CSI or CSR - Are You a Learning NPO?

corporate social responsibility npos donors corporate social investment
Tuesday, 27 June, 2006 - 16:16

Comparing Apples and Oranges?

So what’s the difference between CSI (Corporate Social Investment) and CSR (Corporate Social Responsibility)? Do you know and have you considered how these two concepts impact on your work as a non-profit organisation and your current way of doing things? 

The terms corporate citizenship, sustainable development and partnerships are  bandied around and glibly used by the non-profit sector as a solution to fighting poverty and changing lives.

Words as Weapons:

All of the above are perceived to be the answer to any funding gaps and a way to raise considerable amounts of money for projects and programmes. It is good news for those responsible for the financial security of good causes, as it appears that another force, something huge, larger than a well-written funding proposal and a donor directory, is pushing investment towards the work of the third sector. 

Such influences are attributed to “push” and “pull” factors; the push factors are contained in the UN Global Compact,  Millennium Development Goals (MDG’s), OECD Guidelines for Multinational Enterprises and local pull factors include Sector Charters, BEE scorecards, the Johannesburg Stock Exchange CSR Index and - depending on your stance - social consciousness or guilt.

Some Clear Definitions:

CSR is believed to  reflect a company’s value system and is defined by one of the largest Auditing company’s in South Africa as “the manner in which a company manages its business processes to generate stakeholder value while having a positive impact on the community and minimising any adverse impact on the environment”.  This definition indicates that CSR is a deeper approach, as it enhances the morale of employees and the immediate situation of surrounding communities of a company.

CSI, on the other hand, is defined by Trialogue as “any social development activity that is not undertaken for the purpose of generating business income”. This comprises the cash and non-cash items given to people, organisations and communities that are external to the business.  So the nuance is entwined in making profit whilst doing good.

Getting What you Need:

All of  these initiatives must be viewed with caution. They require nonprofits to become tuned-in to what’s happening on a larger scale, to be more businesslike in their approach and creative in how they promote their brand and mission.

Taking business to a new level in being more human is good news for the nonprofit sector in South Africa. As companies seek ways and means to integrate sustainability into their ‘corporate mindsets’, their value systems and their operations  embrace practices that are more ethical, more sustainable and, hence, more reflective of good corporate citizenship.  However, they will always have to focus on the financial bottom-line and will eagerly look for partnerships with blue-chip causes that can raise their image and enhance their reputation – meeting the requirements of score cards and global reporting initiatives.

When NonProfit Organisations (NPOs) partner with business, it can be a win/win situation for everyone; it’s a growth opportunity for the NPO, a chance to take it to a level that was never thought possible, whilst for the company, it’s an opportunity for  expanding their image and increasing the much talked about triple-bottom-line; namely, people, the planet as well as profit.

Looking at the Facts:

During 2005 an estimated R2,6 billion was allocated from corporate budgets towards social investment and community development. This is CSI not CSR. Over the past 10 years this growth has been impressive but it still only represents 14 percent of the total income generated by the non-profit sector in South Africa, which is collectively estimated to be R15,2 billion.   The volunteer effort from employee involvement has not been factored as a Rand value but it could be equal to, if not more than, the R2 billion previously mentioned.

Impressive figures - but still short of denting the perceived target of R25 billion - if an estimated 110 000 NPO’s are to turn the tide against homelessness, hunger, HIV/Aids orphans and provide much needed home based care for the sick and dying.

Sectoral Analysis:

A comparative break-down of CSI spending over the past three years has remained fairly consistent. The split is still very much in favour of Education, which receives 37 percent of the total CSI expenditure, a slight dip from previous years. However, the most alarming  decrease has been in Housing, with a drastic cut from 3 percent to 1 percent . The Safety and Security sector has also suffered. 

This is trend confusing, as one would have thought that this segment of donations would have increased, what with so many people living in shacks  as well as the numerous informal settlements sprouting up daily alongside motorways and outside major airports. Surely this impacts on the CSR value system and the weighting of CSI programmes?

Comparative breakdown of CSI Budgets
Development Sector 

 




Development Sector

2002

Percentage

2005*

Percentage

Education

42

37

Training

8

9

Job creation

12

10

Social Development

8

13

Health/Welfare

15

16

Sports Development

4

4

Arts & Culture

4

5

Environment

4

4

Safety & Security

3

1

Housing

3

1

How the Corporates Calculate:

Most CSI budgets are determined by an agreed method based on a set amount that is annually approved by the board of directors or on a percentage of pre-tax or post tax profits. For example, Tiger Brands (Pty) Limited  have just announced a staggering after tax profit of R1,2 billion and they will  allocate 1% of this profit to be awarded towards their Section 21 Company; Tiger Brand Corporate Social Investment Company.  BHP Billiton have the same formula, but their profit is stated in US dollars, so the exchange rate can ultimately influence the final Rand value committed towards the BHP Billiton Development Trust.

Staying Ahead:

The challenge for non-profits is  to ensure that they are learning organisations. In other words, nonprofits must  keep abreast of  trends and influences impacting on them, or the raising of resources will always be in crisis.

Currently, the situation  is favourable - almost reminiscent of the late 1980’s when the Sullivan Principles and Codes compelled American companies based in South Africa to contribute towards communities. In that instance, the funds just flowed. Maybe the new pressures will also make life less tough for the good old fundraiser ….

By Ann Bown, Charisma Communications – e-mail: ann@charismacom.co.za

Ann Bown is a fundraising consultant, public relations advisor and trainer to Non-Profit Organisations.

Acknowledgement to:  The CSI Handbook 2005, UN Global Compact Initiative, Strategic Corporate Partnerships workbook, Deloitte Southern Africa Social Responsibility Report 2005 and the Diageo Corporate Citizenship Report 2005.

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