GOODGIVING GUIDE

the

for individualsA RESOURCE FOR ESTABLISHED AND BUDDING PHILANTHROPISTS

GOODGIVING GUIDE

the

for individuals

TABLE OFCONTENTSForeword 7A Message From Francois van Niekerk 9Introduction To The Good Giving Guide 11About Philanthropy 15Where To Start? 16To Trust Or Not To Trust 19Tax Implications 26Overview Of The NPO Sector In South Africa 29Identifying The Right Partners 33Best Practice Tips For Good Giving 36Ways To Support NPOs 39Measuring Your Impact 43The Joy Of Giving 46Next Steps 49

Keri Paschal is the Executive Director of the MuthobiFoundation, and a Trustee of the Nation Builder initiative.

FOREWORDAccording to a global Barclays Wealthreport, South Africans are the world’ssecond most generous people (afterAmericans) in the proportion of incomethat individuals give to communitycauses. This finding reveals the deeplyentrenched desire South African peoplehave to eradicate poverty in our nation,and explains why we see locals playing asignificant role in building a new, betternation of greater opportunity.

At theMuthobi Foundation wemeetmanypassionate individuals and businessleaders who want to see our countryprosper andbeof the ‘few’SenatorRobertF. Kennedy spoke of when he said, "Fewwill have the greatness to bend historyitself, but each of us can work to change asmall portion of events. It is fromnumberless diverse acts of courage andbelief that human history is shaped”.Getting this right, however, can feeldauntingand it requiresmuch thought andstrategy to achieve the greatest effect in arapidly changing environment.

It is for this reason that MuthobiFoundation established the NationBuilder initiative. It is a movementdedicated to bringing togetherbusinesses and individuals to know moreand do better in their endeavours to makea lasting impact on society. This isachieved through the sharing of bestpractice, lessons learned and thedevelopment of collaborative tools toequip all of us to achieve better results inour Good Giving, both individually andwithin our businesses.

Nation Builder has a number of helpfulGood Giving resources and toolsdeveloped in collaboration with top-end

social investment specialists to assistbusinesses and individuals to contributeeffectively to ‘building our nation throughgood giving’.

Businesses can enjoy the first-of-its-kind,free online self-assessment of their goodgiving (or social investing) to benchmarkthemselves and identify focus areas ofimprovement. Supplemental resourcesthengivepractical next steps.Nowprivateor individual philanthropists who desire tomake a lasting difference through theirtime, skills, influence or money can usethe Good Giving Guide For Individuals togain insight into some basic first steps ontheir philanthropic journey.

We are firm believers in the counsel ofmany and certainly don’t profess to knoweverything. We are grateful for thecontribution and invaluable sharedlearnings from some of this country’s keyphilanthropists and expert advisories thatwe have had the privilege of working withand learning from, such as the MergonFoundation, Trialogue and Trustees forthe Future. They have generously sharedtheir expertise, knowledge and time tomake this Good Giving Guide ForIndividuals a reality.

Our hope is that this will be a guiding lightto all who have been inspired to action bythe Mergon/Mertech story and Francois’stestimony, and that it will assist you insteering your own story and legacy in adirection that will impact the lives of manyinourgenerationand inmanygenerationsto come.

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Francois van Niekerk is the founder of the Mertech Groupand the Mergon Foundation, of which the Muthobi Trust and

the Nation Builder initaitive are part. Francois is also a co-founder of the Atterbury Group and was Chairman of AtterburyInvestment Holdings from inception to 2012. Francois is also

the author of Doing Business with Purpose… BeyondSuccess to Significance, launched in November 2015.

A MESSAGE FROMFRANCOIS VAN NIEKERKI have shared my testimony at manybusiness breakfasts, managementworkshops and similar events in recentyears. It is a story that testifies to how theGod of the Bible took a one-man businessstart-up,withnopossibility of survival, andturned it into an internationalconglomerate. It is about an enterprisecalled the Mertech Group and theassociated Mergon Foundation, whosecontinued survival and eventual successhas been clearly due to God’s grace andmercy alone.

The underlying significance of whathappened in our business also points to amuch wider call on the business world,and the wealthy, of today. The time hascome for the business sector to step upand address some of the worstimbalances threatening both the socialand the commercial order of the world inwhich we live.

The Muthobi Trust is one of severalancillary institutions established in recentyears to increase the broader footprint ofthe Mergon Trust by giving fellowbusiness practitioners free access to thekaleidoscope of projects administered byMergon and its partners.

An outflow of Muthobi’s engagement inthe broader social sector has been theestablishment of the Nation Builderinitiative. Nation Builder is positioned tobe a catalyst for a newwave of leadershipfrom the South African business andprivate wealth community. It recognisesthe potentially pivotal contributionbusinesses and individuals can make inredressing the social imbalances in our

society, and in securing the long-term futureof South Africa.

Since its establishment, Nation Builder hasactively collaboratedwith the business sectorand civil society, while at the same timereceiving support from government. This hasled toanarrayofpractical guidelinesand toolsbeingpublished.Theseareaimedatassistingand equipping businesses to become moreeffective investors in the social sector.

Nation Builder embodies my conviction thatSouth Africa will be built and strengthenedwhen there is anactive collaboration betweenthe church, civil society, the state andbusiness. This conviction ultimatelyunderpins the premise and fundamental goalof establishing the Nation Builder movement.

A personal life principle can be taken from thequote 'feed the stream of life, not your owndam'.

Any obsession with ‘our’ dam or ‘our’business can lead to a selfish hoarding ofmaterial wealth. This is often seen asrepresenting corruption and the ugly face ofcapitalism, rather than discovering thesignificance of selflessness and a widerinvolvement with those less fortunate. Iencourage you to look up from your ‘dam’ andexperience the joy and freedom found infeeding the ‘streamof life’ - helpingotherswithwhatever resources you have been entrustedto steward.

