The Rationale for Establishing Independent Corporate Foundations

By Fia van Rensburg, Knowledge Manager at IPASA 

Diverse transformation journeys

One size definitely does not fit all, and generalisations should be avoided. That, in short, is what IPASA has learned when we zoomed in to the workings and realities of three of our members who have their origins in business and Corporate Social Investment entities. Conversations with three IPASA members who are constituted as independent corporate foundations – the Momentum Metropolitan Foundation, the Lefa la Rona Trust, and the DO MORE FOUNDATION – revealed a rich diversity of origins, approaches, and ways of expanding their impact.

The nature of the businesses from which these now independent funders have originated – the insurance sector, mining, and food production – clearly influenced their focus, and continues to do so. The impetus for these companies to become independent funder entities also vary:

• Following the Momentum and Metropolitan merger in 2010, the Momentum Metropolitan Foundation (MMF) was set up as an independent Non-profit Company (NPC) that integrates the corporate social investment initiatives of Momentum Metropolitan Holdings (MMH).ii
• The Lefa La Rona Trust is part of six independent Community Development Trusts that were established from 2011 as sustainable and empowered structures with shareholding directly in Anglo American Platinum (AAP). The novel ‘Project Alchemy’ emanated from AAP’s ‘Reimagining Mining’ vision of facilitating transformation and socio-economic development through communities’ equity ownership.ll
• In 2017 RCL FOODS established the DO MORE FOUNDATION as an independently-run, separately- audited non-profit organization. The establishment of the foundation actualised a significant, conscious shift in RCL FOODS’ vision for, and approach to, sustainable community development in South Africa.

See the Text Boxes below for more information on these organisations’ transformation and focus areas.

Focus areas and ways of working

These IPASA members cover different funding focus areas, and there are also vast differences in the identities of the three entities: MMF regards themselves as a CSI funder; Lefa La Rona forms part of a set of six community development Trusts that pursue common objectives as development facilitators; and the DO MORE FOUNDATION has evolved into a backbone organisation.

What they have in common is that their respective transitioning processes have enabled them to work more strategically, focusing on ways to achieve systemic change in their respective funding focus areas, and to be more attuned to the needs of the communities that they serve. They do, however, maintain a close relationship with their mother companies.

• Tshego Bokaba, Group CSI Manager, MMF says: “The MMF’s approach to CSI is strategic. We believe that effective CSI unlocks opportunities for communities and businesses, and the Foundation aims to align its CSI efforts with the country’s priorities and the company’s strategic direction. Remaining close and partnering with the Group is key to the Foundation’s strategic objectives. Where possible the Foundation aligns its CSI mandate to that of the Group, hence remaining close and understanding the business is important for us. We are strategic – our scope and approach are narrowed to what is important and pressing to the country: youth unemployment. To truly tackle what seems an impossible task, requires a constant interrogation and addressing of the roots of the problem instead of the symptoms. We believe our insights and research-led approach are what enable us to play to our strengths.” 

• According to Reza Bardien, Operations Manager of Lefa La Rona Trust, “The Alchemy vision of ‘Sustainable and Thriving Communities, Through and Beyond Mining’ was created by AAP, focusing specifically on AAP’s host communities. The mandate of the six independent Alchemy Community Development Trusts is to develop the strategies to deliver on the original vision in their capacity as development agents, thereby fulfilling the Founder’s long-term vision across the life course of its host communities. Facilitating ‘felt impact’ is guided by our ‘Impact by Design’ framework, which is directly influenced and designed by affected communities.”

• Warren Farrer, CEO of the DO MORE FOUNDATION and Group CSI Manager at RCL FOODS, articulates the Foundation’s strategic positioning: “RCL FOODS recognised that some potential partners were hesitant to collaborate directly with a corporate entity, so we established the Foundation as a non-profit to facilitate broader and more effective connections, ranging from national government to community levels. This separate identity also allows other organisations to support our initiatives without the concern that their contributions are benefiting RCL FOODS directly. Our approach blends social entrepreneurship with strategic corporate social investment.”

Balancing connectedness and independence  

Plus-points for these entities are that their governance frameworks are clear, but the level of involvement of the Boards of Directors in strategy operationalization differs.

• According to Tshego Bokaba of MMF, their Board of Directors are “responsible for oversight and governance of the Foundation. In addition, the MMF has access to corporate resources for operational support including monitoring, evaluation and learning (MEL).

