GUIDELINES FOR MANAGING FUNDS DONATED BY CORPORATES

Public Benefit Organisation: 930049399

1. PURPOSE

1.1 These general guidelines set out the terms of engagement by the Social Justice Initiative (“SJI”) in the management and disbursement of funds donated by corporates (“Donors”) in support of civil society organisations that defend and advance South Africa’s democracy.
1.2 The guidelines could also be useful for civil society organisations in general when entering into partnerships with corporates.

2. ABOUT SJI

2.1 The SJI is a non-profit organisation that mobilises resources in support of civil society organisations that promote and enable the realisation of human rights and social justice, in line with the Constitution of South Africa.

3. RATIONALE

3.1 Corporate funding comes with risks, given the conduct of these entities. Decisions on whether to accept corporate funding may therefore be problematic for civil society organisations that promote and defend democracy. This issue has been magnified in the aftermath of the revelations on state capture, where a number of potential Donors have been involved in conduct that is unethical or transgresses codes of good governance. Accepting funds from certain corporates may undermine the values and principles that civil society organisations stand for and has the potential risk of reputational damage.
3.2 These guidelines have been created for the SJI to navigate its relationship with Donors in a manner that does not undermine the integrity and the work of civil society organisations. The guidelines are to be shared with Donors before the SJI enters into a contract with them and are to be published on SJI’s website.

4. CONDITIONS UNDER WHICH FUNDS MAY BE CONSIDERED

4.1 All funds donated by Donors will be placed in a basket fund (“the Fund”) held by SJI, which should be underpinned by a mission statement serving one or all of the SJI focus areas as listed below:
4.1.1 promote accountability in business and state entities;
4.1.2 enable access to justice; and
4.1.3 protect freedom of expression and media.
4.2 The mission of the funds managed by the SJI must be in line with the Constitution of South Africa and seek to strengthen, advance, and defend South Africa’s democracy and its institutions; and enable equitable access to rights, services, and resources.
4.3 Subject to 4.4 below, funds may only be accepted from Donors who as part of their support for social justice, commit themselves to:
4.3.1 uphold the Constitution, its values and the rule of law;
4.3.2 commit to act with integrity and challenge discriminatory practices and corruption;
4.3.3 ensure that no funds are the proceeds of crime (including funding emanating from activities such as “State Capture”); and
4.3.4 commit to paying taxes that are due to the SA Revenue Service.
4.4 In the event that any funds emanate from institutions that are associated with “State Capture”, then SJI shall have the discretion to accept such funding, provided that it is satisfied that after taking all the circumstances into account:
4.4.1 appropriate disclosure and remorse has been shown by the Donor;
4.4.2 appropriate sanctions have been taken against the relevant individuals; and
4.4.3 a donation of this nature to civil society can be viewed as playing an acceptable role within the Donor’s policy of contrition and reparation.
4.4.4 a donation of this nature is not used as a marketing tactic.

5. PRINCIPLES GUIDING SJI’s PARTNERSHIP WITH DONORS

The following principles guide the management of the partnership:
5.1 INTEGRITY
5.1.1 The Fund shall be used only to support activities or pursue objectives which fall within the framework of its defined mission.
5.1.2 The Fund shall not pursue the commercial or other interests of those from whom it obtains its funding.
5.1.3 The Fund shall not support or oppose any political party or faction within a political party.
5.1.4 The Fund shall support only registered non-profit organisations that work within the parameters of the South African Constitution. Only in exceptional cases shall the Fund be used to pay legal fees directly to a legal firm.
5.1.5 Donors accept that the funds they provide are to promote social justice and they shall have no right to attempt to extract any financial or other advantages from this or to use the fact that they have donated to the Fund to influence potential criminal or civil proceedings against themselves.

5.2 AUTONOMY OF CIVIL SOCIETY
5.2.1 The autonomy of civil society organisations shall be maintained at all times. In this context, the inherent power imbalance between Donor and beneficiary is recognised and if there is any conflict in this regard, SJI will act in the interests of civil society organisations.
5.2.2 The Donor shall not in any manner dictate to or seek to influence civil society organisations that are selected by the SJI Board as beneficiaries.

5.3 CONFIDENTIALITY
5.3.1 Confidentiality shall apply to all information which is received during the period of the Fund’s operations.
5.3.2 This does not apply to information that is:
(a) in the public domain; or
(b) required by law to be disclosed; or
(c) required to be disclosed to insurers or legal advisers; or
(d) independently developed as part of the evaluation process; or
(e) received from a third party without restriction and without a breach of a duty of confidentiality.

5.3 CONFIDENTIALITY
5.3.1 Confidentiality shall apply to all information which is received during the period of the Fund’s operations.
5.3.2 This does not apply to information that is:
(a) in the public domain; or
(b) required by law to be disclosed; or
(c) required to be disclosed to insurers or legal advisers; or
(d) independently developed as part of the evaluation process; or
(e) received from a third party without restriction and without a breach of a duty of confidentiality.

5.4 TRANSPARENCY AND COMMUNICATION
5.4.1 The Donor shall
(a) Publicly disclose information about its anti-corruption/ethical conduct programme and its implementation,
(b) Publicly disclose its compliance with regulatory statues, and act within the law,
(c) If it wishes to do so, conduct its own independent audit process on the management of the Fund. The SJI’s obligations in this regard are set out below.