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Lauren Henning is the Public Affairs Director at the MuthobiFoundation, and a Trustee of the Nation Builder initiative.

INTRODUCTION TOTHE GOOD GIVINGGUIDE FORINDIVIDUALSThere is no single path to impactfulphilanthropy; it is as individual and uniqueas every person, driven by their ownpersonal values, beliefs, and passions, aswell as their concerns and hopes for thefuture of our society.

Deciding on how to go about yourphilanthropy is not always easy and thereare many questions to consider. This iswhy we have created this practical guidefor you to bring about meaningful changethrough your philanthropic endeavours.

This is by no means a comprehensiveguide, but rather a collection of thoughtpieces and bite-sized expertise from avariety of experts in the field of giving –both individual and corporate.

The aim of this is to be a guide to some ofthe key questions you should considerwhen deciding on your commitment toinvesting in society, and leaving a legacyfor your family and generations to come –people that you might never meet in yourown lifetime.

As well as some practical fiduciaryinformation about how to structure yourgiving and tax implications, this resourceprovides insights into how to selectbeneficiaries, how to determine yourimpact and provides some insight into thelandscape of the not-for-profit sector inSouth Africa.

Whether you are new to the field, or aseasoned philanthropist, this handbook is tohelp you to take the first – or the next – stepthat can help you to become impactful in yourgiving and allow you to make informed givingdecisions that leverage the work of the non-profits and beneficiaries that you choose tosupport, and to fulfil your vision.

If your giving is strategic and carefully thoughtout, it has the best chance of having thegreatest impact in the longer term. This doesnotmean you have to givemore, it justmeansgiving well, or better.

Remember: this is a journey.

Regardless of where you find yourselves onthe journey of personal giving, this Guide, inassociation with the Nation Builder initiative,will provide some knowledge and direction asyoupursue this goodgiving journey in order tohave the greatest impact for yourselves, yourfamilies, for our nation and for generations tofollow.

May the journey be as rewarding as it isimpactful.

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It takes a noble man to planta seed for a tree that willsomeday give shade topeople he may never meet.

- Dave E Trueblood

Charity vs PhilanthropyThe most commonly cited difference

between charity and philanthropy is that charityrelieves the pains of social problems, whereas

philanthropy attempts to solve those problems at theirroot causes (the difference between giving a hungry

person a fish, and teaching them how to fish).Private vs Corporate Giving

In the context of this publication, philanthropy is focused onindividual, or private giving, which is different from corporatesocial investment . In most cases, the end goal is the same –

to impact society for good – although the drivers andmotivations might be different. Furthermore, individualdonors are not tied up by red tape, the need for Boardapprovals or budget sign offs – and because of this,

they are able to be more flexible, take greaterrisks and be more entrepreneurial and less

prescriptive with their funding.

My giving is a recognition that people inmy position, and me in particular, have ahuge responsibility to South Africans who

are less fortunate - those who areunemployed, poor and marginalised, andto make a humble contribution to improve

their lives and living conditions.

- Patrice Motsepe,businessman and philanthropist

ABOUTPHILANTHROPYTheword philanthropy originates from theGreek word, philanthropia, which means,“love for humanity”. Beyond the simple actof being charitable, philanthropy as weunderstand it today implies a strongdesire to understand and resolve socialissues, the desire to promote the welfareof others, expressed especially by thegenerous donation of money to goodcauses, and a strong personalcommitment to impartingpositive change.

Philanthropy is by no means limited togiving money.

At its core, philanthropy is a donation ofone’s time, expertise, resources and/orfinances to benefit society or a particularcause. Whether you donate R500 or R5million to a cause you are passionateabout, volunteer at a soup kitchen or giveof your time to serve as a Board Directorfor a not-for-profit, you are aphilanthropist.

Motivations For Philanthropy

The reasons for philanthropy are manyand range from religious convictions,moral values, personal experiences, asense of social responsibility aswell as anempathy towards one’s fellow man.Corporate giving is different fromphilanthrophy, in that it is mainlymotivated by regulatory compliance andtax incentives, whereas individuals aremotivated by an inner sense of purpose,passion and personal conviction about acause or organisation that they want toassist.

For the most part, the main motivationto give comes from the heart.According to a 2012 joint ForbesInsight Credit Suisse report onphilanthropy, the majority (70%) of allphilanthropists reported that personalvalues were the key drivers of theirgiving.

Financial incentives are not the primarydriver of philanthropy but more becausean individual cares about a cause andwants to make a meaningful contributionto their community, country or society ingeneral.

Formany, philanthropy is deeply personaland rooted in their religious beliefs andemotional connection to a cause. It issomething they do, not because theymust, but because they can, and becausethey choose to.

Considering the great need in today’ssociety and in order to have a longer-termimpact, it is becoming increasinglyimportant tobemorestrategicabout one’sgiving – approaching it with as muchwisdom and discernment as one wouldwith any business or family decision –without losing the heart or vision behind it.

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WHERE TOSTART

Theremaybemany reasonswhysomeonewouldchoose to give some of their hard-earned wealthaway, but there needs to be a clear idea andstrategy in deciding how to pursue theseintentions and with whom to partner. If there is noclear conviction for an individual to give, it will behard tomaintaina long-termsystemofgiving, andit is extremely difficult to make wise decisionswhen there is no clear goal or a desired outcomeof the giving. This can lead to money being‘wasted’, or not making a sustainable or enduring

impact.

The opportunities for philanthropy are limitless.Faced with such a wide range of possibilities, it isimportant to ask and determine the following

considerations for oneself.

The narrower your focus is, the easier it will be for youto define amission and concrete philanthropic goals.Being specific about what you will focus on, whereyou will act, and whom youwill help has two benefits.First, it increases your chances of success byconcentrating your efforts on something that isachievable.Second, itmakes it easier todetermine theactivities needed to get there, as well as how to

measure progress.

