Coen Welsh | Nov 14, 2017 | 0
Soft investments must also contribute to the bottom line
Corporate Social Investment is the new buzzword. It is the magic answer to all our social shortcomings, it is the wave of expectations that now floods every aspect of the business environment, and it helps us on our way to entitlement where we become more and more attuned to the misguided idea that getting something for nothing is the way the world works.
Corporate Social Investment is a noble thing. There is nothing wrong with helping communities to improve their lives, with showing kindness and charity, and with relaying some of the benefit a company accrues by operating in a certain community, back to that community.
The exploitative side of Corporate Social Investment is that it is just another form of tax. If a company is not seen as being CSI compliant and willing, it is penalised when it comes to government tenders, prospecting licences, trade licences, regulatory approval, and human resources management. In short, companies who do not practise CSI, soon find themselves in hot water. But essentially it remains a tax.
Of course, this observation begs the question, What part of the normal tax companies pay actually goes to social investment? The answer can not be anything but philosophical since such a large part of the budget is spent on social categories like education, health and housing. But how much end up in tangible projects and not as salaries?
However, it is not the ethical side of CSI that occupies my mind, it is the way companies handle every new additional claim on their revenues in an attempt to stem the tide of expectations originating from the something for nothing premise.
It is not easy to draw up a list of all the claims on companies in various guises over, say the past twenty years. It is a long list, and it will include the many poverty alleviation strategies we have encountered under how many different names.
But it seems companies, and entrepreneurs, do not survive without reason. In short, they are successful because they are resourceful. And if a company or an entrepreneur does not possess this quality first, over the long-term, failing any government hand-outs, fishing concessions, mining concessions, protected trade licenses, and nepotism and graft, it will not survive. Therefore, entities that are in business to generate a profit so that they can pay tax, must come up with resourceful ways to handle, and survive, the plethora of claims on their revenue.
Renaming and rebranding are just two such simple, but very effective measures to maintain a publishable CSI window, and to ensure that the company stays within the budget by which it is operated.
It was quire revealing to learn recently that many companies, including parastatals, do not draft a new budget or change an existing board-approved one, when a new claim for Corporate Social Investment arises. They simply rename the existing allocation to fit whatever new prosperity plan is put on the table.
In a sense, this is just re-allocating the existing social spend, to fit a new profile, then splash it lavishly, and pay gullible public relations people to spread the message. Voila, Corporate Social Investment accomplished, and everybody is happy. Nobody loses faith and the drivers of the new claims can go back and tell their entitled constituency, so much and so much have been pledged by such and such a company.
Of course, the company must make it look tangible and real. That is where the PR parade comes in handy. But remember, companies are not fond of giving stuff away for nothing. Whether it is a fancy corporate gift, an outright bribe, or support on the community side, they always want a return on investment. Serious companies with serious CSI budgets actually employ analysts to research and calculate the multiplier effect of every buck they spend on so-called social investments. That is the sole reason why they pick their projects so carefully. This is particularly relevant for a new company that does not make a profit yet.
And even parastatals are forced to do the same. The hypocrisy of it all is that parastatals have the government as shareholder, whose interest they must protect. I believe this is perhaps one of the reasons why parastatals’ CSI is so modest compared to privately owned companies. But there is no way I can prove this.
Perhaps the one good aspect of CSI is that it is a subtle bribe in the form of an additional tax that hopefully benefits more than just one individual and his cronies. At least, the PR people make sure it happens and stays in the open.