Innovative funding models help to sustain welfare organisations

Innovative funding models, such as the one devised by Nedgroup Investments are becoming increasingly important to help sustain local welfare organisations, says Chantel Cooper, Director of Rape Crisis in Cape Town.

Nedgroup Investments, through its Renaissance Fund, a unit trust fund managed by Heather Jackson of Cadiz African Harvest Asset Management, has been making quarterly donations to Rape Crisis and three other welfare organisations since 1999. The other three charities are Childline, Habitat for Humanity and the National Institute for Crime Prevention and the Rehabilitation of Offenders (NICRO).

Cooper says regular support by the local private sector to Rape Crisis and other welfare oganisations is vital, as international funding is drying up. "More and more, international funding is channelled to other 'problem areas' in the world, because South Africa is no longer perceived as in need of funds to deal with its wide-ranging social crises. The country's economy is seen as booming and therefore it should be able to deal with issues such as violence against women through its own resources", says Cooper.

She pointed out that South African companies have started contributing to a number of programmes, but the school of thought remains that the state should be responsible for addressing social issues. The reality, however, is that the state is not able to do so on its own. This is where civil society organisations, assisted financially by private sector support from companies such as Nedgroup Investments, play a very important role. Importantly, these organisations are able to specialise on specific issues and to work with individuals at grass roots levels.

Nic Andrew, Head of Nedgroup Investments, says the Nedgroup Investments Renaissance Fund has donated close on R2.4 million during the past eight years. Donations are paid quarterly and for the 1st quarter of 2007 the Nedgroup Investments Renaissance Fund has contributed almost R40 000 to each of the four organisations.

Andrew says the money comes from two sources. Nedgroup Investments donates 60% of the initial fee earned on investor money flowing into the Nedgroup Investments Renaissance Fund to the four beneficiary organisations. In addition, together with the manager of the fund, Nedgroup Investments donates 30% of the annual investment management fee.

Andrew explains that the fund works somewhat differently to many other social investment funds, which are often restricted in terms of where they can invest. By contrast, the Nedgroup Investments Renaissance Fund is not limited to certain stocks, so the portfolio can be structured to generate optimal returns. In this way, performance is not jeopardised as investors receive unconstrained investment performance. (The fund returned 30.2% per annum for the three years ended 30 March 2007*.)

"This enables us to provide the best of both worlds, fulfilling the mandate to investors, while contributing to community upliftment without any compromises or conflicts," says Andrew.