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• Understand the motivation behind your giving.• Establish a vision - forming your vision is the mostcrucial step for your philanthropy, because it will lay thefoundation for all further activities.

• Determine and define your focus⁃Whom will you help: children and youth, rural areas?⁃What issues will you focus on: health, education, socialjustice?

• Where will you act?• Identify the right partners and beneficiaries that shareyour vision and objectives

• Decide on your degree of involvement• Decide on the form or vehicle of your giving (directfunding of a non-profit, or the establishment of your owntrust)

• Consider the desired impact of your giving• Determine the duration or extent of your involvement• Decide on the type of giving you are committing to:monetary, resources, time.

• Decide on the scale of involvement.• Decide what areas you would like to fund i.e.:⁃ Programmes⁃ Capital projects⁃ Operational costs⁃ Research

DETERMINING VISION, STRATEGY AND PURPOSE -A FEW KEY POINTERS

TO TRUST ORNOT TO TRUSTWHAT LEGAL ENTITY BEST SUITS YOUR NEEDS?

by Karen Eckley, Trustees For The Future and a Nation Builder board member.

The termFoundation is not somethingyoucan register within South Africa law, nor isit a separate entity. It is just a word thatcan be used to refer to any chosen entitywith an altruistic or philanthropic intent i.e.a Trust, a Society or a Company.

South Africans can therefore choose touse a Trust or a Non-Profit Company(NPC). Which to choose to best fit yourpersonal objectives and requirements ismostly a question of the amount of controlyouwant to exercise over the entity and itsoperations. Such entity’s tax status doesnot depend on its structure but on its taxstatus with South African RevenueServices [SARS].

Your Options: A Comparison

The table on the next few pages outlinesthe comparative benefits, requirementsand limitations of the options to form aTrust or a Non-Profit Company, to assistyou tomake the choice best suited to yourown needs and vision.

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TRUST

A trust is an arrangement, set out in a written document(called the Trust deed) in which an owner or founderhands over property and/or funds to a group of people(called trustees)whoadminister theassets for thebenefitof other people (called beneficiaries) for a statedobjective. You will need professional assistance to draftthe Trust deed and this may be expensive and timeconsuming. The Trust deed must be registered with theMaster of the High Court. The Trust deed names yourintended trustees, but it is the Master who actuallyformally appoints them. Trustees cannot legally act

before being appointed by the Master.

Trusts are mainly regulated by the common law and theTrust Property Control Act 57 of 1988 but the Income taxAct 58 of 1962 and the Nonprofit Organisations Act (71

of 1997) must also be considered.

Except in certain circumstances, such as for tax andinsolvency purposes, trusts do not have an independentlegal personality. If there is a legal dispute (litigation), thetrustees acting in that capacity sue or get sued, not thetrust, although trust property is protected and the TrustProperty Control Act requires trust property to be keptseparate from trustees' personal property. Also, trusts

are required to have their own bank accounts.

A trust is very flexible and can suit many NPOs, theirobjectives and situations. It is a contract and amendingthe Trust deed is easy as long as there is consensusbetween the Founder and the Trustees. After the deathof the Founder (or if the Founder is no longer a legalentity), the Trust deed itself will regulate amendments.

The Trust deed must state the beneficiaries or statedobjectiveof theTrust andTrusteescannot act inanyway,manner or formoutside the scope of the defined purposeestablished by the Founder. Benefits can easily bedistributed to beneficiaries or applied to promote thestated objective. Trustees have no personal right tobenefits except for fair and reasonable compensation for

their services.

Structure

Which laws govern?

Legal personality

Flexibility

Benefit to members

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NPC

Incorporation of Company in terms of the CompaniesAct, Act 71 of 2008 with aMemorandum of Incorporationthat reflects the purpose and objectives of the Companyand registeredwithCompanies and Intellectual PropertyCommission (CIPC).

NPCs are mainly regulated by the Companies Act 71 of2008 and the Nonprofit Organisations Act (71 of 1997)but the Income tax Act 58 of 1962 must also beconsidered.

It has an independent legal identity which is distinct fromits members' legal identities.

A NPC is regulated in South Africa and functions in aspecific manner in accordance with the law and thepurpose for which it was incorporated.

Maymakeaprofit, butmaynot distribute their property orprofits to their members. They use any profits theymaketo further their public interest objectives.

Structure

Which laws govern?

Legal personality

Flexibility

Benefit to members

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TRUST

Before the Nonprofit Organisations Act (71 of 1997) waspassed, trusts could not have an independent legalpersonality, other than for certain specific purposes suchas tax and insolvency. Now, a trust that also registers asan NPO (in addition to registering with the Master of theHighCourt) is recognised by the law as a body corporatewith an independent legal personality. Indeed, trustsacquire independent legal personality through suchregistration. Its tax position is determined by the purposefor which it was founded and therefore depends on theirapplication to SARS to be recognised as PBOand ability

to issue Sec 18A certificates to donors.

Selected by the Founder initially but may be changedfrom time to time by the Trustees in office or thebeneficiariesor theFounderdependingon thewordingofthe Trust deed. Their powers are solely derived from thecontents of the Trust deed and their role is to administerthe trust property with the necessary due care skill anddiligence as is required from a person who is entrustedwith the assets of another and their duties are derivedfrom common law and the Trust Property Control Act.

A trust is governed by its Board of Trustees. Trustees'powers are normally as wide as possible to enable themto achieve the objectives of the trust, and usually similarto the powers of a company. Trustees are expected toexercise their duties with the care, diligence and skillwhich can reasonably be expected of a person whomanages the affairs of another. Trustees should notmake self-serving decisions and should avoid takingdecisions in situations where there is a conflict betweenwhat is best for the trust and what is best for a trusteepersonally (conflict of interests). They may receivereasonable payment for their work for the trust unless the

trust deed forbids this.

