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| The Business Trust set out to mobilise and manage a larger pool of funding than had previously been raised for any privately funded development programme. That was done in the context of rising pressure to meet post-liberation expectations, a self-imposed structural adjustment programme to stabilise the economy, questions about the commitment of business and calls for reparations. |
| South Africa was committed to building a free, fair and prosperous nation capable of meeting the needs of all of its citizens, especially the poor. It was understood in business and government that the voluntary commitment of business to South Africa’s shared development project would be underscored by an initiative that could be practically useful and symbolically significant. |
| The strategy was to: |
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mobilise R1 billion from companies operating in South Africa against a formula that would raise equitable contributions from companies of different sizes |
| • |
secure the funding in a manner that would allow the Business Trust to undertake relatively large-scale long-term projects without placing project implementation at risk |
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manage funds efficiently without placing the capital at risk |
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use Business Trust funding to leverage public funds |
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contain administration costs. |
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| Over 12 years, 140 companies donated R1,2 billion against a prospectus that described the Business Trust’s planned work.
This was over and above normal corporate social responsibility
funding. |
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| Results |
| Mobilise R1 billion from companies operating in South
Africa |
| ✔ |
140 companies donated R1,2 billion against a prospectus that
described the Business Trust’s planned work |
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| The funds were raised in two funding cycles in 1999 and 2004. In
each cycle the bulk of the funds were raised in the first year against
letters of undertaking to provide funds over a five-year period. All
undertakings made were honoured. This enabled the Business Trust
to enter into long-term project partnerships and limit the time and
money spent raising funds. |
| Corporate funding was intended to provide an extraordinary
contribution over and above the normal social responsibility funding
of private companies. All of the participants in the Business Trust
operated their own substantial social investment programmes. |
| Corporate contributions accounted for less than 2% of total annual
corporate giving in South Africa. |
| Manage funds efficiently |
| ✔ |
Funds received were carefully invested |
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| A conservative investment policy generated R235,8 million in
interest on corporate donations over the life of the organisation. The
donors agreed to donate the capital sum and the interest thereon. |
| By using its resources
to accelerate the
achievement of the
agreed objectives, the
Business Trust was able
to leverage government’s
investments in
programmes like public
works, infrastructure and
crime reduction. |
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| Secure funding on a basis that will support long-term
commitments |
| ✔ |
Corporate funders gave five-year undertakings |
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| Contributions were provided against a funding formula of 0,15% of
market capitalisation (or 2% of after-tax profit) in the first phase,
and 0,05% of market capitalisation (or 0,7% of after-tax profit)
in the second phase. This resulted in a contribution of just over
R100 million from the largest contributor and R2 500 from the
smallest. All undertakings were honoured. |
| Although it was not originally planned to attract government funding, the Business Trust managed increasing amounts of government funding for designated purposes. |
| Manage government funds efficiently |
| ✔ |
Significant government funding was raised for application to
designated projects |
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| It was not originally planned to attract government funding for
management by the Business Trust. However in the second
phase of the work of the Business Trust it was agreed to manage
government funds for designated purposes. Funds managed in
this way increased each year over the last seven years to total
R423 million. |
| These funds were used for designated purposes only, mainly in the
tourism and business process outsourcing programmes. These funds
were not used for general management or general programme
development purposes. |
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| Leverage public funds |
| ✔ |
Business Trust funding supported the development of large-scale government programmes |
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| The government resources involved in the programmes undertaken were considerably larger than those provided by the Business Trust. Government funding in programmes like public works, tourism, schooling, infrastructure and crime reduction were all multi-billion Rand investments. The Business Trust was able to leverage those funds by using its resources to accelerate the achievement of the objectives set. |
| Contain administration costs |
| ✔ |
Business Trust management costs amounted to 5,5% of total costs over the life of the Trust |
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| Account for the funds managed |
| ✔ |
Audited statements up to 30 June 2010 have been provided annually |
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| The audited results for the final period 1 July 2010 to 31 December 2011 will be available in March 2012. The forecast for the full term of the Business Trust to 31 December 2011 is shown below. |
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| Lessons |
| Discretionary resources |
| While the R1,8 billion managed by the Business Trust was a larger sum than previously assembled by a privately initiated programme in South Africa, it was small in relation to government budgets. Its value was that it could be rapidly deployed on focussed initiatives at the discretion of the jointly governed Business Trust board. |
| Professional management |
| The decision by a large number of firms to pool their resources in a relatively large fund enabled the creation of an organisation dedicated to the professional management of those resources. |
| Business commitment |
| Unwavering business support demonstrated long-term commitment to South Africa and a willingness to cooperate in the pursuit of national objectives. |
| The value for government |
| Discretionary funding enabled the government to undertake the non-routine tasks that are required for bringing about change, but are seldom available. |
| The value for business |
| The funds pooled in the Business Trust added an important dimension to the substantial social investments made by the corporate sector. At less than 2% of annual social investment spending in South Africa, this funding enabled businesses to do together what they could not do alone. |
| Value for society |
| By combining the resources of business and government, the Business Trust was able to accelerate the achievement of national objectives for the benefit of society as a whole and especially the poor and needy people who participated in its programmes. |
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Unwavering business support demonstrated long-term commitment to South Africa and a willingness to cooperate in pursuit of national objectives. |
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