Beyond compliance: enhancing the impact of community trusts in South Africa

Mining’s Commitment to Communities

For decades, South Africa’s mining sector has recognised the importance of investing in host communities. This commitment has been driven by both regulatory requirements and the moral imperative to address historical inequities. Community trusts, and similar broad-based ownership schemes, have been one vehicle through which mining companies aim to deliver benefits. Yet, many of these initiatives have struggled to create meaningful, lasting impact.

Tshikululu and the Minerals Council Partnership

In recognition of this, Tshikululu is partnering with the Minerals Council South Africa to host a series of dialogues to support sector and community trust representatives in strengthening their planning, implementation and impact measurement. The ultimate goal is to create lasting, positive changes that impact the lives of community members. The first two dialogues of 2024 focused on key topics that emerged from Tshikululu’s 2022 benchmarking study on community trusts and through discussions with our clients: good governance and impact strategy.

Good Governance in Community Trusts

Governance is a broad area of concern, covering aspects as diverse as trust registration and structure, tax considerations, trustee composition and appointment, centralised vs de-centralised decision-making, reporting and accountability. Community trusts face unique governance challenges, existing at the intersection of B-BBEE ownership requirements, accountability to the community members whose ownership they hold, and their connection to a founding company.

Good governance is especially critical in the case of community trusts, which exist to benefit thousands of community members. Strong governance that builds accountability and trust is essential for these trusts to deliver on their mandate. Without it, their efforts can exacerbate tensions at community level without contributing meaningfully to development. It is essential to think beyond legalistic issues in our approach to governance of community trusts and approach it with a clearly defined understanding of each trust’s purpose – this informs the structures and processes necessary to achieve it and drive impact.

Success Factors for Strong Governance

Our experience has given us a broad perspective on the challenges and success factors for community trusts operating in different contexts. Tshikululu has found that a detailed trust deed and well-structured relationship between the trust and the founder company are central to good governance. A strong trust deed sets up a trust for success by outlining what it can and cannot do and how any governance concerns will be handled. The presence on the board of at least one founder trustee to represent the company, alongside independent and sometimes community trustees, provides a link to the company without enabling undue influence over the trust’s activities.

At the same time, stakeholder management and collaboration are inextricable from governance concerns. Community trusts operate within contexts with diverse stakeholders, cultures and good governance provides a foundation for transparency and accountability, which are key to developing trust among stakeholders.

The Importance of Impact Strategy

Impact refers to the effects or consequences a social investment has on the world, specifically the economic, social and environmental changes experienced by people and the planet as a result of the investment. Impact strategies require thinking beyond the direct outputs and immediate outcomes of an investment and seeking to create and measure change in terms of what success means for those who will ultimately benefit from it.

Our 2022 benchmarking study found that the most effective community trusts had a clear strategy that aligned with the trust’s core purpose for existence. These trusts maintained a focus on long-term impact and sustainability, and so their activities were not determined based on individual funding applications or donations, but were rather guided by a clear, impact-driven strategy.