Any, but objectivesmay never be discriminatory, againstthe good moral values of our country.

Tax

Role, powers, dutiesand selection oftrustees/directors

Governance andcompliance

What types ofcharitable orphilanthropicintentions areallowed?

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NPC

Depends on their application to SARS to be recognisedas PBO and ability to issue Sec 18A certificates todonors.

Selected by the Shareholders of the Company andderiving their powers, obligations and duties firstly fromtheCompaniesAct and secondly from theMemorandumof Incorporation of the Company.

Governedby theCompaniesAct and itsMemorandumofIncorporation read together with any shareholder’sagreement (which may not contain any provisions whichare in contradiction with the Act or the Memorandum ofIncorporation).

Any, but objectivesmay never be discriminatory, againstthe good moral values of our country.

Tax

Role, powers, dutiesand selection of

trustees/directors

Governance andcompliance

What types ofcharitable orphilanthropicintentions are

allowed?

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TRUST

Trust structures which are created by professionals andwith proper insight to the purpose for which it wasfoundedanddue regard to thecontentsof theTrustdeed,will create certainty and funders will contribute to its

purpose with confidence.

Ensure that the Trust deed allows the Founder (or someTrustees) to nominate succeedingTrustees in awill. Thiswill ensure that the Founder elects trustees who sharethe same passion for the objectives of the Trust as theFounder did. Defining the criteria which Trustees mustmeet to act,will also ensuregoodcustodiansof your trust

and money.

Funders' confidence

Succession planningafter the death of thefounder.

Trustees for the Future is a specialist fiduciary services consultancy committed to theunique needs and objectives of individuals and families. Their services include theadministration of Trusts as well as providing advice for clients who need to structure theirfinancial-, estate-, and succession planning to ensure a financial future for themselves,

their families and future generations.

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NPC

The regulated environment in whichCompanies operatein South Africa will create certainty and Funders willcontribute to its purpose with confidence.

Shareholders can elect at any time but defining thecriteria whichDirectorsmustmeet to act, will also ensuregood custodians of your trust and money.

Funders' confidence

Succession planningafter the death of the

founder.

CONSULT A PROFESSIONAL:

Before formalising or registering your own philanthropicTrust, make sure that you make contact with arecognised legal and/or taxexpertwho is familiarwith thephilanthropic sector and can assist you in providing youwith expert advice in making informed choices that fityour vision as well as meet legislative and taxrequirements.

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TAXIMPLICATIONS

By Karen Eckley, the Managing Director Of Trustees For The Future,and a Nation Builder Trust Board member.

An organised, vibrant civil society is essential for participatory democracyand development. There are many different kinds of civil societyorganisations: some are set up to make a profit for their members, othersarenot forprofit butprovidesome formofserviceorbenefit to theirmembersor the public.

It is important to understand the legal framework for not-for-profit, non-governmental organisations in South Africa from a taxation perspective.

The first tier (establishment) allows for the establishment under statutoryand common law of the following three forms of NPOs:

• Voluntary associations, established under common law;

• Non-profit trusts, established under statutory law; and

• Non-profit companies (NPC) incorporated for a public benefit objectiveor an objective relating to one or more cultural or social activities, orcommunal or group interests, established under statutory law.

The second tier of legislation (voluntary registration) allows any of theseorganisational forms to apply for the status of a registered NPC. Amongother requirements, a registered non-profit organisation cannot distributeprofits, and it must meet certain governance criteria.

What this means for the donors:

Organisationswith only this second tier of legislationdonot really affordanyreal benefits to donors other that being able to use the words NPC in thename of the company so that third parties know that the company enjoysthis particular status.

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The third legislative tier (partial tax exemption)enables an NPC to apply for the status of PublicBenefit Organisation (PBO). Among otherrequirements, the organisation’s sole purposemust be to:

• undertake one or more public benefitactivities,carried out in a not-for-profitmanner and with an altruistic orphilanthropic intent.

PBOs are entitled to a broad range of fiscalbenefits, including a partial income taxexemption, an exemption on donations tax, andfor some an exemption on transfer duty onimmovable property.

What this means for the donors:

Organisations that are tier 3 registered afforddonors the opportunity to have the PBO enjoysome form of tax benefits but, real benefit will beenjoyed by donors if the fourth legislative tier isalso adhered to.

Finally, the fourth legislative tier (donordeductibility status) allows PBOs to apply for theright to receive tax-deductible donations and theability to issue Section 18A tax certificates.

What this means for the donors:

Organisations registered as PBOs with thedonor deductibility status afford donors thebenefit that:

• all bequests made to such PBO with tax-exempt status from a will of the donor will bedeductible for Estate Duty purposes thusreducing a donor’s liability for estate duty ondeath

• donations during life will be deductible fromthe donor’s taxable income (subject tocertain limits) thus reducing the donor’sliability for income tax and capital gains tax.

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There has been a significantincrease of NPOs registeredover the past few years, withthe national databasegrowing from 65,633organisations in 2009/10 to136,453 in 2014/15. 93% of allNPOs in South Africa areregistered as voluntaryassociations, 6% as non-profit companies and 1% asnon-profit trusts.

Over136,000NPOs in

SouthAfrica

OVERVIEW OFTHE NPOSECTOR INSOUTH AFRICAby Trialogue, an excerpt from the Trialogue Funder's Guide To SocialDevelopment In South Africa

Legal framework

People’s rights to freedom of religion,belief, opinion and association, asenshrined in the country’s progressiveConstitution, are a cornerstone of SouthAfrica’s civil society.

The different types of organisationsestablished for public good include:

1. Voluntary Associations, which areoften informal community-basedorganisations, governed by the Non-Profit Organisations Act 71 of 1997(hereafter referred to as the ‘NPOAct’).

