Philanthropy in South Africa
An African perspective
South African researchers Moyo and Ramsamy1 define African philanthropy as “surrendering oneself to the service of humanity while being resilient and absorbing the challenges associated with development and transformation.” These authors further argue that “in African cultures one’s neighbour cannot go hungry when the other could give help; this is reflected in African philanthropy. Giving and sharing is at the heart of philanthropy”.2
This definition reflects growing efforts across the continent to broaden the meaning of the term philanthropy to include the full spectrum of formal and informal giving practices3, such as:
It has been argued that overlooking these forms of localised giving and social capital serve to privilege the more widely recognised formal philanthropies, while relegating certain communities to being recipients of “help” rather than active agents of development.4
In South Africa5 and elsewhere on the continent6 there is also a growing body of literature that looks at the role of giving in the building of community. For example, Ubuntu7 is a particular inter-relational view of humanity that reflects long and deep traditions of mutual support within communities.
Philanthropic giving in South Africa: an overview
Looking at philanthropy in South Africa within the larger context of Africa, the groundbreaking report by the African Grantmakers Network, Sizing the Field8, identifies six trends9 in philanthropy on the continent:
- A continuing prevalence of ad hoc and informal models for giving across much of the continent due to sensitivities around how wealth is accumulated and displayed
- The lack of an enabling policy environment, including a dearth of tax incentives that might encourage a more strategic and structured philanthropy
- Limited, if any, links between different categories of philanthropy and the development community at large (the authors point out that philanthropists tend to operate in distinct silos that are isolated from both fellow philanthropists, the global philanthropic dialogue, development specialists and activists)
- Limited efforts to track and assess longer-term impact
- Limited but growing links to non-African donors active on the continent who have typically thought of African partners as primarily implementers in need of funding as opposed to local pools of resources capable of co-investing in shared priorities
- An emerging generation of entrepreneurial high net worth individuals (HNWIs) who are less inclined to completely separate their philanthropy from their businesses
In South Africa specifically, the philanthropy environment includes a number of broad stakeholder groups:
- Those who give philanthropic funds (“ordinary” South Africans, HNWI philanthropists, private Trusts and Foundations)
- Those who serve the funding and grantmaking sector (philanthropy advisors, wealth managers, legal and tax specialists, etc)
- Philanthropy promotion initiatives and organisations (as key to the development of a philanthropy infrastructure)
- The grantee organisations (without which funders would not be able to achieve their change objectives)
South African philanthropy from high and ultra high-net worth individuals (HNWI and UHNWI) and institutional structures, such as Trusts and Foundations, is charaterised by:
- A high degree of privacy and opacity, resulting in little accessible information about the size and scope of this giving
- A small pool of well-known Foundations, with the remainder preferring not to be publicly known for a range for reasons that include privacy, religious reasons, security and protection, and the avoidance of unsolicited approaches10
- No legal or state requirements for Foundation information concerning capital, endowments, or annual grant spend11 to be made public
- Little published information on South African philanthropic and donor Foundation practice, although this is fast changing as more research, discussion, writing and knowledge-sharing occurs
- New entities developing in support of philanthropy, including the recent establishment of a forum for South African Foundations and philanthropists
I think there are lots of different levels of philanthropy in South Africa; indigenous philanthropy, community philanthropy, where people take action in their communities and use what little resources they have… We certainly have a long history of philanthropic Foundations, some of them are quite substantial and there are new ones being set up all the time.*
Shelagh Gastrow, Director, GastrowBloch Philanthropies
Another source of information on funders and funding interests in South Africa is Inyathelo’s FundingFinder, a subscription-based database of local Foundations, corporate social investment funds, government grantmaking entities, and international Foundations.12
Of over 1,000 donor records, the donor database lists approximately 100 entities that operate as Trusts or Foundations in South Africa. However, the percentage this might represent of the total number of registered Trusts and Foundations, or the value they represent within an overall annual philanthropic spend in South Africa, remains unknown.
Drawing on information from the funding data base, it is stated that: “… Corporate South Africa is still the biggest funder of non-profits in South Africa. We derive 22% of our income from Business and CSI spend. Surprisingly, individuals are next, contributing 15% of our income. We are also generating 15% of our own income these days by “selling” products and services. Foreign independent donors and our government both provide 11% of our income, with South African Trusts giving 8% and the Lotteries 7%. Foreign state donors are down to 5% and other non-profits also contribute 5% of our income.”13
The business sector does not support human rights and social justice organisations because they don’t want to rock the boat … And a lot of companies depend on government for business … The BEE scorecard has something to do with it, in that business can’t count what they give to social justice. More and more companies will only do things that they can count on the scorecard.*
Colleen du Toit, CEO, Charities Aid Foundation Southern Africa
Key questions about South African philanthropy
Information is not readily available on the numbers, geographic footprints, foci and activities of Foundations and Trusts in South Africa. Important questions, often asked, but not yet substantially answered, include:
- What is the size and scope of philanthropy in South Africa?