5.4.2 The SJI shall:
(a) Be transparent in terms of the procedures it uses to make grants and in terms of all the operational and strategic processes it undertakes to achieve its mission,
(b) Publish the names of all Donors without restriction,
(c) Share its financial statements with Donors, and
(d) In order to permit Donors to conduct due diligence on its systems and processes, the SJI will provide Donors with the information required for such due diligence, subject to Donors accepting that all such information is to remain confidential.

5.5 ACCOUNTABILITY
5.5.1 The Donor shall:
(a) Have an internal policy, aimed at raising awareness of its integrity commitments and values,
(b) Reveal to SJI the source of funds allocated for a donation,
(c) Ensure that the donated funds are generated in an ethical and lawful manner.
5.5.2 The SJI shall:
(a) Provide a public annual report on its activities to the Donor,
(b) Be committed to good programme management in terms of undertaking appropriate due diligence assessments before issuing grants,
(c) Monitor the performance of beneficiaries for purposes of its internal evaluation.

6. DUE DILIGENCE OF CORPORATES

6.1 SJI shall conduct due diligence on the Donor. This process entails:
6.1.1 Phase 1 Preparations: setting goals and priorities for the work.
6.1.2 Phase 2 Investigation Phase: This entails collecting and investigating documents, interviews and any other valuable information.

6.1.2.1 SJI will investigate the following areas:
(a) Finances
(b) Legal
(c) Employees, Human Resources, Internal and External Policies
(d) Business Structure and Governance
(e) Operationsconduct that is unethical or transgresses codes of good governance. Accepting funds from certain corporates may undermine the values and principles that civil society organisations stand for and has the potential risk of reputational damage.
3.2 These guidelines have been created for the SJI to navigate its relationship with Donors in a manner that does not undermine the integrity and the work of civil society organisations. The guidelines are to be shared with Donors before the SJI enters into a contract with them and are to be published on SJI’s website.

6.1.2.2 Donors are expected to have a:
(a) Publicly stated commitment to anti-corruption,
(b) Publicly stated commitment to ethical conduct,
(c) Public commitment to be compliant with all relevant laws, including anti-corruption laws,
(d) Code of conduct/anti-corruption policy explicitly applied to all employees, agents and intermediaries, contractors and suppliers,
(e) Anti-corruption training programme for all staff,
(f) Policy defining inappropriate gifts, hospitality and travel expenses,
(g) Policy that explicitly forbids facilitation payments, and
(h) Channel through which employees can report potential
violations of policy (e.g. whistleblowing) etc.
SJI will consult with social justice organisations that have the tools to verify the information given by the corporate; for example, Open Secrets or Just Share.

6.1.2.3 Phase 3 Result Phase: A report will be prepared based on findings in phase two. This is then discussed, and a decision is then made.

7. RESPECT FOR THE INDEPENDENCE OF THE SJI IN THE SELECTION OF
BENEFICIARIES

7.1 The Donor shall have no role to play in the selection process of beneficiaries and shall not seek to influence it in any way.
7.2 The partnership shall fall within the established framework of SJI’s grant making process.

8. PUBLIC STATEMENTS

8.1 Neither the Donor nor SJI, without the prior written consent of the other, shall issue or make any public statement regarding the other, either during negotiations to partner or after agreement has been reached, unless it is necessary for a party to make a public statement in order to comply with the law in the Republic of South Africa.
8.2 If the parties agree to make any public statement about their partnership, a copy of such statement or announcement is subject to the written approval of each party prior to publication.
8.3 The beneficiaries of the basket funds shall remain SJI’s beneficiaries and therefore no particular donor can refer to SJI’s beneficiaries as their own at any given point.

9. FINANCIAL MANAGEMENT

9.1 The Fund that is housed within the SJI is not a separate legal entity.
9.2 It is a special project of the SJI and does not interfere with its overall programmes and focus.
9.3 Financial transactions relating to the Fund are to be conducted in a segregated account held by the SJI with its current banking institution.

10. RISK MANAGEMENT

10.1 SJI shall request and the Donor shall divulge:
(a) All confirmed incidents of corruption/unethical conduct,
(b) Allegations that affect the company’s reputation,
(c) Any incident that has impacted on stakeholders and details as to the nature of the impact,
(d) Legal action taken to deal with accusations and action taken to implement court judgments,
(e) Action taken to remedy any harm caused.
10.2 In the event of any unforeseen risk arising from a Donor’s past conduct, the Donor and SJI shall agree on steps to manage such risk.
10.3 Both parties shall commit to acting only within the terms of the agreed contract.

11. STRUCTURE OF DECISION MAKING

11.1 The SJI will select beneficiaries, conduct due diligence, and ensure that proposals are in line with the mission and criteria of the Fund.
11.2 The SJI Board will exercise the final decision in the selection of beneficiaries.
11.3 A Donor shall be informed of the management of the grant on terms agreed with the SJI.

12. GRANT MAKING

12.1 The SJI shall use its current grant making model in its management of funds donated. It will rely on its existing partnerships with grantmakers to disburse funding to beneficiary organisations.
12.2 SJI shall as a rule use outside entities in the transfer of funds and in dealing with associated administrative functions.
12.3 Direct grant making by SJI will occur under exceptional cases, when:
(a) A PBO 18A certificate is requested by the Donor.
(b) In support of an urgent intervention arising from the environment.
(c) In the absence of a grant maker willing to administer the grant.