Tshikululu: Serious Social Investing workshop LEARNING FROM 40 YEARS OF CSI

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1 1 Tshikululu: Serious Social Investing workshop By Godfrey Gomwe LEARNING FROM 40 YEARS OF CSI Good afternoon ladies and gentleman. Thank you for the privilege to address you. This afternoon I would like to:- 1. Give you a flavour of the Anglo American strategy and how it relates to CSI. 2. Paint a picture, specifically, of the history of the Chairman s fund. 3. Outline some examples of the Chairman s Fund work and, in the process, highlight the reasons for success. 4. Finally, a view of the future and the next 40 years, before closing. Background and Strategy of Anglo American Anglo American is one of the world s largest diversified mining groups and our ambition is to be the leading global mining company. We believe that our primary purpose is to provide our shareholders with sustainable returns above those of our direct competitors. This has been best achieved over the long term by earning unparalleled trust and commitment from our employees and partners, who include governments, communities, customers and suppliers with whom we work. The words leading global mining company implies that we have to be, and remain, the investment, partner and employer of choice. In line with this philosophy of investment and partnership is Anglo American s corporate social investment, or CSI. The Group has a long and distinguished CSI history, dating back over 40 years, and has put in place CSI initiatives long before any other mining company deemed it necessary, appropriate or fashionable. The initiatives put in place by Anglo American predate any enforced current day legislation. Today, Anglo American is still South Africa s largest supporter of CSI, working closely with the government and other stakeholders to create a better future for all. Central to this CSI framework has been the Anglo American Chairman s Fund, which has emerged as the first professionally managed CSI fund in South Africa. Over the years, the fund has undergone the sort of organisational and structural change that could be expected of a dedicated initiative to social change, in a company founded during the Great War.

2 2 The ideas that propel the current Fund are mere refinements on a long held philosophy at Anglo American. This philosophy takes the long view of development much the same view that we take within our operations by recognising potential and talent in the actions of select individuals and community champions, listening to these, and then partnering to the greatest positive effect. Its ethos is best summed up through the words of Anglo American founder Sir Ernest Oppenheimer, who in 1954 said that the purpose of the company is to make profits for its shareholders, but to do so in a way that makes a real and lasting contribution to the countries and communities in which it operates. Anglo American s thinking behind undertaking and supporting social responsibility projects is, therefore, not to obtain goodwill or credit or publicity but to produce an actual beneficial social result. Nothing is more important in the administration of this fund, than an adequate measure of humility or recognition and not only does it not necessarily know best, but that many people may know better than it did, and that those closest to the problem, and those actually working in the field were the most likely to have the best vision. History of the Chairman s Fund There has always been a Chairman s Fund in Anglo American since the Corporation was founded in It seems unlikely however, that the Fund has actually existed under this name for that long, although contributions to charitable endeavours have been noted throughout the company s history. We are aware of the existence of a Chairman s Fund from at least the late 1950s, although it may have worked under a different title in the early Sixties. From Margie Keeton s unpublished De Beers in South Africa a socio-political history, , one derives much important information to note. In 1967, the social investment activities of De Beers were merged with those of Anglo American under an entity called the Group Chairman s Fund, administered by a committee of senior executives from Anglo American and De Beers. By 1971, total contributions of the Fund had grown to R1.4 million. Also revealed in the book is that in 1974, contributions were increased by 60% to enable the Fund to initiate more substantial projects in fields such as education and social services. In coming to this decision, it was the view of corporate leadership that in expanding its operations