2. Non-Profit Companies, which areusually more sophisticated and havea broader reach than their immediategeographic base, governed by theCompanies Act 71 of 2008.

3. Non-profit Trusts, governed by theTrust Property Control Act 57 of1988.

The NPO Act defines a non-profitorganisation as a trust, company or otherassociation of persons that has beenestablished for a public purpose and the

incomeandproperty ofwhicharenot to bedistributed to its members or officebearers, except as reasonablecompensation for services rendered. TheNPO Act is specifically aimed atencouraging NPOs to ensure goodgovernance, transparency andaccountability, as well as to maintain asystem that provides the public with easyaccess to information about registeredNPOs in South Africa.

To register as an NPO, an organisationmust submit a constitution or foundingdocument to the NPO Directorate of theDepartment of Social Development(DSD), along with the prescribedapplication form, containing contact andoffice bearer information.

If an application is successful, the NPO isregistered in accordance with theInternational Classification of Non-profitOrganisations, based on the foundingdocument, its mission and objectives. AnNPO is obligated to comply with itsconstitution and to submit an annualreport to the Directorate, including annualfinancial statements, within nine monthsof being registered.

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An organisation can also register as a public benefitorganisation (PBO), qualifying it for tax exemption onthe basis of its public benefit activities. A voluntaryassociation, trust or company can apply for PBOstatus separately, with the South African Revenue

Service.

In accordance with the NPO Act, in 2015, the DSDreleased a report from the National NPO Database,which provides a comprehensive overview of thestate of South African registered non-profitorganisations, providing much of the national

overview discussed in this article.

As a leading corporate social investment andsustainability consultancy, Trialogue has more than17 years of experience working with corporates andnon-profit organisations.Visit www.trialogue.co.za

for more information.

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SOURCES ANDFURTHER READING:

A guide to legal forms for socialenterprises in South Africa, Legal

Resources Centre (2011)

State of South African registered non-profit organisations issued in terms ofthe Non-Profit Act 71 of 1997 “Areport from the national NPOdatabase”, Department ofSocial Development

(2015)

It is moredifficult to givemoney awayintelligently

than it is to earnit in the first

place.

- Andrew Carnegie

IDENTIFYINGTHE RIGHTPARTNERSWhether a philanthropist decides to addresources, build capacity, campaigndirectly for change, or all of the above, heor she will need to consider resources,rewards and risks involved. They will alsoneed to match their personal values andphilanthropic goals with credible andaligned NGOs that can assist in makingthe greatest impact.

It is important to conduct thorough duediligence on potential recipients andpartners. Further, clear objective setting,monitoring, evaluation and learningactivities are key ways to mitigate the riskof failure.

The first step to channelling your givingeffectively is to explore what types of not-for-profit organisations you want tosupport. As reported by Trialogue in their2015Funder’sGuide, there aremore than136,000 registered non-profitorganisations in South Africa, making thechoiceofwhichorganisation to support, orwith which to partner, potentiallyoverwhelming.

This is the first step of your philanthropyand themost crucial one inensuring futureimpact and satisfaction. How you findpartners or opportunities will depend onwhether you are active in a field wheremany organisations operate, or in onewhere there are few. Different processeswill need to be put in place depending onyour situation.

SELECTING BENEFICIARIES

Choosing the right partners andbeneficiaries is an essential step forcarrying out one’s philanthropic mission.

When it comes to selecting projectpartners to support, we have found thefollowing categories and criteria to behelpful in obtaining useful informationabout potential beneficiaries, anddetermining whether they will be the mostsuitable in pursuing one’s vision andintentions for giving.

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I resolvedto stop

accumulatingand begin the

infinitelymore seriousand difficulttask of wisedistribution.

- Andrew Carnegie

1. Does the organisation align with your own focus, vision andmandate (does the what, where, whom of what you hope toachieve through your giving resonate with the what, where andwhom of the potential organisation)?

2. A brief history: including reputation, key activities, managementand why it was established.

3. Mission and vision: what are the plans and dreams of theorganisation?

4. Leadership: how good is the project’s leadership? Is there asuccession plan?

5. Planning: does the organisation have a strategic plan?

6. Initiative and resources: what resources does the project have?What is their track record in developing solutions for themselves?

7. Financial health and accountability: analyse an organisation’saudited financial statements.

8. Credibility: what is the reputation of this organisation in thecommunity and with other donors?

9. Funding dependency or sustainability: who else funds thisorganisation and which other donors are involved? Are theyheavily dependent on donor funding?

10. Capacity: Does the partner have the capacity to deliver on theproject goal? Does it have the financial, human and technicalcapacity to reach the project goal?

11. Legal status and paperwork: does the organisation have allthe requisite paperwork (such as NPC registration)?

12. Impact and results: what measurable results does the projecthave? Focus on outcomes, not just inputs or activities.

13. Track record: is this a start-up or an organisation with a provenrecord of success?

14. Project descriptions: what will money or resources be usedfor?

The questions above can be used as measurements of impactover time. It is advisable to have such, or similar, information onrecord for accountability and for purposes of monitoring andevaluation in the longer term.

SELECTION CRITERIA TO CONSIDER

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BEST PRACTICETIPS FOR

GOOD GIVINGHere are some of our top tips on how to be a good, strategic and impactful giver.

Think strategically - It is important tobear in mind that the extent of need inSouth Africa can be overwhelmingand the need for support will almostalways exceed available funding.Given the current socio-economicsituation, the best thing an individualcan do, therefore, is to make strategicgiving choices with a long-termapproach. It isn’t about howmuch yougive, but how your giving is appliedand the impact of your investment.

