What to expect from Brazilian corporate social investments in 2012 – hoping for the best, but shouldn’t we be prepared for the worst?

 

Elaine Smith and Instituto Geracao

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Elaine Smith

Trying to analyze corporate social investment in Brazil, Comunitas launched the 2011 report of Benchmarking the Corporate Social Investment (BISC) on 7 December. Figures in the report are related to the 2010 fiscal year and rely on the collaboration of 23 corporations and one independent institute in Brazil. The number may appear small, but these 23 corporations hold 171 companies in several sectors, and represent what we believe is a good portrait of the social investment in the country on a relative basis.

The BISC is inspired by the experience of CECP (Committee for Encouraging Corporate Philanthropy), which has 165 companies collaborating with data (55 out of the Fortune 100) in the US.

The idea here is not to analyze each number, as the full report and names of the contributors can be found on their site. Instead we intend to show some trends that we believe are resourceful for the industry going forward.

Volunteer social investment (unsolicited and or unrequired by law) for instance, reached R$1.6 billion. This, combined with the social investments required by local law, made the social investment of these conglomerates to reach R$2.3 billion. The volunteer portion of investments was 15% higher than 2009 if you consider the same number of companies participating in the survey in both years (the absolute number increased by 18% but the number of companies also increased).

With the focus in the volunteer social investment by these companies it is no surprise that in the qualitative analysis the main concern is on the management of the projects (on average 4.3 projects per company were evaluated). It is interesting to read about the five indicators in the qualitative analysis: 1) set of social targets and the commitment with the achievement; 2) dialogue with the public or community in question; 3) professionalization of the management; 4) evaluation and results; and 5) management transparency.

These corporations invested 40% of their resources in 2010 in education while 16% targeted economic and community development (the report also shows arts and culture as being popular, with 17.3%, but it is important to highlight the tax incentives for this area). In a country where infrastructure and education are always considered the main ‘problems’, we find it interesting that companies understand that massive investments can change infrastructure during a four-year government term, while in terms of education, decades of investments are needed to move the needle and show results with demographics.

The 2010 investments were probably decided and budgeted by these companies during the 2009 fiscal year or earlier in 2010. 35% of these investments go to NGOs’ projects (third party execution). My point of concern is what to expect for 2012 corporate investments after a tough 2011 in terms of business environment around the world? There is an entire topic in the report proving that companies’ commitment during tough times is consistent. Although investments over profits can decline, we are living in a trend where investments over revenues continue to grow on a relative basis. And 32% of this resource allocation is based on the previous year’s social budget. We have seen in the past how companies react on economic recessions. What Brazil may face in 2012 is how non-profits that rely on grants will react to a possible shortage of investments in case absolute figures decline. Are these NGOs prepared? Do they have cost controls in place? Or could we face an inflationary environment leading to struggling projects where grants are now over one year old?

Brazilians are optimists by nature. Always hoping for the best, but are we prepared for the worst?

Elaine Smith is development manager at Instituto Geração.

Tagged in: Brazil Corporate philanthropy Financial crisis Social investment


Comments (1)

Silvia Morais

Elaine, I like your analysis and reflection. It helps to think about the importance of social investors to invest in strengthening the management of NGOs. In my opinion the Brazilian social investors have increased the amounts invested and their teams, but failed to evolve in their methods of investment. In 2012 I would say that both NGOs and the private social investment managers should take the opportunity to reflect and seek to innovate in their methods of management, seeking more independence and results in their projects. Brazilians should not lose your optimism, but critical need to look what they do to be prepared for the worst.


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