Since 2002, R51,6bn in value has been created specifically for charitable recipients through BEE deals, including community trusts, existing charities and newly established foundations. There is R32.6bn held by foundations set up as a result of BEE deals that will support charitable activities on a perpetual basis, while R19.06bn has been generated in contributions to public benefit beneficiaries, outside of the new foundations, some of which are existing endowments.

These are the main findings from a study conducted by financial research house Intellidex into trusts and foundations established from SA’s black economic empowerment transactions. The figures are based on an analysis of a sample of 35 companies’ deals, which includes all those of the 100 largest JSE-listed companies which had a charitable component to their BEE deals.

The full research findings can be found in the Empowerment Endowment by Intellidex, funded by FirstRand. Intellidex is solely responsible for the research and content of the report. FirstRand’s funding was not contingent on any of the findings contained in this report. The full report can be accessed here.

Key findings include:

Sizwe Nxasana, chairman of the FirstRand Empowerment Foundation, has called for greater co-operation between sponsoring companies, trusts and foundations to maximise the impact of these initiatives. “Collectively the impact that these could make is far greater than any of us acting alone. This fact calls for innovation and coordination to really maximise the difference this legacy can make in the country.

“We should aim to develop, share best practice and collaborate where possible. Knowing more about each other and working together can only help,” he says in the introduction to the Empowerment Endowment report. “This research helps us to understand the lay of the land. By having a clearer picture of what other companies are doing, we can better shape our own activities to ensure a better overall outcome.”

Intellidex chairperson Stuart Theobald, who headed up the research project, says that the R32.6bn in endowments, of which most are destined to exist in perpetuity, can make a long-running difference to the lives of millions of South Africans.

“The key challenges facing these new entities are a shortage of skills and lack of infrastructure. Many are struggling to find the required staff to run operations. Foundations also have to think through the right operational model, that will balance efficiency with the need to be independent of their sponsoring companies. The use of sponsoring company infrastructure lowers costs, but can come at the loss of real independence in grant making activities.

“Foundations also have to find ways to manage the concentration risks inherent in their portfolios. All have major exposures to the shares of their sponsoring companies. This is an outcome of the current BEE regulatory environment which requires companies to maintain BEE-qualifying investment levels. But it leaves foundations with inefficient investment portfolios. Some have begun diversifying by using a proportion of cash flows to diversify their portfolios. But more creative solutions are surely feasible, such as total returns swaps, a form of derivative.

“There is clear potential for foundations to cooperate, both in dovetailing their programmes to maximise impact, and in sharing best practice, infrastructure and potentially in pooling financial risks and jointly supporting projects.

“The new foundations also bring a corporate culture, particularly in driving innovation, into the philanthropic sector that could have spin offs for the rest of the sector too. This could result in new innovations such as social impact bonds, philanthropy markets, activist investing, and so on.”


The Empowerment Endowment report is based on a year-long research exercise into the charitable and community components of the 100 largest JSE companies’ empowerment deals implemented since 2002, when community schemes started to be included in BEE deals. It follows an earlier research report by Intellidex, The Value of BEE Deals, which considered the top 100 companies’ deals overall. The sources for this research included the published documents of the companies, but also extensive interviews and other engagements with various company executives to obtain information. Additionally, Intellidex interviewed several other individuals involved in philanthropy who provided background information and context.

By Heidi Dietzsch

We continue our overview of the basic methods of data collection and how they are evolving. Last month we discussed paper-and-pencil (PAPI) interviewing.

After decades of struggling with PAPI – time-consuming, error-prone and costly data collection method – the advent of the computer was a real game changer for market research.

When IBM launched the personal computer in 1981, the potential of quantitative research increased exponentially. Computer-assisted telephone interviewing (CATI) and computer-assisted personal interviewing (CAPI) became the primary quantitative data collection methods. CAPI replaced the clipboard and paper questionnaire in face-to-face fieldwork, these days often done with tablet computers, while CATI improved and simplified traditional telephone interviews.

CAPI and CATI are similar, but with CAPI the interview takes place in person instead of over the telephone. With CATI, trained interviewers in a specialised call centre conduct the interviews. All interviews are recorded.

One of the advantages of CAPI and CATI is that they use sophisticated software that allows automatic questionnaire routing where irrelevant questions or sections can be skipped. This simplifies the interviewer’s work – they no longer have to struggle through complex routing in paper questionnaires. Rather, they can focus on guiding respondents through the questions.

The software can also integrate a variety of formats – multiple choice, rating scale and verbatim questions. Rating scale questions usually use the Likert scale, named after the American psychologist, Rensis Likert, who invented it in 1932. Likert scales are designed to measure attitudes and opinions. Respondents are provided with a statement and indicate to what extent they agree or disagree with it. Usually five or seven ordered response levels are used. For example: “Please agree or disagree with the following – My private banker always ensure that all my needs are met.” 1) Strongly agree 2) Agree 3) Neutral 4) Disagree 5) Strongly disagree.

One area requires extra vigilance: to set up questionnaires on CAPI and CATI systems, without any errors, is time consuming. Questionnaire routing can be complex and computer programmers need to ensure that this works flawlessly. Before fieldwork can start, researchers have to do thorough questionnaire testing. One small error in a questionnaire can lead to massive problems with the data.

Data collection using CAPI and CATI is more efficient and accurate because the interviewer enters answers directly into the computer rather than on a paper questionnaire. This eliminates the separate data capturing step where mistakes can creep in. Furthermore, with these two methods interviewer errors resulting from incorrectly following questionnaire routing and skip patterns are eradicated.

Despite their similarities, CAPI poses some restrictions that CATI does not, and vice versa. For instance, CAPI interviews sometimes have to take place in some strange places – crowded malls, hospitals, remote villages or busy inner-city street corners. This means interviewers can face challenging and even dangerous situations. Of course, failing battery power and intermittent internet coverage create their own problems.

While CATI interviewers are permanently stationed in call centres and thus do not struggle with the above, they also experience challenges. For instance, when there are many verbatim questions, interviewers need excellent typing and spelling skills. Poor data entry may lead to time-consuming data cleaning. Also, interviewers need to capture answers within the context it was intended, otherwise it could lead to compromised data integrity.

CAPI and CATI definitely made the lives of market researchers easier compared to older methods. Although these two methods have some disadvantages, they are widely used and most market research companies have invested heavily in them. At Intellidex we use CAPI and CATI interchangeably, together with digital collection methods.