Executive Summary
As South Africa marked its 30th year of democracy in 2024, this milestone offered an opportunity to reflect on how well its approach to corporate social investment (CSI) had fulfilled its intended contribution to the nation’s social and economic development. Over that period, CSI has indeed become a vital part of South Africa’s social sector landscape. And yet, The Bridgespan Group’s research found that there is still much untapped potential.
As the nation set out to build democratic institutions, the South African government also sought to spur businesses to participate in the country’s development. Policies evolved over time, leading to the Broad-Based Black Economic Empowerment (B-BBEE) Act in 2003. The act created a set of practices that strongly encourage CSI to enable meaningful participation of Black people in the South African economy as well as to support community development, education, and poverty alleviation.
Compliance is voluntary, but the act created a scorecard system that offers tax breaks and access to government contracts and funding to companies with high marks. Companies earn scorecard points in categories such as Black ownership, Black management participation, purchases from Black-owned businesses, skills training, and development for underserved communities.
By 2024, CSI expenditures had risen to nearly 13 billion rand ($686 million), according to Trialogue, the bulk of which went to education, community development, and food security initiatives. By some measures, spending on B-BBEE compliance has helped to grow a more equitable and inclusive economy. Still, broader socio-economic progress, a goal of CSI, has been disappointing. The World Bank reported in 2022 that South Africa was the most unequal country in the world and had one of the highest rates of unemployment. Critics point out that Black managers account for only 16.9 percent of top management jobs, while 80 percent of the employable population is Black.
To be fair, the South African government and foreign development aid agencies spend more on social programmes annually than corporate CSI. Hence, it is unrealistic to expect CSI alone to fix South Africa’s economic and social problems. But 22 years after the passage of the B-BBEE Act, few would dispute that corporates can up their game and accomplish more.
We set out to learn what that could look like in terms of achieving desired social impact. What we consistently heard was that most corporates exhibit a regulatory compliance mindset in their CSI work, a transactional approach that limits impact on the ground. To be sure, compliance is important. But what would it take to move from transactional – focused on compliance with B-BBEE regulations – to transformational – focused on lasting change in people’s lives?
From our conversations with three dozen corporate, nonprofit, and sector experts, we distilled six approaches corporates have taken to evolve their CSI initiatives from transactional to transformational:
- Build trust as the cornerstone to productive relationships.
- Fund NPOs’ non-programme administrative costs and capacity building.
- Secure commitment from corporate leadership.
- Balance business expertise with community needs to shape CSI initiatives.
- Collaborate with other funders – businesses, philanthropy, and government.
- Invest in measurement as a tool to improve programmes.
For most interviewees, these approaches are a work in progress. Getting them right takes time and effort. But they represent a way forward for businesses on how to make CSI compliance and real impact work in tandem.
