Corporate Interest, Grantmaking

Achieving community investment with corporate returns

7 September 2011

Corporate social investment (CSI) initiatives can do much to build a company’s resilience and reputation and to generate sustainable improvements for South African communities. So why do many still struggle to gain internal corporate recognition and demonstrate lasting impacts?

Louise Gardiner, international corporate sustainability expert and founder of First Principles Sustainability Services suggests four reasons and four strategies to address them.

For too long, community investment has been channeled as charity or marketing. It’s a cliché but remains a reality. The result is a lack of data on the social impacts of CSI programmes and the value created for the company – financial, reputational, and operational.

The World Bank and a number of mining companies are testing a financial valuation tool to capture and quantify return on investment from social projects.  With this information, CSI teams can demonstrate the corporate value of their work to executives and directors. It also lays the foundation for adding CSI returns to the company balance sheet in the integrated report.

The second problem is that many CSI approaches still create a cynical atmosphere of dependence and entitlement, in which middlemen distort contributions and outcomes. A growing number of local and international examples are showing that desperately poor communities – in both urban and rural contexts – are much more powerful than previously thought. They are able to mobilise themselves as cooperatives to identify their most pressing concerns and design solutions. Without this collective ownership, many CSI programmes will continue to face demoralizing failures and waste of company resources. Companies can cultivate this trend by supporting more funding requests that come directly from communities and can demonstrate collective ownership and good governance.

The third challenging reality for CSI in the South African context is rapid social change. Our country is urbanising at an exponential rate. Inner city slums are the name of the game, and represent a major risk or a major opportunity for economic vitality. Small-scale and short-term solutions are no longer sufficient. The old paradigms and models of CSI also won’t work. What’s needed is integrated action by a combination of stakeholders. Companies can reinforce and scale-up their efforts by joining forces with cities, their supply chains, and their peers. The businesses that succeed will embed their brands among fast emerging groups of consumers and entrepreneurs.

Finally, perhaps the most obvious challenge is that many CSI programmes still don’t invest in long-term engagement to build real trust with communities and co-design solutions that stick. The private sector is used to short-term engagement and delivery. Communities work in timeframes of years and generations.  By learning to listen over periods of months and years, companies are likely to find that the value they can bring to communities and the value they receive in return will look very different and have a lasting impact.