BBBEE in socio economic development

Non-profit organisations (NPOs) and businesses can benefit from the socio- economic development (SED) element in the BBBEE Scorecard. RUSTIM ARIEFDIEN explains

The socio economic development element is for the benefit of NPOs that, ideally, provides services to more than 75 percent black beneficiaries with disabilities. Businesses can obtain five points if they spend a percent of the net profit after tax as a SED.

All that the NPOs must have is a sworn affidavit that shows their BBBEE level if they classify as an emerging micro enterprise or qualify as a small enterprises with more than 51 percent black beneficiaries. These two categories cover NPOs that fall under the R50 million threshold.

The BBBEE Commission provides guidelines on how an NPO can benefit from SED:

  • Sustainable livelihood initiatives, limited to economic activities.
  • Building vocational, literacy and work-related skills (including self-employment).
  • Providing opportunities for adult education.
  • Income generating skills and knowledge.
  • Improvement of capacity to work (including self-employment).
  • Generation of income from productive activities.
  • Increased employability and earning power.
  • Providing training or mentoring to beneficiaries. Such contributions are measured by quantifying the cost of time (excluding travel) spent by staff or management in carrying out such initiatives. A clear justification must support any claim for time costs incurred, equal to the seniority and expertise of the mentor.
  • Maintaining a socio-economic development unit by measured entity. Only the portion of salaries related to time spent by staff promoting and implementing socio-economic development constitute contributions.

Furthermore, the Commission states: “Any support of initiatives outlined, through SED contributions cannot be charitable in nature such as mere donations that are not linked to income generation.

“Further, SED is not necessarily tantamount to Corporate Social Investment (CSI). CSI is mostly used to promote good will in communities where the measured entity operates, but does not necessarily meet the income generation test. This is usually in form of handouts, for example, donation of school uniform and books, building repairs, and donation of food parcels.”

The line between SED and CSI can easily be blurred. The key difference is that SED places less reliance on donations. Instead, the focus is on generating an income to create and maintain sustainable access to the economy.

Fundraising has become a challenging space. BBBEE SED provides NPOs with alternative funding options to the traditional CSI. Furthermore, NPOs can be present in the other elements of the BBBEE Scorecard. For example, a protective workshop that manufactures and supplies products would contribute to the procurement spend.

A NPO with a placement programme can recruit people with disabilities for permanent or learnership placements.

contributorRustim Ariefdien is a disability expert extraordinaire who assists businesses to “let the Ability of disAbility enAble their profitAbility” through BBBEE, skills development, employment equity and socio-economic development.

His purpose is the economic empowerment of persons with disability in Africa. As a person with a disability himself, he has extensive experience in the development and empowerment of persons with disability.