3 3 the Fund should concentrate on the development needs of Black communities in urban and rural areas, with special emphasis on education and improved standards of living. In the Anglo American 1973 Chairman s Statement, Harry Oppenheimer, son of Ernest Oppenheimer, provided background to the Chairman s Fund. He noted that the policy of the Anglo American group has always been to support, on a substantial scale, charitable causes both in the narrow sense and in the broader fields of education, culture and social services. Therefore, it was both logical and sensible that further parts Anglo American s profits should be invested in endeavouring to conserve and improve the social environment in which the company would operate in the future. Further, noting the social change in South Africa, Harry Oppenheimer expressed the view that the time was ripe to do more in this field, and to do it in a new way. The new way was to bring impressive results. Buoyed by the dramatic rise in the gold price and a favourable tax regime for donations, contributions from the Group s gold mines to the newly-named Anglo American and De Beers Chairman s Fund soared during the late 1970s, putting in place the funding for it to contemplate very large capital projects. Many of these changed the face of South Africa, creating important new facilities for individual development at a critical time. During these years the company recognised the important strategic opportunity that was created, whereby the economic imperative for skilled labour and settled communities was exposing the internal contradictions in apartheid. This created the conditions in which new educational projects challenging the parameters of racial segregation and inequality could take root. Sadly, not all the innovative projects initiated by the Fund have survived testing times of social upheaval and political change. However, for a time, they were powerful beacons of hope, highlighting some of the next steps on the uncertain path to a shared future. Some examples. How? The Fund s most notable monument is the Mangosothu Technikon, the first facility to provide advanced technical training for Black students in the country s industrial heartland. It is now part of the fabric of higher education, and few remember its origins as a privately-funded venture, supported by the Anglo American and De Beers Chairman s Fund with finance.

4 4 Other firsts included the Teacher Training College in Soweto, and several schools that pioneered models of multiracial or accelerated education, far ahead of their time. These included Uthongathi School in KwaZulu-Natal, the Schools of the Resurrection in Johannesburg (R50 million in current money) and All Saints College in the Eastern Cape. The Fund also supported the construction of the first major home for disabled Black children in South Africa. This new way also entailed dedicated management and purposeful social investment, undertaken with care and sensitivity to the individual realities of each project. Over the years, what singled the Anglo American and De Beers Chairman s Fund out from others in the field was its thoughtful approach and its deep understanding of the developmental realities in a changing South Africa. The Chairman s Fund has evolved over a very considered philosophy of social investment, as well as a willingness to embrace risk and innovation, and bank on the energy and passion of the champions behind selected projects, singled out after careful review. The Fund has also earned a reputation as a helpful donor, willing to listen to and learn from the organisations with which it worked. Critically, it is also important to note that the Fund is no slavish follower of fashion which dictates what kind of NGO will find favour at a given time. Rather, its policies of diversity of donation and its support of breakthrough initiatives to self sustainability have enabled it to serve as a catalyst for a wide range of innovative and far-reaching interventions in social upliftment. The times they are Changing The current Chairman s Fund, administered by Tshikululu, was born in 1998 owing to the restructuring of the Anglo American group of companies and the subsequent formation of the Anglo American Chairman s Fund, the De Beers Fund and the AngloGold Fund. Subsequently, the decision was taken for the former Chairman s Fund team to form a Section 21 company to continue to manage and guide the three new funds, pooling together the vast experience and expertise that has been built up since So Tshikululu Social Investments was born independent of Anglo American, with a formidable arsenal of vastly talented, multi skilled individuals who became the centre of the Fund s success for the next decade.

