Trialogue tracks local trends in corporate social investment (CSI) against those taking place internationally, comparing the South African research findings presented in chapter one (pages 30–57) with those reported by our global partner, Chief Executives for Corporate Purpose (CECP). The CECP publishes two research reports annually: Giving in Numbers, which compiles data from 250 multi-billion-dollar companies, 90% of which are headquartered in the United States (US), and Giving Around the Globe, which presents high-level data from 86 companies in 17 different countries, including regional results from Africa derived from select companies that participated in Trialogue’s 2018 CSI survey.
Benchmarking community investments
Global companies give more than US-based companies as a percentage of revenue
Trialogue’s research found that total estimated CSI expenditure in South Africa grew by 5% in nominal terms, reaching R10.2 billion in 2019. Among the 75 companies surveyed that provided expenditure data, total giving exceeded R3.6 billion. Average spending increased to almost R49 million from R46 million in 2018, although median spend declined from R22 million to R20 million.
Internationally, Giving Around the Globe reported aggregate total giving of $3.6 billion among 86 participating companies in 2017. Median giving reached $5.9 million and, on average, community investments accounted for 0.28% of companies’ total revenue. With a sizably larger sample, giving reported by the 250 US-based companies featured in Giving in Numbers increased to a record $26 billion in 2018 from $24 billion in the previous year, equating to 0.14% of companies’ total revenue. Median giving totalled $20.7 million.
Changing needs, profit growth behind increased CSI
More than half of all participating South African companies (56%) reported increased CSI expenditure in 2019, for reasons including changing project requirements, greater need among recipients and increased corporate profits. CSI budgets are most often determined as a percentage of post-tax profit, at an average rate of 1%.
US-based companies have also continued to increase community investments over the past year. Among the companies reporting their contributions to Giving in Numbers between 2016 and 2018, investments increased by 11% overall. Reasons cited for this growth in CSI included a greater focus on strategic initiatives and programmes, as well as expanded international giving, improved business performance and changes in employee-directed giving programmes.
US companies outpace others in non-cash giving
Cash spending continues to far exceed non-cash contributions worldwide.
Although 35% of participating South African companies reported non-cash giving in 2019, it amounted to only 6% of total CSI expenditure. Giving Around the Globe found that non-cash contributions were also low internationally, at around 10% of total contributions, consistent with previous years in which non-cash giving generally constituted the smallest share of contributions across regions.
US-based companies were more likely than others to engage in non-cash giving. Two out of three made at least one form of in-kind gift in 2018, amounting to 19% of giving on average. These rates were particularly high in specific sectors including communications and consumer staples, where they exceeded 40%.
Global businesses, global giving
International giving on the rise
According to the CECP, as companies grow and achieve scale many also globalise their supply chain, customer base and operations, as well as their social programming.
International giving was particularly high among US-based companies, with two-thirds reporting international giving – an increase of 9% over the past three years. Contributions outside of the US typically amounted to 21% of a company’s total allocation.
Although at a slightly lower rate than their US counterparts, 45% of Global Giving participants contributed to at least one international end-recipient in 2018. The CECP has also linked international giving with the establishment of foundations and trusts. Two-thirds of global respondents reported having a foundation or trust in 2018. Opening foundations and trusts outside of a company’s headquarter country was associated with a number of advantages, including capacity to address local social issues as well as increased credibility, ease of legal and tax requirements and beneficial legal and fiscal frameworks.
South African giving remains locally focused
Despite the globalisation of corporate giving, this practice is rarer in Africa than other regions. South African companies generally fall far behind the international average, with only 8% supporting projects outside of South Africa in 2019 and these receiving only 1% of CSI expenditure.
Trends in community investment management
Sustainable Development Goals lead corporate planning
The United Nations adopted the Sustainable Development Goals (SDGs) in 2015 and these have increasingly become the basis for planning among corporates, as well as governments and civil society. In 2018 the SDGs were identified as the most important among four main influences on social investment strategies. Just over half (51%) of global companies indicated that they would consider including the SDGs in content and reporting for CEOs and senior executives. Only 1% did not use the SDGs at all.
This growing importance is also evidenced in data from other regions. CSRone’s Taiwan and Asia Sustainability Reports Analysis found that in 2019, 44% of the 528 Taiwanese companies surveyed included the SDGs in their sustainability reports, up from 28% in the previous year. In 2016 Trialogue found that 48% of participating South African companies already responded to aspects of the SDGs through their CSI strategies, and an additional 37% were likely to do so in future.
Continued focus on education
Education and social issues continue to be the main focus areas for corporate giving in South Africa and worldwide. Almost half of all US-based companies (49%) reported supporting educational initiatives, including at school level as well as higher education, with total contributions reaching an estimated $351 million. Three-quarters of companies included in CSRone’s 2019 Taiwan and Asia Sustainability Reports Analysis invest in “science and education” while education was the top social investment area identified in Israel’s Maala Index 2018, followed by youth at risk (12%), and social services and welfare (11%).
Education is an even greater priority among South African companies. In 2019, 94% of surveyed companies supported educational causes, which received half of all CSI expenditure on average. This was followed by social and community development, which was a focus for 77% of companies and received an average of 15% of CSI expenditure.
Increased measurement of community investment impact
The CECP found that companies worldwide are increasingly using measurement, data analysis, and monitoring and evaluation (M&E) to better understand the results of social investments – both on communities and businesses themselves. Global Giving reported that in 2018, 44% of companies measured the business value of their community investments, with a focus on metrics related to employees, such as staff retention.
