Report underlines the risks of Empowerment Endowment governance failure

25 October 2018 |

An independent research report carried out by Intellidex and funded by Tshikululu Social Investments has highlighted the risks facing Empowerment Endowments, corporate social investment trusts and funds when effective governance is not in place.

Based on a six-month research exercise into the charitable and community components of the 100 largest JSE companies’ empowerment deals implemented since 2002, the recently released Understanding Empowerment Endowments Report followed an earlier research report into the scale of BEE foundations.

Coming at a time when the national discourse has shifted to fundamental questions about the ethics of BEE deals, the report included governance as one of its focus areas. It studied 25 trusts and foundations created and endowed under black economic empowerment policies, with a collective value of around R37 billion.

Tracey Henry, CEO of Tshikululu Social Investments, says the report found several examples of exemplary governance among the trusts and funds studied, but also cited examples in which governance failed. “In those cases, the trusts ended up defunct,” she says.

Noting the guidelines of the Independent Code of Governance for Non-Profit Organisations, Henry says robust governance and risk management frameworks are crucial for the success of any social investment initiative or organisation. “Governance lies at the heart of strategic social investment, and it cannot be neglected, or worse – deliberately flouted,” she says. “Social investors must have sound governance and ethical frameworks in place to guide their decisions; and any practices based on unethical and corrupt motives require the highest sanction.”

About Tshikululu Social Investments

 Started 20 years ago, Tshikululu Social Investments is South Africa’s leading corporate social investment manager. Led by a team of innovators, strategists and specialists, Tshikululu provides private sector entities with a one-stop service to undertake comprehensive and strategic social investment and community gratn-making in line with national and international development trends. This ensures impact is both measurable and meaningful.

 For more information on Tshikululu visit www.tshikululu.org.za