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Johannesburg - While criticism at claims made about community development and project delivery usually focuses on the public sector, its private corporate social investment (CSI) counterpart is often the scene of sloppy reporting with low standards of measuring the effects of work done.
This has practical and harmful effects on community upliftment efforts, and places company reputations at risk, says a study by CSI research consultancy, Trialogue.
The study has only 12 out of the 72 companies on the JSE Social Responsibility Index rated as "good" on their CSI reporting, according to the new analyses. No companies were rated "excellent".
According to the broader survey, South Africa's private sector spent R8.2bn on external social causes in 2014, a marginal decline of 2% on last year and the first contraction since the surveys begun.
Meanwhile, standards applied by many companies to their public CSI reporting often lags the rigour that their other types of public accounting insist on, sometimes to the extent of being misleading, including by making claims that cannot have been properly tested or confirmed.
Most companies (around 90%) measure - or hand over this task to the social development organisations that they fund - how effective is company largesse when it is spent on the recipient oganisation's most important projects.
Fully 64% of companies insist that they measure the developmental impact of projects that they fund. Yet Trialogue's research shows that only 2% of CSI budgets are on average directed to monitoring and evaluation of project effectiveness.
Companies only scored an average of 1.7 out of five on the "formal project impact assessment" criterion, with only 39% of companies mentioning this basic foundation of social investment reporting at all.
"Where this basic diligence is absent, some parts of corporate social investment reporting have to be taken on faith, a poor reflection on some company attitudes to measuring community involvement, and inevitably misleading in resultant corporate claims in some cases," said Trialogue director Nick Rockey.
"A murkiness in some reporting must, unfortunately, tar other, more robust, claims made by others in the private sector - with the difference between solid and presumed results not always being immediately obvious to the public."
Public demands
He pointed out that most CSI grantmakers have many public demands on them, and thus tend to spread their resources thinly. In 2014 this meant that nearly three-quarters (73%) of respondent companies supported more than 10 organisations, while a significant 12% gave to more than 100 organisations and projects.
On average, companies support organisations in four or five developmental sectors, which range widely from health to education to welfare to entrepreneurial development, and to the arts and similar.
Making the most effective social investments then relies to a great degree on quality of impact reporting, given that the average number of dedicated CSI employees in corporate CSI foundations and departments is only seven - to serve often vast areas, sometimes nationally. More than a quarter (+26%) of companies have only two or fewer dedicated CSI staff members.
Meanwhile, developmental non-profit organisations being funded through CSI say that they are often required by funding companies to self-evaluate their effectiveness. Thus NPOs report spending an average 40 hours a month compiling evaluations and reports for their donors, and a further 88 hours each month pitching to donors for funding support. In this vortex lie obvious pressures to distortion of impact measurement and subsequent accounting of this.