US-based companies also reported measuring social impact as a critical management practice. In 2018 nearly nine in ten surveyed for Giving in Numbers measured the outcomes and/or impacts of at least one partnership. The percentage of companies specifically measuring the social outcomes of strategic programmes rose from 36% in 2014 to 41% in 2018 while those measuring the outcomes of all grants increased from 14% to 25% over the same period.
Trialogue has also found a strong uptake of measurement tools and practices among South African companies. In 2019, 72% of survey participants measured project outcomes for all grants, up from 57% in 2018. Almost all companies that collected M&E data reported on this information to their boards (96%).
Enough staff to maximise CSI impact?
Given the increase in giving worldwide, it is important that companies dedicate sufficient resources to philanthropic management. Among global companies, the CECP found the median number of full-time equivalent (FTE) social investment employees to be 7.5 in 2018. About a quarter reported to a corporate citizenship or corporate social responsibility department, while 16% each reported to a sustainability department or communications department. Notably only two in ten companies reported increased FTEs, which the CECP found surprising given growing demand for measuring, reporting and transparency. This trend could suggest a growing practice of outsourcing responsibility for managing and delivering social programmes.
In line with the global findings, the median number of CSI staff employed by South African companies decreased to two in 2019, from three in 2018. Median staff numbers were highest among companies spending R50 million and above annually, but still declined from eight FTEs in 2018 to six in 2019.
Comparatively, US-based companies reported continued growth of FTEs – at a faster pace than overall employee numbers and, in some cases, even when total headcount decreased. In 2018 the median number of FTEs was highest among companies giving the most: companies contributing $50 billion to $100 billion employed a median of 15 social investment staff.
Changing face of corporate leadership and activism
Employees as key corporate stakeholders, collaborators
Research shows that worldwide, people’s relationships with, and expectations of, their employers have begun to change. According to the Edelman Trust Barometer, employees now trust their employers (75%) more than non-governmental organisations (57%), businesses (56%), government (48%) or the media (47%).
The Edelman Trust Barometer found that many people looked to their employer as a trustworthy source of information about contentious social issues and more than three-quarters (76%) wanted CEOs to be change leaders. More than two-thirds expected prospective employers to join them in advocating around important social issues and, where this takes place, it has led to greater commitment (83%) and loyalty (74%) among employees.
One recent example of impactful corporate activism occurred following the US travel ban imposed by President Donald Trump, which was opposed by top technology companies and their CEOs. More than 175 tech companies including Apple, Facebook, Amazon, Microsoft and Google filed an amicus brief in the Supreme Court condemning the policy and citing the harm inflicted on American companies, their employees and the entire economy.
Activating employees for social causes
Employee engagement strategies are often built around volunteering programmes and employee giving. Globally, the CECP found that in 2018 over half of all companies surveyed (56%) offered paid-release time or flexible scheduling for employee volunteering, followed by skills-based volunteering/ pro bono services (35%). On average, about a third of employees at international companies volunteered at least one hour of their time over the course of the year. Engagement of this kind has been shown to improve employee motivation and retention.
Giving in Numbers reported that among US-based companies about a third of employees participated in volunteer initiatives over the past three years. Rates increased, however, where more flexible volunteering options were available such as paid-release time and flexible scheduling. Companies offered employees an average of 20 hours annually for volunteering of this kind.
Trialogue’s 2019 survey results showed that, consistent with previous years, most participating companies (81%) had formal employee volunteer programmes. These were most commonly in the form of company-organised volunteering initiatives and fundraising drives, for which average employee participation rates were 39% and 22% respectively. While some companies also reported more flexible volunteering arrangements, such as time off during work hours (59%) and pro bono services (22%), rates of average employee participation were considerably lower for these.
Millennial workforce shifts corporate values
Millennials now make up a quarter of the world’s population. Nearly nine out of ten live in emerging economies and, according to the US ManpowerGroup’s analysis, will represent 35% of the global workforce by 2020.
For global companies paid-release time and skills-based volunteering/pro bono are among the top offerings to employees, differing from the practice of most South African companies. These, the CECP has suggested, are closely aligned with key priorities valued by millennials: flexibility and achieving clear impact in real skills-based projects.
However, despite the growing millennial presence in corporate workplaces, and links between engagement and job performance, the Gallup State of Global Workplace report has warned that 85% of employees worldwide are not engaged actively, or even at all.
Brands empowering consumers to accelerate change
In addition to focusing on corporate social leadership and employee engagement, companies are also shifting towards empowering consumers to accelerate change through their own choices.
As reported in Giving in Numbers, the 2018 Cone/Porter Novelli Purpose Study found that most Americans (85%) would be likely to support a purpose-driven company in their community and eight in ten prefer to buy products or services from purposeful brands. Speaking at the first European Sustainable Brands conference in Paris, Danone CEO Emmanuel Faber urged companies to “be bold or die” in terms of shifting corporate purpose and changing consumer behaviour. One example showcased at the conference was the Loop reusable packaging platform developed by TerraCycle and partnered with Procter & Gamble, which aims to expand zero waste purchasing options and improve customer experience. Non-traditional, customer-centred approaches were linked with increased sustainability as well as brand reinvention around qualities such as ease, attractiveness, affordability, innovation and convenience.
Trialogue also explored prospects for leveraging CSI work in corporate branding. More than half of survey respondents (59%) agreed in 2019 that their CSI work is integral to their brand. However, most (74%) did not participate in any cause-related marketing.