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Drop in giving has ramifications for all kinds of South African entities that rely on donor grants to survive

Recently Nedbank Private Wealth brought out the fifth edition of The Giving Report (2022) which provides the results of a 2021 survey on the giving practices of high-net-worth individuals (HNWIs) in South Africa. To qualify as a HNWI, participants required earnings in excess of R1.5-million a year or owned investable assets of more than R5-million, excluding their primary residence – 409 HNWIs took part in the survey, but only 4% reported their annual income as exceeding R5-million.  

Most favoured areas of focus for individual givers included social and community development, religious institutions, education, animal welfare and health. Only 3% of funding went to environmental causes and nothing went to arts and culture or the promotion of democracy and good governance. This is an interesting outcome as it indicates that people are not looking at systemic issues such as climate change or bad governance and corruption, but prefer to deal with the symptoms of both.  

The report did not indicate the size of donations, but did provide information on how often people donated. This did not provide real clarity as some people indicated giving more than 50 times a year and 40% gave to individuals unrelated to themselves. This could be giving to car guards, people at traffic lights and people collecting funds door-to-door, and might show how much goodwill exists if there was clarity on this data.

While most of it appeared to be good news, one quite shocking figure emerged that could have ramifications for all kinds of entities that rely on donor grants for their survival. The assessed cash amount donated from HNWIs dropped substantially from R6.1-billion in 2018 to R4.2-billion in 2021. Similarly, the amount donated in goods and services dropped from R3.1-billion in 2018 to R2.6-billion in 2021. This happened at a time when the number of HNWIs in South Africa had grown from 135,700 in 2018 to 147,836 in 2021, and therefore giving should have increased somewhat.

Yes, Covid-19 took its toll on everyone in the country and businesses and incomes decreased. Millions of people dropped out of “middle-class” ratings into poverty. Yet, generally HNWIs were not hit as hard, with 70% of respondents indicating they were still financially secure or even more secure, while 20% were less financially secure. A 30% decrease seems quite remarkable, at a time when people were pouring money into Covid-19 causes such as the Solidarity Fund, into neighbourhood CANS, into Gift of the Givers and other organisations providing relief.  

How does one make sense of these numbers and the outpouring of money during the pandemic that might counter the figures? We should perhaps recognise that money from individuals who supported the Solidarity Fund and other entities during Covid came from large numbers of non-HNWIs making their contributions. There has always been the view that the poor are more philanthropic than the rich in terms of the contributions they make as a percentage of their income. In an article in the 2020 IPASA Annual Review of South African Philanthropy, Leila Davids wrote about the Solidarity Fund. She explained that 300,000 individuals made direct contributions to the fund through its website and crowdfunding channels; at supermarket tills across the country including in some of the poorest areas of the country where people made small donations at Shoprite. As an example, she mentioned the residents of Mafikeng who alone raised R1.6-million through Shoprite. The average donation through crowdfunding was R42 and donations through the website averaged R4,300. 

The drop in giving is not unique to South Africa. The Charities Aid Foundation in the UK found that 4.9 million fewer people donated money to charity between January and April 2022 compared with the same period in 2019. The only spike in donations was to provide assistance to people affected by the Russian invasion of Ukraine. 

While the Nedbank Giving Report focuses mostly on Covid as one of the key drivers of the drop in giving, there is little analysis of other factors that might have contributed to this. These include the substantial emigration of HNWIs over the past few years. On 6 May 2022, Michael Haldane wrote in Moneyweb that 4,500 HNWIs had left South Africa over the past 10 years, with key drivers being safety, blackouts, corruption and economic stagnation. While this is starting to affect our country’s tax base, it also affects the sustainability of many of our non-profit organisations. It is further predicted that 350 of our “super-rich” are likely to have left before the end of 2022.

A further issue that could affect the level of giving is the breakdown of trust.  There have been numerous financial scandals involving non-profits and the lotteries, for example, while many organisations do not have adequate systems of governance. There have been other instances of lack of accountability and transparency as well as reported issues around harassment and power relations, even among well-known organisations and leaders. The Giving Report provides an interesting analysis of criteria used by donors when selecting recipients of their funds. These include the organisation’s reputation, good governance, leadership quality, sound financial management and sustainability. 

The report focused solely on HNWIs and it may be a mistake to assume that this is the dominant source of individual giving in South Africa. According to Whizy Kim in Vox on 27 September 2022, the “wealthy are just one of a giant ecosystem of generosity” and that by focusing the spotlight on the wealthy, we render other giving invisible. Other forms of giving in South Africa include the value of millions of people sharing their resources, giving their time and efforts to community priorities, providing in-kind donations to others in need (as individuals gave tins and packets of food to deal with food insecurity during Covid), and even mutual aid such as stokvels.   Society does notice primarily the giving of HNWIs, and they are frequently recognised for their philanthropy. While not detracting from the importance of such giving, it needs to be seen in the larger context as to how people survive with mutual help in times of poverty, unemployment and inequality. 

Where does this leave the thousands of non-profit organisations in South Africa that are undertaking essential services that the government has long given up? They are being affected badly by inflation and the reduction of international grants, failure by the lotteries to provide financial support and the unwillingness of donors to fund their overheads. It is time for South Africans to recognise the role played by multiple organisations in keeping our society together, demanding accountability from the state and filling in the gaps and damage done by both the market and our government.

Originally published in the Daily Maverick

Shelagh Gastrow

Gastrow Consulting

Shelagh Gastrow provides advisory services to the philanthropy sector, higher education advancement and non-profit sustainability. She works with individuals and families on how to integrate their wealth and their values into meaningful and effective philanthropy. From 2002-2015 she was founder and executive director of Inyathelo and focused her efforts on strengthening civil society and universities through programmes to develop their financial sustainability whilst promoting philanthropy in SA. Her work has gained public recognition locally and internationally.

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