• The Board of directors of the DO MORE FOUNDATION, on the other hand, focuses on governance and strategic connections that support the Foundation’s work, while granting the Foundation complete freedom to take decisions on projects and programmes. This autonomy enables the Foundation to be operationally agile, responsive to the needs of the communities it serves, and most importantly to take risks and innovate. “If I look at the amount of innovation that we do, I can’t think of failures, because I don’t dwell on them, and because there’s a lot more successes than there are failures”, says Warren Farrer.

• The road to autonomy for Lefa La Rona and the five other Trusts is somewhat lengthier and more complicated – a four-phase implementation plan over a period of 30 years is aimed at leading the six Trusts to ‘full autonomy’. “With each phase, reliance on the Founder’s capacity, resources and support is gradually transferred to each independent Community Development Trust. During the first phase of the transition (years 0 to 3), the Founder’s support and resourcing was direct and intensive. All the Alchemy Trusts are now in the third phase of the transition (years 11 to 30) and have little reliance on the Founder nor its peer Trusts, while collaboration remains intuitive and crucial. However, the Founder remains available and accessible to assist the Trusts when requested to do so on a case-by-case basis, including as a minority Trustee on each Board. Lefa Le Rona (LLR) Trust, as the first Alchemy Trust established, plays an oversight, supportive and enabling role as well as a conduit between the Alchemy Trusts and the Founder “, says Reza Bardien.

Added benefits and opportunities   

A wider range of assets and opportunities are available to these types of entities, through their close relationships with the businesses from which they originate. Some examples are:

• The MMF has been able to contribute towards the company’s talent-sourcing strategy, where some of the young people in the MMF’s ICT programmes get absorbed by the business, because MMF purposefully invests in skills that the company deems scarce and critical for business.

• The DO MORE FOUNDATION is also using the manufacturing capacity of RCL FOODS to produce the nutritionally fortified DO MORE sorghum porridge that the Foundation uses to feed in excess of 30,000 children daily. RCL FOODS has incorporated the DO MORE brand on all its Sunbake packaging (over 90m loaves of bread) to share how RCL FOODS supports the community.

• The Alchemy Trusts were established in addition to AAP’s license to operate obligations via its Social Labour Plans. Through open collaboration that includes a data-driven approach, with a deep understanding of the development requirements of and with respective mining communities, as well coordinated and transparent implementation, we are able to plan for increased, systemic and long term ‘impact by design’ across the life-course of approximately 5,2M community members.

These foundations are also using their independent status to enhance collaboration.

• The MMF sees collaboration as one of the Foundation’s key enablers. “It is key to the Foundation’s ability to increasing the scale (reach) of the impact of our programmes – without leveraging collaboration and partnerships we will not be able to move the needle in addressing the unemployment challenge. We all know that collaboration does not come easy. It is complex, but if done right, collaboration has the potential to see the sector shifting the needle in areas where we are currently struggling to see a meaningful and transformative impact of our efforts“, says Tshego Bokaba.

• On a practical level, Reza Bardien appreciates Lefa La Rona Trust’s ability to implement “a fresh approach for the Alchemy Trusts, unencumbered by the sometimes-challenging relationship that AAP had with its host communities. As direct shareholders in AAP via the Trusts, as well as holding the majority decision making power on each of the Trusts’ Boards [¹], communities are in a unique position to define, have access to and direct resources toward a co-created, shared vision of the affected community…the 30+-year time window, as well as the life-course approach, guided by the unique ‘Impact by Design’ methodology allows us to focus on building broad based community resilience and capacity to benefit from incremental and clearly defined impactful interventions. Our life-course approach enables and requires us to partner with a wide range of co-resourcing partners, including those that have specific focus areas.”

• The DO MORE FOUNDATION has strategically leveraged its status as an independent foundation and non-profit organisation to attract funding from other corporates and partners. This approach has been so successful that RCL FOODS’ contribution, which has not declined, now constitutes less than 20 percent of the Foundation’s community investment. According to Warren Farrer, “Their contributions enable other corporates to join us, allowing us to invest significantly more in communities. What is not accounted for is the collective impact of our work at community level. Because of that work, other organisations now bring their own funders and services into these communities. That is the collective impact of our efforts.”

Limitless opportunities

The full extent of opportunities that the independent status of these foundations has unlocked cannot be covered in an article like this. We provided a glimpse into the endless opportunities that independent funders with a CSI background can explore. It is evident that the constraints of CSI foundations are significantly overshadowed by the multitude of possibilities that their symbiotic relationships with their companies of origin offer.

Transforming from corporate social investment entities to independent funders

[¹]The Boards consist of five community Trustees, two Founder Trustees and one Independent Trustee.