Focus on the ‘one’ thing –Without aspecific focus or strategically thoughtout mandate, a philanthropist caneasily become overwhelmed by tryingto be ‘all things to all people’. Theresult of this is that the impact of one’sgiving becomes so thinly spread anddiluted that there are no tangible ormeasurable results. That’s why focusis crucial: to have a holistic strategyaimed at tackling a clearly definedsocial or development concern.Identifying one or two focus areasusually works well.

The right fit - There isnosuch thingas‘one size fits all’! Align your missionand values with social initiatives that

have a logical fit with your vision andmandate, in order to create the most socialvalue (which is why it is a good idea todetermine a clear social investment visionand focus at the outset rather than engage inad-hoc/once-off support).

Ask, listen and understand beforeassuming - Spend time understanding whatis needed by the organisations andcommunities that you engage with – don’timpose your ideas (or unwanted goods!) onthem.

Small but perfectly formed - Begin smalland focused and grow the relationship/initiative (in terms of funding and scale ofinvolvement) over time in order to ensure along-term, enduring and successfulpartnership.

Build on good foundations - Don’t operatein isolation or try to reinvent the wheel. Inorder to leverage social impact, developpartnerships with existing organisations, thatalready have community credibility, and apositive impact that can be built on.

Avoid donor dependency – Always ensurethat thereareotherdonors involvedotherwiseyou will likely carry all the risk and emotionalburden in carrying a cause or organisation.

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This is potentially dangerous for allinvolved. It is crucial that the organisationtakes independent ownership ofmobilising funds for their work andresponsibility for considering ways togenerate alternative streams of income.

More than money – Your value as aphilanthropist or private donor is notlimited to funds. Sometimes you are ableto unlock valuable opportunities andresources by leveraging your networksand using your circles of influence toassist further.

Be in it for the long-term - Real andlasting change does not happenovernight. Therefore, when consideringyour involvement in social upliftmentinitiatives, avoid reactive/short-termresponses to requests. Rather selectlong-term, sustainable programmeswhere you will be able to see the benefitsof your involvement.

Be upfront about intentions andexpectations –Sometimes it is advisableto put it in writing. This will help to avoidmisunderstandings and unrealisticexpectations, and will assist in creating alevel of responsibility for everyoneinvolved.

Take stock, give feedback andencourage openness - Monitoring andevaluationof projectsmight seemdull andlaborious but they are critical elements inensuring the effectiveness of a fundingpartnership, and determining whether theeffort and resources are worth it. Opencommunication and feedback are key tobuilding strong relationships and trust,and form a strong foundation for attainingshared vision and objectives.

Dignity restored – No matter what thenatureof your involvement, recogniseandacknowledge beneficiaries as the mostimportant agents of change in their lives.Nothing sets inmotionpositive and lastingsocial change like restored dignity. Afterall, social investment is about investing inthe lives, hopes and futures of humanbeings – not only because we should, butbecause we can!

(Philanthropy) isinjurious unless it helpsthe recipient to becomeindependent of it.

- John D Rockefeller

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WAYS TOSUPPORTNPOs

Once a funder has decided whichbeneficiary organisation to support, theinformation that follows can assist indetermining the best way to provide thatsupport.

Donations of goods are typically givenfor charitable purposes and may takevarious forms, including cash offerings,vehicles and new or used goods. Whendonating in kind, it can be useful to lookinto whether the NPO wants and canafford to maintain the goods received, orrepair them if they are not in goodworkingcondition.

Grant funding is the provision of moneyto an organisation. While the money doesnot have to be repaid, recipients are oftenrequired to commit to specific outputs oroutcomes, including reporting on how themoney is spent and how the project isprogressing.

Purchasing products from an NPO canhelp to support it financially, as well asstrengthen its entrepreneurialdetermination. It is, however, important

that the making or sourcing of products isaligned with and does not deter an NPOfrom its primary aims. For example,purchasing items made by beneficiariesof an NPO with a mission to empowerpeople living in poverty directly supportsthat NPO and its beneficiaries, instead ofcausing additional strain. Payments forsuch commercial transactions are not taxexempt for either party.

Purchasing services from an NPO canbe legally governed by contractualagreements. Similar to purchasingproducts, it is important to ensure thatservices purchased are aligned with theNPO’s mission and will not distract it fromits primary aims. Payments for servicesare not tax exempt for either party.

Bartering is the exchange of goods orservices without exchanging any money,for example, providing an NPO withaccounting services, in exchange for theirexpertise.

Loans can be applied for by NPOs in thesame way that they are applied for by

by Trialogue, an excerpt from the Trialogue Funders Guide To SocialDevelopment In South Africa

39

individuals, and will need to be secured against assets suchas property, and repaid with interest. The lender shouldensure that the NPO has a track record of operations andincome that reasonably position it to beable to repay its debt.This is a high-risk and short-term means of supporting anNPO, and must be entered into with careful considerationabout its viability for both parties.

Equity capital is provided by external investors in return fora stake in an organisation that has share options. Externalinvestorsmay alsowant a share in possible rewards gained.This form of financial support does not have to be repaid orsecured against assets, and is an option most popular forsocial enterprises. It is in an equity investor’s best intereststo take a long-term view of the organisation and to possiblycontribute skills and expertise as well, since their money isat risk if the organisation fails. Charities and similarorganisations without share options do not, however, havethe necessary legal structures to raise equity capital.

Volunteering time or expertise to an NPO is generallyconsidered an altruistic activity for which there is no financialgain. Volunteering can be a rewarding and educationalexperience, but it is also important for volunteers to be abletomeet the time and skill requirements of theNPOs that theyintend to support. Aligning volunteers’ passion with NPOneeds can go a long way to ensuring the overall impact andsustainability of volunteerism.

Pro bono work is professional work – such as marketing,accountingor legalwork–undertakenvoluntarily, asapublicservice, without payment or at a reduced fee. It differs fromvolunteerism because it is a service that provides specificprofessional skills to those who are unable to afford them.

