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Investing in bricks and mortar

Philanthropy undertaken with big vision requires an appetite for big risk. The promise of success is almost always accompanied by the potential for great failure. Philanthropy that is able to accept high risk in the pursuit of a bold vision may well be the transformative mechanism that a highly pressured society requires.

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Sadly, many donors do not support capital projects and we would urge organisations to consider the developmental impact that this support can have on our society*.

There are several examples of South African philanthropists that have fully or significantly contributed to large building projects. For example:

Further perspectives on Atlantic’s capital grantmaking can be accesssed here

Named facilities can be seen at many local universities, schools, sports venues and hospitals. These facilities house libraries, museums, medical and research amenities, and are home to programmes in sport, education, science, humanities, and the performing and creative arts. These buildings stand testament to the enduring value of philanthropy in support of capital programmes.

Most philanthropists would tell you not to invest in buildings because they will then belong to somebody else. But Atlantic was saying that buildings have ghosts and dreams and they can be associated with passion, and with the kinds of things that governments and other investors are not going for.*

Albie Sachs, Former Justice of the Constitutional Court
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Housing Dreams, Building Futures: Investing in Bricks and Mortar

In South Africa, post democracy, as the inequality gap widens and the consequences of grinding poverty, joblessness and inadequate service delivery adversely affect the majority of the population, the emphasis of philanthropy has become focused on providing immediate relief to urgent social problems.

Private philanthropy has mostly abandoned large capital investment, preferring to stream funding to programmes that render immediate and human-scale outcomes.

Corporate philanthropy, which during apartheid made solid investments in bricks and mortar, is no longer willing to consider this form of funding. This is in part because the business environment has undergone a series of regulatory initiatives, such as the Broad-based Black Economic Empowerment Codes (B-BBEE), instituted to widen the reach of corporate giving that in some instances has had the opposite effect.24

Support for buildings comes with a particular set of risks. There include issues of maintenance, of usage, and the risk of the building becoming obsolete. Yet, as with all audacious projects, the counter-side of those risks are the possibilities.

With a building a landscape can be transformed, dreams can be translated into programmes of learning, research and education, testament to human ingenuity and passion can be made tangible and stand in strong form and design for generations of people to work, develop, dream and create. Capital investment leaves more than a structure. Buildings curate by their very presence the intangible imprints of the activity that they have housed over time.

Some features of The Atlantic Philanthropies capital projects
  • Between 2000 and 2014 Atlantic supported 21 capital projects in South Africa with a total investment of R494m
  • Capital projects account for almost one third of Atlantic’s total grantmaking of $6.8 billion, as of August 201425
  • Projects range across education, medicine, history, memory, law, and the arts in Gauteng, the Western Cape, KwaZulu-Natal, the Eastern Cape and the North West Province
  • Of the 21 capital projects, 14 are directly linked to bricks and mortar and 9 have attracted significant investment by both international and local partners
  • Several have government departments as partners and a strong contingent of local funders. The operating theatres at the Red Cross War Memorial Children’s Hospital, for example, garnered significant funding from South African Foundations, Trusts and corporates in addition to the international funders such as Atlantic and Adcock Ingram
  • The Life Sciences Building at the University of the Western Cape (UWC) is an example of how vision, commitment and influence can be leveraged to great effect. The Rector of UWC, Brian O’Connell and Chuck Feeney, the Founder of Atlantic, had an aligning vision to build a state of the art science facility at the university. Atlantic’s investment, although substantial was not the full cost of the project. The Department of Education at the time had placed a moratorium on providing funding for capital projects and had not shown any sign of being swayed. A meeting between representatives from UWC, the national Department of Education and Atlantic resulted in the freeze being lifted and a partnership agreement entered into which saw joint commitment to bringing the project to completion
  • Atlantic invested in buildings to support the future sustainability of its long-time grantees. These include the Inyathelo Civil Society Sustainability Centre, the Kutlwanong Democracy Centre, the Khayelitsha Youth and Community Centre Trust and the Treatment Action Campaign Further perspectives on Atlantic’s capital grantmaking can be accessed here.

South African philanthropy does have the resources to support large-scale capital projects and, in some cases, has joined with great generosity. Government has demonstrated willingness to fund capital projects in collaboration with other funders. This is an inclination with the potential to reap a solid working model for South African philanthropy and government to bring to fruition imaginative public interest capital projects.

If executed effectively, philanthropic support for a building is not the purchase of a product. It’s an investment in enterprise, a long-term underwriting of whatever goes on inside.26