Local trusts pack billions in B-BBEE spending power

South Africa’s empowerment endowment trusts have a collective value in the tens of billions, with the potential for significant black economic empowerment impact, a new study has found.

A recent independent research report carried out by Intellidex and funded by Tshikululu Social Investments has found that, if managed well, corporate funds and foundations focused on black economic empowerment could drive sweeping transformation in South Africa.

The report – delving into B-BBEE foundations – analysed 25 trusts and foundations created and endowed under black economic empowerment policies.

The collective value of these 25 trusts alone is about R37 billion, with the funds currently focusing their efforts largely on education, supplier and entrepreneurship development programmes and support of social innovation projects benefiting previously disadvantaged individuals, in line with the National Development Plan.

Analysing fund disbursement in four distinct types of fund or foundation, the report found that merged group trusts had collectively committed R388m on projects to date, with R86.1m spent last year. Nested group funds had a total public benefit spend of R201.5m to date and spent R174m last year. Outsourced group trusts had spent R532m to date and nearly R204m last year, and semi-autonomous group trusts had collectively spent R2.4bn and R222.5m in 2017. The figures signal a 44% growth in overall budgets for 2018, across all of the funds studied.

“These are substantial sums that, if managed well, will make an enormous contribution to the future of the country, particularly in areas that are most deprived,” says Tracey Henry, CEO of Tshikululu Social Investments.

However, to deliver on their full potential, funds and foundations have to be managed correctly and, ideally, collaborate, says Henry. “With effective cooperation and knowledge sharing, as well as a focused and strategic approach to social investment, South Africa could maximise the impact of the pool of funds available for black economic empowerment and transformation.”