Is CSI Good for Business?

Corporate Social Investment Development
Sunday, 14 October, 2007 - 14:02

By Margie Keeton: Corporate Social Investment (CSI) will never command the resources to tackle South Africa’s development needs on scale, but as a carefully targeted response it can have a disproportionate impact. But does that mean it’s really “good for business”?

Having money and a mission is not necessarily a recipe for a successful development outcome, no matter how good your intentions might be.

Business across the world has spent a good deal of money and effort in recent years helping to fight poverty and build communities. When we probe a little deeper, the outcomes of much of this well intentioned spend are often disappointing.

For businesses that either have to or want to make a difference through corporate social investment in developing countries, there are some simple guidelines. The first is to treat CSI exactly as you would any other investment and embrace the opportunities it presents. CSI must produce returns for the business, but to do so it must be staffed appropriately with professional managers able to build long-term assets for the company, to take informed risks and to manage then for performance. Of course the assets and returns I am talking about are social not financial, but they are real enough and can add substantially to your business. A good CSI manager will work in the same kind of way as a good stock broker, a good hedge fund manager or a master diamond cutter – they just don’t get paid quite as well. It all boils down to the judgements they make and the hidden value they see that others miss. In short, their ability to distinguish the extra ordinary from the ordinary and to pick winners.   

The starting point for any successful CSI intervention should be to establish who exactly you are trying to help and who you are going to work with in helping them? Be warned – you might have to do quite a lot of asking before you find the right people. But taking the trouble to find them is what makes all the difference. It is what I call the Warren Buffet approach to corporate social investment – and it works just as well. 

Let me try and illustrate this with reference to education – the biggest area of public and private social spend in most developing countries. For democratic governments, their mandate for delivery rarely permits differentiation – they carve up their budget allocations using the equity principle. So each state school gets the same measure of government funding, but each does something different with it. Even in the most impoverished of situations you will find schools that have triumphed against the odds. These are the champions that Warren Buffet would tell you to back. And he would be right. And so private funders should always give precedence to the principle of efficacy and for them the ability to differentiate one needy school from another is key. Of course you will not always get this right, but if you treat one deserving cause the same as the next, your chances of making a real impact are seriously limited and you will end up with wasted resources and shattered hopes.

To some, this sounds pretty radical because for them social investment is only about need, it is about trying to help the poorest of the poor. To argue this way is to see and therefore to wish to treat the poor as a homogenous whole which they are not. If you want to spend money in CSI with the goal of making a difference in the lives of poor people, you have to move away from sentimentality and you have to make choices. Poverty cannot be engineered away or eliminated by direct assault. It is chipped away slowly by people themselves, people who see themselves not as victims, but as victors. 

CSI is not at heart about needs, it is about initiative. And no matter how desperate conditions may appear from the outside, there are always people who won’t accept that this is the way things must be, who will marshal what energy they have to start to bring change in the lives of others around them. There are social entrepreneurs of this kind in every developing country. There are thousands in South Africa alone. Viewed individually their efforts may seem fragile and insignificant compared to the overall scale of need, but seen as a whole they represent a strong web of people’s power that is bringing new hope and opportunity. 

You may not recognise it at first but that leadership is there. If not, move on until you find it. Starting with getting the right people involved won’t guarantee success, but it is one of the best risk mitigation strategies a CSI manager has. 

But this is only the first step; the next is to work with them to develop an intervention tailored to their realities, constraints and capacity. Here again it is easy for good intentions to take over. Take the simple example of a company wishing to make a donation of its old computers. Nothing could be simpler surely? Get a disadvantaged local school connected, arrange a handover ceremony and everyone goes away happy. End of story. 

Not quite. A year later you may be very disappointed. In all likelihood several computers have stopped working because they weren’t serviced and the learners are allowed only limited access because there are no qualified teachers to assist them. In giving the school what you thought was a solution, you have inadvertently created a new problem. You made them the recipient of your giving before finding out if they were in a position to use what you were getting rid of. 

In business if you want an investment to generate a decent return it must be attractive to the market. If you are selling a product, it must be something the consumer wants. The principle applies equally in social investment where the consumers are the beneficiaries we are hoping to help. But many companies are only looking at half the picture when they make their social investments – they are pre-occupied with what they want to see done with their money. Only by coming to grips with a country’s real social market dynamics, will you get the whole picture and then can you hope to make an impact. This is the lesson behind the expensive monuments to failed donor largesse that litter the countryside in the developing world, each one built in the naïve belief that it would be different.

CSI is often sold to the board on what I believe are misleading grounds - that it will be good for the business. And then all kinds of arguments are presented to show its potential commercial benefits. This is nonsense. CSI doesn’t need to be massaged into something that is good for business. CSI is business. CSI is your brand. CSI is your corporate value statement. CSI is the only thing that many people who fall beyond the reach of your marketing strategies know about your company. CSI is your corporate reputation. Isn’t it time we got rid of the muddled thinking and mixed messages that shackle CSI? CSI has the potential to be so much more, if we only let it.

-   Margie Keeton is CEO of Tshikululu Social Investments, CSI managers for Anglo American, De Beers and FirstRand. This is an extract of a recent address to the Gibs Forum. 

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