Good governance is a central concern for social investors. It is especially critical in the case of community trusts, which exist to benefit thousands of community members, typically as part of broad-based ownership schemes. 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. On 26 July 2024, in partnership with the Minerals Council South Africa, Tshikululu hosted the second in a series of dialogues focusing on community trusts in South Africa. The session dealt with questions of governance through an exploration of challenges in the sector and how members of the Minerals Council are responding to them.

Tshikululu’s 2022 community trust benchmarking study identified governance as a key priority for 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. The dialogue provided an opportunity for sector and community trust representatives to explore this complexity and learn from one another’s experiences.

Speaking at the event, Tshikululu CEO Tracey Henry emphasised the importance of thinking beyond legalistic issues in our approach to governance. By definition, the decisions made by community trusts affect large numbers of people, and so it is essential to approach governance with a clearly defined understanding of the trust’s purpose and the structures and processes necessary to achieve it and drive impact.

• Werner Duvenhage, Managing Director at Richard’s Bay Minerals (RBM), stressed the importance of sharing challenges as well as success stories as part of a collective attempt to strengthen community trusts. Having commissioned Tshikululu to undertake the benchmarking research project in 2022, RBM has since used the report to strengthen governance in its own trusts. An understanding of best practice has led to RBM clarifying its trust deeds and clearly delineating the role of the founder, the appointment process for trustees, and how beneficiaries are defined. Understanding the communities and engaging with key stakeholders has also been critical in refreshing the trusts and ensuring that governance concerns are discussed with and understood by community stakeholders.

• Vusani Malie, CEO of SIOC-CDT, discussed the incremental journey towards SIOC-CDT’s current governance structure, which involved adopting many corporate principles and setting up a robust committee structure that supports accountability. Trustee selection and composition are key considerations for the trust. The trust has a whistleblower system to promote transparency, and a process through which regular feedback is given to communities to build trust.

• Reza Bardien, responsible for Operations Management at Lefa La Rona Trust, identified good governance as the bare minimum consideration for a trust to be successful. For the Anglo American Platinum Alchemy Project, in which Lefa La Rona is the umbrella trust, a decentralised structure that builds agency through community-level development trusts is aligned with its goal of inclusive and transformative impact. The trust deed is designed with consideration of the balance between the founding company and the independence of the trusts. The founder has minority representation, but retains step-in rights in the case of breaches of governance.