New report from the Yetu Initiative sheds light on corporate giving in Kenya

The goal of the Yetu Initiative[1] is to build an ecosystem for local philanthropy in Kenya. In so doing, the programme seeks to address the lack of trust and over-reliance on external funding which is dwindling, and which has forced the closure of several non-profits. Local philanthropy also enables greater ownership of development initiatives, thus contributing to sustainability; a key cross-cutting concern for development in the 21^st century.

This study on Corporate Philanthropy in Kenya was conducted between April – July 2017, with the objective to understand the landscape of corporate giving in Kenya. Specifically, the study sought to: map out players; establish drivers and deterrents of giving; and understand the processes and criteria used by corporates to select benefitting organizations.

60 companies drawn from nine economic sectors participated in this cross-sectional survey. The research established that 77% of them practiced corporate philanthropy. The manufacturing, ICT/technology, banking and finance sectors emerged as the most notable players, having consistently given KES 1 million (US $10,000) and above between 2014 and 2016. It perhaps isn’t a surprise that larger companies gave more than smaller companies but, interestingly, larger companies were more structured in their giving. They employed a more strategic approach characterized by clarity on their thematic focus and structured reporting, which wasn’t the case with small and medium-sized enterprises (SMEs).

While 61% of companies mentioned that their philanthropic decision-making took place within a specific internal department, there were inconsistencies. Decision-making departments varied from Chief Executive Officer, Human Resources, Corporate Affairs to Sales and Marketing and even Communications. In line with Yetu’s earlier research on Why Kenyan’s Give, whose focus was on individuals, the preferred thematic areas were health, poverty alleviation, and economic empowerment, with a significant skew (49%) giving to initiatives that fall under the theme of education.

It was noteworthy for Yetu that the greatest beneficiaries of corporate profits were local Kenyan non-profit organizations. This could be explained by existing beliefs that they are more in touch with issues affecting the common citizen, yet less-likely to attract international funding when compared to their international counterparts or government institutions. The four main decision factors for corporate giving were: credibility (20%); ability to impact the underserved (18%); presence and composition of the governing board (16%); and, track record (16%).

The study found a focus on in-kind, rather than direct financial support, and significant (62%) employee engagement in philanthropic activities. Besides alignment to business strategy, it emerged that corporates are now also actively seeking to align themselves to the Sustainable Development Goals (SDGs).

In terms of the legal environment, the Kenyan Income Tax Act allows for tax deductions on sponsorship and support provided to tax-exempt entities. However, this hasn’t been fully tapped; in part because the processes of obtaining tax-exempt status of processing refunds is opaque and onerous. The Betting, Lottery & Gaming Act provides for a significant percentage of profits to be channeled to charitable work. Furthermore, theme-specific acts such as the Persons with Disability Act and the Energy Sector Law include provisions for tax exemption.

The need for corporate mapping, thematic forums with business entities, and investment in strategic communications are among the recommendations provided from the study. CSOs will also need to demonstrate greater accountability and impact. Finally, CSOs are encouraged to increase their visibility as credible partners through various private sector driven platforms such as The Global Compact UN platform for private sector involvement in the SDGs – hosted by the Kenya Association of Manufacturing (KAM), Institute of Certified Public Accountants in Kenya (ICPAK) and Kenya Bankers Association (KBA) that also engage their members on community philanthropy and SDGs.

With the increasing appreciation of the role that the private sector stands to play in enhancing development outcomes, there couldn’t have been a better time to conduct such a study. The civil society and business sectors have for a long time been perceived to have an ambivalent relationship, characterized by a lack of shared values, and limited capacity and expertise on the side of civil society to effectively engage with the business sector. The rift is further deepened by limited information and understanding on how each sector engages in community development. This study complements Yetu’s ongoing work on private sector engagement which seeks to bridge this divide. With 77% of corporates expressing a “High Probability” of establishing partnerships with CSOs, the future is brimming with opportunity!

By: Phyllis Engefu Ombonyo, Program Director, YETU Initiative, Aga Khan Foundation (East Africa)

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[1] Yetu is an initiative for and by Kenyans with funding support from USAID and the Aga Khan Foundation in East Africa (AKFEA).