- How many Trusts and Foundations exist for purposes of philanthropic funding?
- What is the endowment value of these Foundations?
- What is the annual grant spend of these Foundations?
- What are the levels of private wealth in South Africa and what is the potential for directing some of this wealth into philanthropy?
- What are the grantmaking areas most supported by philanthropy?
In addition to these more quantitative questions, a range of qualitative questions on giving attitudes and approaches have also been posed, including:
- How do South African high net worth individuals approach their giving?
- How and why do they select a cause or organisation to support?
- In technical terms, how do they make their donations or grants?
- To what extent do they employ strategy in their donating or grantmaking?
The legislative framework
Constructing a Developmental and Transformational Philanthropy in Africa, authored by the African Grant Makers Network (AGN) and the Southern African Trust (SAT), on legislative frameworks relating to philanthropy in seven countries in Africa, reports that none of the countries surveyed had a single coherent piece of legislation on philanthropy. Rather, the report indicates, “philanthropy is regulated by many statutes – financial, monetary, taxation and administrative among others. Philanthropy cuts across the regulatory and policy regimes of these countries.”14
Increasingly, as evidenced in the AGN and SAT report and the Hudson Institute’s Index of Philanthropic Freedom 201515, levels of regulation are rising and a tightening of the freedoms in philanthropy’s operating environment across the continent is taking place. As pointed out in the AGN and SAT report, “policies of the majority of the seven countries are steeped in a historical tradition or regulatory approach and logic that tends towards supervision and surveillance, compliance and punishment as opposed to responsible innovation, accountability, transparency and mutual trust.”16
The development of professional associations are part of efforts to engage in self-regulation. These professional bodies can negotiate with legislative frameworks governing philanthropy and raise the profile of self-regulating philanthropy professions. The AGN and SAT report further emphasises that “self-regulation bodies would also serve to
strengthen common values, standards, equity and equality within the sector.”17
Currently in South Africa, these forums include the Private Philanthropy Circle (now the Independent Philanthropy Association of South Africa) and the Philanthropy Service Providers Network. These bodies aim to engage government on improved legislation, an improved tax environment, and their capacity for self-regulation rather than a state-driven “compliance or punishment” environment.
During the period 2013 – 2014 the Private Philanthropy Circle, in partnership with Inyathelo: The South African Institute for Advancement, engaged the South African Treasury, the South African Revenue Services and other government departments in discussion around the development of a tax environment more enabling of philanthropic giving and funding.18
However, as reported in a 2014 Business Day article, the proposed Taxation Laws Amendment Bill is not necessarily the answer, and further work needs to be conducted in this area of philanthropy-related legislation.
There are many resources available to assist a prospective philanthropist in navigating the South African legislative framework that governs entity establishment, donations and tax benefits related to philanthropic giving. These resources include articles and downloads at www.nonprofitlawyer.co.za, a recent Council on Foundations overview of the legislative framework for Philanthropy in South Africa, and the AGN and SAT report on philanthropy-related legislative frameworks and transparency issues across a number of Southern African countries.
These resources variously cover the key aspects of, amongst others:
- The registration of a non-profit entity to establish a private Trust or Foundation
- The registration of such an entity with the South African Revenue Services as public benefit organisation (PBO) in order to derive tax exemptions for non-profit activities
- The registration of an entity with the Department for Social Development’s Nonprofit Directorate
- The tax environment; tax benefits and limits related to donations; eligibility for donation-related tax deduction certificates; annual spend required of a charitable trust relative to any Section 18(A) donations; issuing of Section 18(A) certificates; etc.
- The applicability of the NonProfit Organisations Act of 1997 to philanthropic Trusts and Foundations
An individual requiring specialist knowledge around the establishment of a Trust or Foundation, and the tax and other legislation governing the financial and general management thereof, would need to consult the appropriate wealth management advisor, grantmaking advisor, tax specialist or lawyer.
