Socio Economic Development Element

 

In order to earn points under the Socio Economic Development element, contributions must be made towards qualifying Socio Economic Development Beneficiaries as follows:

 

• Black individuals, communities or groups:

• Where more than 75% of the beneficiary group are black, the full value of the contributions will be recognisable.
• Where less than 75% of the beneficiary group are black, the pro-rata percentage of the contributions will be recognisable.

 

The following is a non-exhaustive list of some examples of qualifying Socio Economic Development initiatives:

 

• Grant contributions to beneficiaries of Socio-Economic Development Contributions;

• Guarantees given or security provided for beneficiaries;

• Direct costs incurred by a Measured Entity in assisting beneficiaries;

• Overhead costs of a Measured Entity directly attributable to Socio-Economic Development Contributions

• Developmental capital advanced to beneficiary communities;

• Preferential terms grants by a Measured Entity for its supply of goods or services to beneficiary communities;

• Contributions made by the Measured Entity to third parties to perform Socio-Economic Development on the Measured Entity’s behalf. For the avoidance of doubt such contributions are regarded as having been initiated and implemented once they become contributions are regarded as having been initiated and implemented once they become payable to the third party;

• Provision of training or mentoring to beneficiary communities which will assist them to increase their financial capacity;

• Such contributions are measurable by quantifying the cost of time (excluding travel or commuting time) spent by staff or management of the Measured Entity in carrying out such initiatives;

• A clear justification must support any claim for time costs incurred, (commensurate with the seniority and expertise of the trainer or mentor).

 

 

Socio Economic Development contributions can be monetary or non-monetary.

 

The following is a non- exhaustive list of some examples of qualifying Socio Economic Development Contributions:

 

• Donations /grant contributions
• Guarantees/ security for beneficiaries.
• Development capital for beneficiary communities
• Exceptional Discounts.
• Free products or services.
• Mentoring.
• Overhead costs
• Preferential terms
• Bursaries and scholarships
• Administrative and Salary Costs associated with running a Socio Economic Development Program or unit.
• Contributions to third party organisations that perform Socio Economic Development initiatives on behalf of the measured entity

 

It is important to note that not all Socio-Economic Development contributions will attract 100% recognition. The Benefit Factor Matrix provides the recognition percentages for the different types of SED contributions.

 

Socio Economic Development Benefit Factor Matrix
	Qualifying Contribution type	Contribution Amount	Benefit Factor
Grant and Related Contributions	Grant Contribution	Full Grant Amount	100%
	Direct Cost incurred in supporting Enterprise Development and Supplier Development	Verifiable Cost (including both monetary and non-monetary)	100%
	Discounts in addition to normal business practices supporting Enterprise Development and Supplier Development	Discount Amount (in addition to normal business discount)	100%
	Overhead Costs incurred in supporting Enterprise Development and Supplier Development (including people appointed in Enterprise Development and Supplier Development)	Verifiable Cost (including both monetary and non-monetary)	80%
	Guarantees provided on behalf of a beneficiary	Guarantee Amount	3%
Contributions made in the form of human resource capacity	Professional service rendered at no cost and supporting Enterprise Development and Supplier Development	Commercial hourly rate of professional	80%
	Professional service rendered at a discount and supporting Enterprise Development and Supplier Development	Value of discount based on commercial hourly rate of professional	80%
	Time of employees of Measured Entity productively deployed in assisting beneficiaries	Monthly salary divided by 160	80%

 

The entity measures its Socio Economic Development Contributions are for the current period of assessment only ( a 1 year period).

 

No Socio Economic Development Contributions payable after the date of measurement will be recognised.

 

The compliance Target is based on the average NPAT of the Measured Entity over the three financial years that precedes the Measurement Period and will be the basis for determining the Targets unless:

 

• The Measured Entity did not make a profit on average over this three year period; or
• The average net profit margin of the Measured Entity over this three year period was less than a third of the industry norm net profit margin during the same three year period.

 

Where, either of these factors are present then the Indicative NPAT of the Measured Entity for the three financial years that precedes the Measurement Period, will be the basis for determining the Targets.

The Indicative NPAT is the Revenue of the Measured Entity for the Measurement Period, multiplied by a third of the average industry norm net profit margin for the three financial years that precedes the Measurement Period.

These industry norms are published by Statistics South Africa on a quarterly basis in the Quarterly Financial Statistics publication.

 

Formula
A = B ÷ C x D
Where:
A	Is the score for the measured indicator.
B	Is the achievement of the measured entity.
C	Is the target for that category.
D	Is the weighting for the measured indicator.

 

Example

INFO SED Beneficiary A SED Beneficiary B Other SED Contribution: R 20 000 R 10 000 R 5 000 Description: Grant Contribution Exceptional Discount Overhead Costs incurred in supporting SED Benefit Factor: 100% 100% 80%   The following information is relevant to the company in terms of Socio-Economic Development Contributions:   Indicators:   • Indicative NPAT = R 5 000 000 • Target SED Spend = 1.25% of NPAT R 62 500   Step 1 - Calculate the Total applicable SED spend across all SED Beneficiaries:   SED Beneficiary A - Applicable SED Spend: = 20 000 x 100% = R 20 000   SED Beneficiary B - Applicable SED Spend: = 10 00 x 100% = R 10 000   Other - Applicable SED Spend: = 5 000 x 80% = R 4 000   Total Applicable SED Spend: = R 20 000 + R 10 000 + R 4 000 = R 34 000   Step 2 - Calculate the points earned:   Score = (R 34 000 ÷ R 62 500) x 4 points = 2.18 points