Training and mentorships can help NPO workers todevelop new skills, including the strategic and operationalexpertise that drives efficiency in the private sector.

Bequests are transfers of wealth bymeans of wills or trusts.Bequests can be made in several forms, including specifiedamounts of money, property, or a percentage of a donor’sestate. Besides a straight bequest, a trust can also be set upto benefit charity organisations during or after a donor’slifetime. Non-profit organisations can also be named as thebeneficiaries of insurance policies or retirements funds.

As is evident, there are many ways to support NPOs.Deciding on which approach to take is best determinedbased on the nature and needs of the NPO, the resources ofthe funder, as well as the needs and expectations, and theperiod of time to which both parties are able to commit.

As a leading corporatesocial investment and

sustainability consultancy,Trialogue has more than17 years of experienceworking with corporates

and non-profitorganisations.Visit

www.trialogue.co.za formore information.

40

Social enterprises

These are revenue-generating businesses thattrade to tackle social problems, improve communities,

people's quality of life, or the environment. They make theirmoney from selling goods and services in the open market, but

profits are reinvested back into the business or the localcommunity. Social enterprises aim to maximise social impact, rather

than profits for external shareholders.

'Restricted’ versus ‘unrestricted’ support

Funders have the option of making their contributions ‘restricted’ for aparticular purpose or project, or ‘unrestricted’ for use at the NPO’sdiscretion, including for organisational operating expenses. Once afunder has conducted due diligence and trusts the organisation’s

leadership, it is best to provide unrestricted support that can be usedfor staff, overheads and other operational costs. If too manydonors provide restricted funding, an organisation may not beable to sustain the capacity it needs to deliver results. For

example, if a funder supports a soup kitchen with adonation earmarked for purchasing food, the NPO

may have an excess of money for food, butmay need to raise additional funds

for electricity to cook.

I decided quite some timeago to give at least half of

the funds generated byour family assets, to

uplift poor and otherdisadvantaged andmarginalised South

Africans, but was alsoduty-bound and

committed to ensuringthat it would be done in a

way that protects theinterests and retains the

confidence of ourshareholders and

investors.

- Patrice Motsepe

MEASURINGYOUR IMPACTMonitoring and evaluation (M&E)

Many of the world’s leadingphilanthropists are successful businesspeople and entrepreneurs. They practicewhat they preach, taking lessons frombusiness life and applying it to theirphilanthropy. As with all businessinvestments, it is all about being goodstewards, and ensuring healthy andresponsible giving.

However, as Nedbank Private Wealthpoint out in their Giving Report II (2012),because most philanthropists developpersonal relationships with theirbeneficiaries, very fewexpect feedbackorconduct impact assessments.Yet,M&E isa critical part of best practice for effectivestewardship and distribution of one’sgiving.

Monitoring and evaluation

Monitoring and evaluation (M&E) hasbecome increasingly important as bothindividual philanthropists and companiesare becoming more strategic in theirgiving. It helps determine whether theirinvestments have been successful, and

helps them to make decisions about thefuture of these investments.

Many smaller donors are happy to receivefeedback through newsletters and year-end reports, however as the contributionincreases so does the need to seetangible demonstrations of impact andchange.

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THE DIFFERENCE BETWEENMONITORING AND EVALUATION

Monitoring is the ongoing collection andanalysis of data that looks at a project’s

activity milestones and whether the objectivesof the project are being met.

Evaluation is a more comprehensive, periodicreview that looks at the long-term outcomes ofa project and determines what worked, whatdid not work and then uses that information to

inform and adapt future plans.

Measuring the impact ofyour good giving is awork in progress. The

challenge is how to extractmeaningful informationwithout impeding the

general operations of yourgrantees.

- Julia Chu,Head of Philanthropy,

Credit Suisse

Even before going into a partnership with an organisation, it isimportant to discuss, understand and capture information on thefollowing:

• Strategy and governance:When deciding on a goodgiving strategy, it is important to reach a consensus onwhat success looks like.

• Implementation and processes: It is important to discussthe monitoring standards used by the organisation andagree upon data that will be consistently collected.

• Monitoring and evaluation: There is a need forcontinuous monitoring of outputs by the NPO to use in themore comprehensive evaluations conducted in order toprove and improve results.

• Reporting and assurance: Reporting needs to be agreedupon up front in terms of format and frequency. Reportsalso need to be transparent and accountable to highlightwhat is working and what is not to key stakeholders.

Following a process which requires detailed feedback from theorganisation is good practice and will give you an idea of theimpactandmanner inwhichyour fundshavebeenadministered.

Relationship, however, should not be underestimated.

A report can be made to look amazing, but on-the-ground visitsand an open relationship often create the ‘safe space’ requiredto knowabout all the untold joys, struggles and triumphs a reportcould never reveal.

Reference: Nedbank Private Wealth’s “The Giving Report II”,is a follow-up to the first comprehensive national survey, theGiving Report I, on the giving practices of the highest networth (HNW) individuals in South Africa. The 2012 follow-upsurvey was conducted to identify giving trends that haveemerged since 2010, and which continue to support theevolution of philanthropy in South Africa.

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THE JOYOF GIVING

Any discussion on philanthropy usuallyfocuses on howagiver can help other people,other organisations or communities, or evenother countries. But acts of giving stronglybenefit the giver as well.

The Reward of Social Impact

While the biggest reward in philanthropy ismore often than not the direct or indirectimpact one has on a particular issue, (andseeing tangible progress, breakthrough andpositive change due to one’s involvement),giving also has a much deeper and personalimpact on the giver."Every great moral and spiritual traditionpoints to the truth that in the giving of self liesthe discovery of a deeper self," said DrStephen Post, the Director for the Centre forMedical Humanities, Compassionate Care,and Bioethics at Stony Brook University.

