiatives remain non-starters.”
Cathy Duff, Trialogue director
Borrowing from the best of CSI
Among those trying to resolve our social ills, companies, through their corporate social investment (CSI), and independent philanthropic organisations frequently share broad goals. While their objectives, operations and interventions may differ, are there lessons they might take from each other? And how might companies and philanthropic organisations align their efforts and collaborate to ensure that scarce funding resources are used efficiently for greater impact and more sustainable results?
“Independent philanthropy’s long history and experience in addressing social challenges continues to influence how companies carry out CSI. Companies increasingly borrow from philanthropic funding practices, showing more flexibility in funding including by funding project overheads and non-direct project costs, as well as by offering longer-term funding. Less frequently considered is whether the corporate sector holds any learning for philanthropy.”
Cathy Duff
While both fund social causes, companies and philanthropic organisations sometimes employ different approaches to their work. However, attempts to draw firm distinctions between these approaches risk misjudging the vast variety that exists across philanthropic organisations and companies in terms of their size, capacity, and approach to giving. Certain philanthropic bodies might have more in common with corporate funders than generally acknowledged and some companies may be practising giving in similar ways to philanthropic organisations. Indeed, in family-owned companies, the distinction is particularly blurred.
That said, the following CSI practices hold potential learning for philanthropic organisations.
- Well defined giving strategies
According to Trialogue’s research, two thirds (68%) of large South African companies develop and document CSI strategies, often aligned with the company’s core business strategy, providing focus and a useful framework against which to measure results. Similar practices aligned to philanthropic organisations’ founding or strategic direction could offer the same benefits for philanthropic funders, a trend that is slowly gaining ground according to the most recent edition of Nedbank’s Giving Report. The report noted that high-net-worth individuals (HNWIs) are planning their giving more carefully amid competing needs with giving strategies rising from 37% in 2015 to 40% in 2021.
- Commitment to monitoring and evaluation (M&E)
Some 57% of large South African companies have a stated policy on M&E, making the effort to measure their social investment impact as a demonstration of value to stakeholders. Corporate management practices that strive to use resources effectively can drive operational efficiencies in CSI, including strategic planning, performance metrics and accountability. Better M&E would be beneficial to philanthropy where nearly 80% of HNWIs surveyed in the Giving Report acknowledged not applying M&E to their giving practices.
- Considering exits and sustainability
CSI tends to place emphasis on sustainability, prioritising social investments that have long-term benefits rather than temporary relief. Since companies know that their projects are subject to change as reviews, new leaders and new strategies take effect, factoring in the organisation’s exit and the sustainability of the intervention is a key facet of their work. A similar strategic approach might benefit certain philanthropic organisations. Designing sustainability into programmes can ensure long-term positive impacts while freeing up funds to tackle other social needs.
- Broad stakeholder engagement
Engaging a wide range of stakeholders, including employees, customers and local communities is often a factor in CSI, fostering a sense of shared purpose. This can ensure that the voices of beneficiaries and communities are heard and incorporated into programme design. This holds true for philanthropy too, where better stakeholder engagement is more likely to secure stakeholder buy-in, influencing the sustainability of interventions in the long term.
- Transparency and accountability
Based on stringent governance practices, companies operate with high levels of transparency and accountability to shareholders and the public, often publishing detailed reports on social investment activities. This builds trust with donors, beneficiaries, and the public and makes companies more accountable for their social work. By contrast, many philanthropic organisations operate entirely privately with little known about their giving strategies, recipients or outcomes. Philanthropic organisations might apply the transparency and stakeholder engagement more common in CSI to their own giving as a means to secure long-term stakeholder support.
Making the case for CSI and private philanthropy collaboration
“Provided that companies and philanthropic organisations are working from a place of shared vision, there is good reason to seek out collaborative partnerships that draw on each other’s unique strengths, resources, and networks to tackle societal challenges together,” notes Duff.
Risk and innovation
Their different risk appetites could make for symbiotic partnerships that offer broader funding for joint initiatives with philanthropic organisations covering the riskiest elements or unrestricted funding and non-direct programme costs, while companies fund initiatives within the boundaries of their governance processes, together creating a platform to be adopted by government, which can take the least risk.
More so than government, both philanthropic organisations and companies have the capacity and flexibility to fund innovation. Where philanthropic organisations might be able to take on even more innovation funding risk than companies, companies can leverage corporate expertise in technology, marketing, and logistics to deliver innovative solutions to social problems. (See Text Box 1 below for an example of collaboration between an independent foundation, private and commercial funders.)
Shared knowledge
All funders can benefit from shared knowledge platforms and active knowledge-sharing which can contribute to more robust measurement frameworks. While philanthropic organisations might benefit from the business acumen and strategic approach of corporates, companies have much to learn from the deeper community insights, funding practices and experience of philanthropic organisations.
Pooled resources
Pooling resources could also have a powerful policy and advocacy influence. Companies and philanthropic organisations might advocate jointly for policy changes or public awareness campaigns that address systemic issues, leveraging the influence and networks of both sectors. (See Text Box 2 below for an example of multi-stakeholder collaboration),
Enabling cross-sector collaboration
Organisations such as IPASA and Trialogue do have a role to play in convening collaboration between companies and independent philanthropic organisations. However, convening power can only go so far.
Beyond funding, collaborative efforts need clear governance structures, transparent communication and appropriate resource allocation, all within a framework of established trust and respect.
“Most important is a clearly defined focus area for collaboration. Broad collaboratives around development or education, for example, tend to be more about knowledge sharing. Whereas deeper collective impact initiatives typically focus on a very specific objective within these broad sectors.”
Cathy Duff
Collaboration between diverse funders made the first social impact bonds in South Africa possible
A prime example of this is the Standard Bank Tutuwa Community Foundation social impact bond initiative. When the first two social impact bonds (SIBs) in South Africa – Bonds4Jobs and the Impact Bond Innovation Fund (IBIF) – were launched in 2018, they were hailed as a revolutionary approach to governing, delivering and financing social services.
As an independent funder, the Tutuwa Community Foundation was one of three investors in IBIF who invested in the Impact Bond Innovation NPC (non-profit company), a special purpose vehicle set up to house the SIB. These private and commercial investors carried the heavier risk of providing upfront working capital to the project implementing non-profits to deliver social services, in this case the delivery of home-based early learning models in low-income areas in Cape Town. As learning services were successfully delivered by the Western Cape Foundation for Community Work, an early childhood development NPO, the investors were repaid by outcome funders, predominantly government entities. This model places the lowest risk on government while private philanthropy and companies bear the heavier risks commensurate with their risk profiles.
How The Teacher Internship Collaboration South Africa enabled different funders to play to their strengths
The Teacher Internship Collaboration South Africa (TICZA), a multi-stakeholder partnership with support from government departments, trade unions, non-profits, universities, and implementers offers a format for how diverse stakeholders can come together. Initiated by Trialogue, JET Education Services, Global Teachers Institute, the Bertha Centre for Social Innovation and Entrepreneurship at the University of Cape Town, and later Bridge Innovation as a convening partner, private philanthropy funders supported the foundational backbone and process behind the collaborative initiative, while companies funded specific programmes to deliver extended student teacher internships for distance Initial Teacher Education students. Participating partners came together to contribute to knowledge sharing, strategy and M&E.
This article was originally published on IPASA’s website. Read it here.
