FIRSTRAND EMPOWERMENT FOUNDATION (FREF) DUE DILIGENCE
The FirstRand Empowerment Foundation (FREF) was established in 2005 as part of the FirstRand Broad-Based Black Economic Empowerment (B-BBEE) transaction.
In 2016, Tshikululu provided the FirstRand Empowerment Foundation (FREF) with a comprehensive due diligence review of its partners and provided the assurance the Foundation required to invest in these organisations
In 2016, the FirstRand Empowerment Foundation (FREF), under the management of Tshikululu, scaled up its social investment portfolio. Like its partner, the FirstRand Foundation, it followed the approach of Systemic Social Investment, which focuses on finding meaningful leverage points to drive systemic change on a large-scale in South Africa. In line with Tshikululu’s commitment to the optimal management of risk in developing solutions with positive social impact for all stakeholders, the trustees wanted to establish a holistic understanding of the operational and governance structures of all potential partners.
Systemic Social Investment, an idea conceptualised by Tshikululu, requires its partners to solve problems in a unique and innovative way, often meaning that investment is of a ‘high-risk’ nature.
Using Tshikululu’s extensive legal, risk, compliance and finance knowledge, a due diligence review of all relevant partners was conducted.
Tshikululu’s Risk and Legal department conducted an extensive assessment of the governance and control structures of all potential partners of the FirstRand Empowerment Foundation including:
• A review of the organisation including its current management structure and a detailed King IV Code gap assessment
• Assessment of governance structures
• Regulatory and legal compliance
• Financial overview including as assessment of the organisation’s bank and cash management policies, grant income, expense cycle and payroll cycle
• Assessment of significant operational cycles
A detailed initial report on each potential partner was presented by Tshikululu to trustees along with findings and proposed conditions. This allowed trustees time to reflect and ask further questions. Subsequent to this, a high-level of engagement took place between the potential partners and Tshikululu. This gave the management of the organisations time to comment on Tshikululu’s findings and to implement the necessary changes. Wherever possible, in line with Tshikululu’s commitment to empowering the development sector in South Africa, advice and mentorship was provided.
A follow-up assessment was then presented to trustees. This detailed the follow-up actions undertaken by organisations. Tshikululu’s innate knowledge of these organisations, borne out of the detailed due diligence process that had been undertaken, allowed them to provide trustees with a detailed recommendation as to whether investment in the organisations should proceed or not.
The result was that when trustees invested the money, even when related to a high-risk project, they could do so with the utmost confidence.
Through their expertise and partnerships, Tshikululu designs and implements sustainable and measurable social investment solutions with integrity and the highest level of ethics.