Areas of funding focus
Research shows that philanthropists, Trusts and Foundations support a diverse range of projects in a variety of forms. However, the major funding focus areas fall into three broad categories: education, welfare and health.19
Statistics derived from the Inyathelo FundingFinder20, of approximately 1,000 donor records, demonstrate that:
- Education still tops the choice of sectors supported in South Africa by donors across the board (corporate social investment, private local, international etc) at 63% of grantmakers on the database
- Health is second on the list at 48% of funders on the database
- Children are the third most supported sector at 32%
The FundingFinder database also shows21 that the top four non-profit activities supported by grantmakers in South Africa are:
- Capacity development and training
- Educational activities
- Bursary support for students
- Partnerships or collaborations between non-profits
Other types of funded activity include interventions aimed at systemic change and longer-term social impact, such as:
- Advocacy campaigns
- Public interest litigation
- Community mobilisation
- Activist training
- Provision of access to justice and legal support
Philanthropy… is not about giving, it’s not about charity, it’s not about giving back. Philanthropy for me is about reciprocity and resilience, and in the African context this is the quintessential form of giving… It’s about reciprocity, it’s about redistribution, it’s about actually helping one another and it’s about stuff that’s on the ground.*
Gerry Salole, European Foundation Centre
Motivations for giving
It is widely reported that most philanthropists are motivated by the need to “make a difference”, “give back”, and “contribute to society”.22
The Coalition for Civil Society Resource Mobilisation report of 2012 reports a motivation amongst Foundations and other grantmakers (not widely reflected in other studies) to “improve the lives of people in need and achieve social justice”23.
The Citadel report reflects the following philanthropic motivations or drivers, based on survey research amongst high and ultra-high net worth individuals:
- Awareness of the unavoidable need for giving
- The importance of the status associated with being philanthropic and/or having one’s own Foundation
- The self-actualisation factor of feeling “good inside”
- Responding to a significant life event that sparks interest in a particular cause
- The desire to maintain explicit family values
- The search for a greater purpose in life (related to life stage)
- A religious motivation
- The desire to contribute to creating a stable society24
Research into the diversity of motivations for philanthropy, over time and between funder types, raises interesting comparisons between individuals and formal giving entities (such as Foundations). It also serves to highlight the shifts in the stated giving objectives of Foundations over time. In the Coalition report the authors show that Foundation giving was previously more focused on “charity and welfare-based interventions, with less focus on advocacy, lobbying and litigation.”25
Philanthropy should not be about asking ‘What can I get out of this?’. It should be about asking ‘What contribution can I make to society?’*
Kgotso Schoeman, CEO, Kagiso Trust
As recently as 2013, it was still being reported that “even in South Africa, which has far and away the best developed HNWI (high-net-worth individuals) philanthropic sector, there is no single comprehensive approach to tracking giving by this category … apart from the annual Forbes ranking of Africa’s wealthiest individuals, there is relatively little data on wealthy families across the continent.”26 However, while South African philanthropy as a field of study remains limited and underfunded relative to mature philanthropic markets such as in the United States and Britain, there is an increase in quantitative and qualitative research and publications.
In research conducted in 2012 by TrustAfrica and the African Grantmakers Network, Southern Africa was determined as home to the greatest number of HNWI philanthropists, “reflecting its longer tradition of formalised philanthropy as well as its greater concentration of wealthy individuals and families.”27
Generally, research has been conducted and published in the following forms:
- Through academic research28
- By postgraduate research students from within various academic disciplines29
- By banks and private wealth management companies (both local and international)30
- By philanthropy support organisations31
This research has been conducted using a range of methodologies and at various levels of academic rigour. Some examples of qualitative and quantitative research reports include:
- Human Sciences Research Council report on Family Foundations
- Judge and Jones’ report32 on HNWI giving and the potential for support to social justice initiatives
- The BoE and Nedbank Private Wealth Giving Reports (which quantified some important baseline wealth and giving information, using self-reporting methodologies).
