Legislate, and all will be right with CSI — or will it?

39_Halima_MahomedBy Halima Mahomed

The idea of using regulatory instruments to increase Corporate Social Investment (CSI) is gaining traction. South Africa has in place regulation which, though not its primary intention, incentivises CSI. Mauritius, Indonesia and India have more directly-intentioned regulations mandating CSI giving, and others are exploring the notion.

A new report, A Tangled Web: The Perceived Influence of Broad-Based Black Economic Empowerment Legislation on Corporate Social Investment in South Africa, raises the issue that while legislation is certainly one avenue to be considered, the mere presence of a regulation alone is inadequate. While many issues emerge from this report, here I will focus on two, which speak to the need for CSI regulation to be both integrated and grounded.

For CSI regulation to have an effect on impact (rather than on just how much money is spent) it needs to be grounded in intensive consultation that caters to the needs and goals of the civil society sector it envisions supporting, as well as the motivations of the corporate sector it aims to influence. The South Africa case does not appear to have engaged with the regulation from the standpoint of how it may best support civil society work, but rather through a narrow economic empowerment agenda. This has had several repercussions, from an inhibiting effect on the nature and quality of CSI to a preoccupation with compliance and outputs, rather than impact. The South Africa experience further reflects that any CSI incentive operating in isolation is sorely limited in influence and scope, and makes a strong justification for the need to locate and link regulatory measures to a broad development agenda, for regulation to be integrated and part of a holistic array of incentives, and for better understanding on how regulatory incentives interplay with existing internal motivations that drive CSI.

Is it all bad? Certainly not! Can regulation have positive spin-offs? Certainly yes! But what the South Africa example brings to the fore is that this is a complex and nuanced undertaking, where cause and effect are not at all a linear equation.

Halima Mahomed is an Independent Philanthropy Consultant. Download the report, A Tangled Web: The Perceived Influence of Broad-Based Black Economic Empowerment Legislation on Corporate Social Investment in South Africa, from the WINGS Knowledge Center.

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