The Reward of Purpose

Although philanthropy usually goes hand-in-hand with altruism, new evidence indicatesthat the giving of one's timeor treasuremakesthe world a better place for both giver andrecipient. "Creativity, meaning, resilience,health and even longevity can be enhancedas a surprising by-product of contributing tothe lives of others. This is perennial wisdom,and science now says it is so", says Post.

It is moreblessed togive thanto receive.

- Acts 20: 35(The Bible)

46

poverty or combat illiteracy. “Onlyvisionaries with hope in the future canaccomplish these goals. It’s our job asphilanthropists tonurture that hopeand, inthe process, rekindle our own sense ofpurpose and meaning in life.” (Giving asReceiving: The True Rewards of Charity,Austin DeMarco)

This Is Only The Beginning Of TheJourney

As we said in the beginning of this guide,philanthropy is a journey, not adestination, with many lessons to belearned along the way. But it is arewarding journey, and one with thepotential for growth, lasting joy and hopefor both the giver and the receiver.

"It is oneof thebeautiful compensationsoflife," said Ralph Waldo Emerson, "that noman can sincerely help another withouthelping himself."

The Reward of Family and Legacy

Philanthropic giving is an opportunity toinvolve family and create a lasting legacyfor generations to come. Manyphilanthropists choose to carry out theirphilanthropy togetherwith their family asaway of bridging generations and bringingfamily members together around a vision,valuesandaroundaphilanthropic project.

Asked why he established his ownphilanthropic trust, Jorge Perez, thephilanthropist and billionaire founder ofthe Related Group answered: “I want tocreate a legacy. I want my grandchildrento know they had a family member whogave back. Hopefully, by establishing afoundation I will create a legacy of giving.”

The Reward of Hope

Hope is the true benefit of philanthropy.It’s not about the money, or raisingawareness, or doing good. These areimportant, but without hope, the benefitsare short lived and they will not endure.Money alone cannot cure cancer, or

47

NOW TO TAKETHE NEXTSTEPS ONYOUR JOURNEY

Consider where your passion lies and what kind ofimpact you’d like to have. You don’t need to be abillionaire or a celebrity to make an incredibledifference in our nation.

“No act of kindness, no matter how small, is everwasted”.

There are a host of foundations and consultancies withthe expertise to assist you with the next steps of yourgood giving. Nation Builder can assist by putting you intouch with the right people.

Good Giving for Business

If you are in the business world and want someadditional guidance on how to use your business tomake a lasting social impact, Nation Builder has arange of tools and resources, including the GoodGiving Guide for Business that will enable you tobuild our nation through business.

Now that you have a basic idea of what good giving entails, whynot take the next step?

49

I am of the opinionthat my life belongs to the

community. And as long asI live, it is my privilege to dofor it whatever I can. I wantto be thoroughly used upwhen I die, for the harder I

work, the more I live.

Life is no brief candle tome; it is a sort of splendidtorch, which I have gothold of for a short moment,and I want to make it burnas brightly as possiblebefore handing it on to thefuture generations.

- George Bernard Shaw

BOOKSFEATURED IN

THIS PUBLICATION

The Trialogue Funders Guide to Social Development in South Africa is thelatest edition to Trialogue’s collection of publications. This user-friendlyresource aims to help funders of social development by providing expert adviceabout how to simplify the funding process and make it more effective, and issupplemented with a comprehensive list of potential beneficiary organisations.

Please contact Trialogue to order your copy:

www.trialogue.co.za / info@trialogue.co.za

021 671 1640 [CPT]011 026 1308 [JHB]

Doing Business With Purpose is a must-read for anyone who has a visionand a desire for their business efforts and talents to contribute towards thecurrent trend of achieving commercial success while doing good.

Read the story of Francois van Niekerk, a man who became humble beforeGod, listened to His call and then acted on that call to be instrumental infeeding the stream of life rather than his own dam.

“A testimony of the surprising net benefit of a partnering strategy relevant to anemerging generation of entrepreneurs and business leaders everywhere.”

“A relevant call to action for business leaders and aspiring entrepreneurs and aglimpse into what might be possible if they act on it.”“Francois masterfully uses his experience, knowledge and humour to help thereader understand that real business is about more than making money.”Find out more by contacting info@mergon.co.za / 021 816 1111.

Thank you to Francois van Niekerk, the Mergon Foundation and Trialoguefor generously allowing the use of excerpts from their respectivepublications. Our hope is that these publications will inspire and equipyou for the next steps on your good giving journey.

We started ourfoundation because webelieve we have a realopportunity to helpadvance equity aroundthe world, to helpmake sure that, no

matter where a personis born, he or she hasthe chance to live ahealthy, productive

life.

- Melinda French Gates

TheGoodGivingBenchmarking Tool is designedwith one specific purpose inmind- to help you better understand the effectiveness of your good giving strategies. Co-created by our country's leading experts in the field, the Nation Builder BenchmarkingTool strives to show you exactly where you are in terms of your good giving strategies.

Through the exclusive resources and innovative materials available on our platform,collaborated on and created by the benchmarking tool panel, we will help you toconsider how to become more effective and have more impact through good giving.

This online self-assessment will measure your performance in the most importantaspects of social investment, helping you to better understand the effectiveness ofyour good giving strategies, as well as assist you in building our nation through better

social investment.

NATIONBUILDERGOOD GIVINGRESOURCES

Muthobi Foundation and Nation Builder do not provide legal or taxadvice and this publication does not constitute such advice. Westrongly recommend to all persons considering philanthropicactivities to obtain appropriate independent legal, tax and other

professional advice.

www.proudnationbuilder.co.zanationbuilder@muthobi.co.za

facebook.com/proudnationbuilderinstagram.com/buildsouthafrica

twitter.com/buildSA

021 816 1111

GOODGIVING GUIDE

the

for individualsA RESOURCE FOR ESTABLISHED AND BUDDING PHILANTHROPISTS