5 5 What would become the AngloGold Ashanti Fund has subsequently moved in-house, and Tshikululu now also administers the CSI funds of clients other than those from the Anglo American stable. The fund has a long history of recognition, owing to the excellence of its achievements. Proof of the Fund s achievements, is the fact that for the last eight years under Tshikululu s management, it has been honoured in the annual Trialogue survey of NGO perceptions as South Africa s best grantmaker. The high ranking in this survey, which examines more than 70 corporates, can perhaps be attributed to competency of management, engagement with beneficiaries and respect for them, and innovative embracing of dynamism in communities. The fact that this survey has now changed this grantmaking category to that of excellence in CSI, with the Anglo American Chairman s Fund in first place, speaks to the deepening understanding of what the work carried out by the Fund encompasses. In the 2007 Trialogue results, Anglo American noted, in response to the Fund s standing among NGOs working in disadvantaged communities, that it was remarkable how the company continued to raise performance standards year on year. Expanded Activities and Current Facts Besides the Chairman s Fund, Anglo American as a group has many other worthwhile and noteworthy CSI initiatives. In 2009, we extended the world s largest private sector workplace programme for HIV/AIDS to dependants of employees and contractors, with some 64,000 people taking up voluntary counseling and testing in southern Africa during the year. In 2009, the Group s social investment expenditure amounted to R693,9 million, 74 percent of which was concentrated in South Africa. The Group s spend was distributed as follows: R28,3 million spent on Health and HIV, R130,5 million spent on Education and youth, R9,6 million on the Environment, R292,5 million on Community development, R20,4 million on Arts, culture and heritage, R1,3 million on Housing, and R210,9 million on various other endeavours. Anglo Americans achievements are noteworthy. Last year, we achieved a top three ranking out of 90 leading European companies for our corporate social responsibility performance for the third time in a row. We were also recognised by the Global Business Coalition (GBC) on HIV/AIDS, Tuberculosis and Malaria for our pioneering workplace programme focused on tackling HIV and AIDS in South Africa.

6 6 To the Future Looking towards the future, the mission of the fund is a simple one: to remain the leading corporate donor in South Africa. This objective will be achieved through various means: Through partnering and growing an informed understanding of the country s developmental challenges; applying the resources at its disposal to maximum effect in supporting and adding value to practical interventions and communities; creating new opportunities and addressing urgent social needs. The strategy intends to build on the reputation of the Fund as pacesetter in CSI in South Africa by retaining the key differentiators that set the Anglo American Chairman s Fund apart, such as its developmental focus, its range in grant sizes, its support of organisational or core costs, its careful engagement with beneficiary organisations, its strong relationships with government departments and its expertise in infrastructural grants. Added to this will be a far more proactive approach to grant-making, through establishing up front clearly defined objectives, and monitoring its success or failure through selected projects. The ability to measure what the Anglo American Chairman s Fund does in a more rigorous way will be embedded in the strategy; from providing selected beneficiary organisations a grant to enabling them to build capacity in monitoring, to ear-marking funds for external evaluations, development research and sharing and learning between NGO s. To do this a Social Performance Unit has been established to work alongside Tshikululu. The projects supported by the Anglo American Chairman s Fund through this strategy will move away from being drops in the ocean towards an emphasis on projects of a national significance. Either the beneficiary organisations will have a national footprint, or the project will aim to have a systemic effect by finding the points of leverage in the system. This is notoriously hard to do successfully in the development landscape, but the Fund will adopt a higher risk profile by trying to find those projects, large or small, that aim to strengthen systems such as the health system, the education system, and the welfare system. The focus on strengthening systems, through direct support and capacity building for champions, will go hand in hand with empowering greater numbers of people to become at least selfsufficient. This will be achieved through the support of skills development (livelihoods) and community development, which in turn will reduce the burden on the state and broader society.

7 7 With limited funding, the only way projects and those that champion them can succeed at such an ambitious task is through innovation, testing ideas and expanding expertise into new fields. The Anglo American Chairman s Fund will continue to support people with passion who are committed to making a difference and not just in their backyard. Backyard support to local communities is an equally effective and important approach to CSI and this will be done directly through American s operations which are well placed to provide such support to the communities where they are situated. The Anglo American Chairman s Fund, through Tshikululu, will provide assistance and advice where requested to operations to help them apply the resources at their disposal to maximum effect. Conclusion At Anglo American we believe that good management of social issues is consistent with our values and our long-term business interests, and is a source of competitive advantage. We recognise that mining involves the depletion of a natural resource and, therefore if we are to produce sustainable benefits for communities over the lifetime of our operations, we need to enhance the social, human and manufactured capital in the communities around our operations. We are, therefore, committed to treating local communities with care and respect, and to regularly engage with all key stakeholders. Anglo American is committed to making the next 40 years as fruitful and rewarding as the last 40 years of CSI. This will be achieved through maintaining and enhancing the core principles that have proved so successful over the last 40 years. Thank you. 25/2/10