PART TWO OF A TWO PART SERIES
Ten Things You (Probably) Didn’t Know About Philanthropy in South Africa
by Philip Faure, Citadel Wealth Management
1. South Africa has only four billionaires (US has 442) and 60 000 millionaires. By 2016 the number of millionaires is expected to grow to 240,000.
2. In attempting to redress the inequalities of the past, many new black Rand millionaires and billionaires have been created. Philanthropists are emerging in this space with the majority of their giving directed closer to home, in their own extended families and communities.
3. In an attempt to redress the unequal distribution of wealth, South African companies are required to comply with broad-based Black Economic Empowerment legislation. Part of a company’s annual score card, includes corporate philanthropy, known as Social Economic Development. Companies are required to spend 1% net profit after tax on social uplift.
4. Philanthropists in South Africa are in general far more private than elsewhere in the world, preferring to operate “under the radar”. In 2013 the first African philanthropist, Patrice Motsepe, joined the Giving Pledge.
5. Philanthropy is still in its infancy in South Africa. Inyathelo – The South African Institute for Advancement, has taken the lead in growing philanthropy in the country. Although not formally appointed, they are considered the Industry Body and are host the annual Inyathelo Philanthropy Awards ceremony.
6. Social Enterprises and Impact Investment funds have been around for some time, but are not yet accepted as main stream investments. Interest and activity levels continue to grow, driven by the likes of the African Social Entrepreneurs Network (ASEN) and the Bertha Institute for Social innovation at the University of Cape Town’s Business School.
7. No capital gains tax, donations tax or estate duties are payable on donations to a Public Benefit Organisation (charities and foundations registered with the South African Revenue Service). However, income tax incentives for donations to PBO’s are limited to 10% of annual taxable income. The South African Private Philanthropy Circle recently made a submission to the National Treasury and Revenue Service with recommendations to changethe Income Tax Act and other restrictive legislation.
8. Donor-advised funds (DAFs) are still not well understood or used. South Africa’s first Donor advised fund was launched in 2013.
9. Nelson Mandela International Day is an annual day to honour the legacy of Nelson Mandela, and his values, through volunteering and community service. Nelson Mandela fought for social justice for 67 years, and on the 18th of July each year, people are asked to do 67 minutes of volunteering.
10. African cultures in Southern African have for generations practiced their own form of philanthropy, called “Ubuntu”. Translated this means “I am because we are”. This is the essence of being human, we cannot exist in isolation, and we are all connected.