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Solid foundations required for successful community trusts

An image of Tshikululu Social Investments social impact head Dipalesa Mpye

Tshikululu Social Investments social impact head Dipalesa Mpye

18th August 2023

By: Donna Slater

Features Deputy Editor and Chief Photographer

     

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Several factors can play a key and determining role in the success of mining companies’ efforts to improve environmental, social and governance credentials, especially as it relates to the management of community trusts to drive social impact, reports social investment fund manager and advisory Tshikululu Social Investments social impact head Dipalesa Mpye.

While the mining industry remains an important sector of South Africa’s economy for its financial contribution and its role as a significant employer, Mpye points out that there are on-going challenges with the transformation of the sector and the delivery of tangible benefits to mining communities.

“Achieving meaningful and measurable outcomes for host communities through the use of community trusts has not been widely successful in many instances. Some of these issues have led to tension in the communities as well as community unrest, affecting mining companies’ social licence to operate.”

Mpye says that some of the challenges arising from ineffectively managed community trusts involve inadequate representation by community members, poor communication with stakeholders and challenges with defining trust beneficiaries.

Other obstacles include challenges arising out of vulnerable and fragile community institutions, an intrusion of local politics into community trust workings, low levels of skills and capacity in oftentimes remote mining regions, and inadequate monitoring and evaluation of community trust performance and objectives.

“We partner with our clients to support them in implementing best practice, including in the area of community and stakeholder engagement. This can be challenging, but it is critical for communities and community trusts to find alignment in their development goals,” she says.

A significant portion of Tshikululu’s community trust labours go into its benchmarking assessment practises, which can be used to help clients establish sustainable community trusts that will produce sound and lasting outcomes.

With 25 years’ experience in the industry, Tshikululu conducted a benchmarking assessment for diversified miner Rio Tinto’s mineral sands mining subsidiary, Richards Bay Minerals (RBM), to present the miner with examples of best practice in areas which can be used to strengthen the governance and the social development intent of its current community trusts.

“This benchmarking exercise intended to provide input for proposed changes to the RBM trusts to address concerns and deliver a sustainable structure that operates effectively to deliver benefit to the intended communities,” Mpye explains.

Once a benchmarking assessment is concluded, its key findings are distilled into best practices that provide insights into the key characteristics shared by well-managed trusts from the perspectives of governance, operations and strategy to achieve long-term sustainable impact for the communities they serve, she says.

In conducting benchmarking assessments, Mpye says it is important to recognise the wide range of community trusts in the research and beyond that differ in their structure, context, culture and circumstances. “What works for one community trust, may not work for another community trust.”

Case-by-Case

Mpye declares that successful community trusts are established with a purpose-driven approach. “The most successful community trusts have a clear and well-defined purpose that extends beyond compliance.”

A clear purpose enables trusts to design appropriate structures and strategies, leading to long-term sustainability and social impact, Mpye emphasises.

In addition to the stated purpose, she says successful trusts have defined roles to play in the community and have identified the most important stakeholders to address.

In this regard, Mpye says strategy should encapsulate a trust’s purpose, taking into account factors such as the trust’s size, geographic context, critical stakeholders and the needs and priorities of the beneficiary communities and those of the trust’s founding company.

“A well-defined theory of change is recommended to guide the trust towards achieving its purpose,” she adds.

Strong governance and oversight also play a key role in the success of trusts, with appropriate governance structures and oversight mechanisms being their backbone. “Well-managed community trusts have trustees with appropriate, complementary skills.”

However, in noting that different trusts have varied relationships with their founding companies, Mpye says a degree of oversight by the founding company is seen as essential for good governance. “Balancing independent and founder trustees, along with community trustees where appropriate, contributes to effective governance.”

Serving the community means that related trusts should have intentional community engagement and involvement, she points out. “Effective community trusts engage consistently and transparently with their community, seeking feedback and involving beneficiaries in decision-making processes.”

While there is no one-size-fits-all model for community trusts, Mpye says it is crucial that sufficient and appropriate capacity is available to ensure their effective management, be it internal capacity or outsourced management.

Tshikululu’s long history with developing and managing community trusts has built up a base of relevant research and experience, which suggests that, as a best practise measure, such trusts avoid direct or preferential benefits for any special interest groups, including government and traditional leaders.

Lastly, she tells Mining Weekly that the monitoring and evaluation of community trusts is another area of critical importance.

“Monitoring and evaluation needs to be integrated into project planning to ensure effective tracking of outcomes and impacts. Capturing and tracking monitoring and evaluation data requires specific expertise and employing or contracting such expertise can ensure continuous tracking of the social impact of funding,” Mpye says.

Tshikululu’s social investment services include assisting companies establish and manage public benefit foundations, community trusts and empowerment vehicles with sound social intentions.

Tshikululu, having undertaken trust work in all provinces of South Africa, including urban and rural areas, works alongside investors and other development partners to achieve sustainable social impact.

The firm offers trust management, governance and financial management, project identification and management, strategy design, project and partner due diligence, stakeholder management, and monitoring and evaluation services.

Edited by Creamer Media Reporter

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