Beyond the rainbow: social investment in South Africa

Although much is being done on the ground and by government to address this imbalance, the culture of giving formally and regularly to causes is not particularly well established and people often feel powerless in the face of what they perceive as overwhelming need. And while corporate philanthropy has grown exponentially over the last two decades, it has often been constrained by an un-strategic, ‘tick-box’ approach to social development, created, to some degree, by affirmative action legislation and industry charters.

Changing donor landscape

At the end of apartheid in 1994, South African non-profits had to adapt quickly to a changing donor landscape. Once supported directly by international aid organisations, non-profits now found their funding streams drying up. With a legitimate government in place, there was no need to provide aid directly to non-profits. So these organisations had to turn their attention to South African companies and individual donors, as well as becoming adept at navigating government-distributed aid.

A great deal of money has gone into development in South Africa since the fall of apartheid. A recent Human Sciences Research Council national survey on social giving in South Africa found that regular citizens give roughly R12 billion a year from their own pockets to help others, and corporate philanthropy stands at an estimated R5 billion per year. Yet things do not seem to be getting substantially better for the very poor in the country. And our major challenges – HIV/AIDS, housing, education, food security – show few signs of being adequately addressed.

In South Africa, and across the continent, donor funds are mainly channeled through governments or large grant-making foundations which have their own specific development agendas. Individual donors are faced with often confusing and competing choices and a lack of adequate giving channels. So the small, grassroots organisations – often doing the most vital work at the coalface of poverty – lose out.

Innovative solutions

What is becoming clear is that innovative solutions are needed to address the huge imbalances that exist between South Africa’s rich and poor.

GreaterGood SA uses technology to connect people but it also aims, crucially, to improve the accountability of the development sector and create a new generation of more considered donor-investors. With the creation of GreaterGood’s Social Investment Exchange (SASIX), the organisation hoped to encourage a more strategic and measured approach to tackling poverty in South Africa. Over R8.9m has been invested in 43 social development projects through SASIX in just two years.

Investing responsibly

Another major growth area for the South African development sector is socially responsible investment. There is an enormous savings pool in South Africa – around R3 trillion largely in life and pension funds – but only an estimated R10 billion is dedicated to socially responsible investing, including infrastructure. At the same time, South Africa is struggling with an infrastructure backlog that needs to be urgently addressed. Social investment products that combine investment return imperatives with sustainable development – environmental, social and corporate – will give the poor access to the capital they need to lift themselves out of poverty.

Although South Africa lags behind many developed countries in terms of both strategic philanthropic giving and socially responsible investing, it also has the opportunity to learn from what works elsewhere and forge its own, uniquely South African, development path.

Sophie Hobbs is Head of Communications at GreaterGood South Africa (GGSA). Through its networking websites, call-to-action campaigns and specialist social investment services, GGSA makes it easy for people to connect with and support registered non-profit organisations in whatever way they can. Since its launch in 2004, GGSA has engaged thousands of individuals and corporates who have given over R16 million in funds, almost 45,000 hours of volunteer skills and time and over 530,000 surplus items. www.greatergoodsa.co.za.

¹ Capgemini Merrill Lynch World Wealth Report, 2008.
² Human Sciences Research Council (HSRC), 2007.