A number of reasons have been put forward to explain the difficulties in accessing financial information, grant spend, and grantee details from South African Trusts, Foundations and HNWIs. One reason, referred to in the AGN and SAT report, is that among high-net-worth individuals across the continent “there may be sensitivity about reporting on and quantifying philanthropic activity given sensitivities about wealth, the source of funds, and potential tax implications linked to reporting”.33 The report suggests that this may lead to substantive under-reporting on the full scope of HNWI philanthropy on the continent. The authors caution that, going forward, “any efforts at deepening the rigor of our understanding of this category will need to deal with sensitivities around identifying HNWIs and getting them to speak openly about their philanthropic activity”.34
The authors of Sizing the Field further reference the inaccessibility of data from tax authorities, suggesting that “a more detailed mapping of activity will entail conducting a trusted and comprehensive survey that would aim to get HNWIs to self-report on covering a number of different metrics, including: sector of focus, amount of money contributed, number of beneficiaries, source of funds, governance structure, strategy, etc.”35
NPOs have been deemed to be struggling to secure their resourcing and financial sustainability for some time.36 A report by the Coalition for Civil Society Sustainability addresses this challenge, and identifies some of the reasons for these funding struggles, including:
- Declining funding from international sources
- Organisational leadership and identity shifts
- The apparent unwillingness of government to meet its responsibilities to the sector37
Legally established non-profit entities rely on donor funding to be able to implement their programmes. It is these kinds of organisations, as well as less formalised community-based organisations, that have struggled signficantly with the shifting funding environment over the last decade or so.38
Of particular interest, as a major player in the field of funding in South Africa, are government grants and state-run funding entities. The authors of the Coalition report argue that government has been remiss “about its obligations regarding legislated and budgeted resource flows to CSOs”.39 This is supported by research presented by the Funding Practice Alliance (FPA) in the report: Meeting their Mandates?, which specifically examined the funding practices and efficacy of the National Lotteries Board (NLB)40 and the National Development Agency (NDA).41
Both of these statutory entities were established to fund initiatives aimed at, for the NLB, supporting charities; sport and recreation; and arts, culture and heritage; and, for the NDA, at eradicating poverty, and addressing the causes of poverty.
The FPA report is a thorough indictment of the extent to which both funding agencies had failed to meet their mandates. The report also makes concrete proposals on how this failure could be addressed towards more effective funding support for civil society organisations. Research and publications have also focused on the various forms, motivations, politics and legislative frameworks of philanthropy in South Africa and at a continent-wide and global level.42
These studies have included research into the giving features and trends amongst South Africa’s white elite, and its growing black elite, as well as into their perspectives on, and approaches to giving. As noted in the BoE Giving Report “a spectrum of giving clearly exists, ranging from incidental charity at one end to professionalised strategic giving at the other.”43 Some research has focused on whether this giving takes place more firmly in a charitable mindset, or whether we are seeing a shift to more strategic investment of philanthropic funding geared towards tackling the big social challenges arising from structural inequalities.
The Hudson Index of Philanthropic Freedom’s 2013 review of South Africa indicates that “as the euphoria of our new democracy wanes, and people begin to see the scale of the problems that face the country, more people are exploring how philanthropy can assist in solving some of these problems. At the same time, they are moving away from a paradigm of charitable giving to meet immediate needs and looking towards making systemic changes with clear outcomes and impact.”44
Philanthropic professional bodies
A network of philanthropy service providers was established in 2013 and convenes regularly. This forum, the Philanthropy Service Providers Network (PSPN), is important for its potential to influence the grantmaking strategies and practices of philanthropists and philanthropies towards more impactful funding for long-term social development and systemic change.
Such a network provides opportunities for the development of industry ethics, a code of conduct, standards, protocols and practices. While not essential to the business of advising philanthropists45, such professional standards create the space to positively shape local grantmaking in South Africa. The establishment of South Africa’s Private Philanthropy Circle (PPC) also marked a milestone in the growth of will amongst local funders to engage in ongoing discussions and knowledge-sharing with other practitioners. Citadel Wealth Management published a report46 which shares the early story of the PPC.
At the outset, the PPC forums focused on donor practices such as:
- Evaluation and monitoring
- The need to fund capacity-building initiatives and organisational core costs
- Exit strategies
In its third year, the PPC started to focus more specifically on issues impacting on the philanthropy operating environment, such as working with Treasury regarding taxation law amendments. The PPC subsequently expanded to include international philanthropic Foundations with offices in South Africa. Now changed to the Independent Philanthropy Association of South Africa (IPASA), this more formal association represents those in the philanthropy sector who seek engagement with similar local and international funders. A range of other initiatives have developed over the last decade in South Africa, aimed at building knowledge about philanthropy and energising the will to give, particularly in support of social justice.
These include, amongst others:
- The Southern Africa Trust Drivers of Change Awards
- Inyathelo Philanthropy Awards
- The African Grantmakers Network
- The Social Justice Initiative (SJI)
- The Other Foundation
- Philanthropy Service Providers Network (PSPN)
How can we recognise what people are already doing, instead of saying that there is little philanthropy in the country? *
Vuyiswa Sidzumo, Director, C.S. Mott Foundation (South Africa)