Trade and Industry Minister Rob Davies has published draft amendments to the existing broad-based black economic empowerment (BBBEE) codes.

Both progressive business and the nonprofit sector are seriously questioning several aspects of the amended codes — to the extent that the Department of Trade and Industry was last week moved to issue a press statement denying that the intention of the draft codes was to disadvantage "charitable organisations".

Paradoxically, it is the changes to the socioeconomic development pillar — which currently carries the least points on the score card — that is drawing the most public criticism.

In spite of the department’s recent demurral, the intended changes have the potential to both impoverish nonprofit organisations and damage South Africa’s burgeoning corporate social responsibility culture.

At both practical and symbolic levels, this is cause for grave concern.

The inevitable result of the precept that stipulates that only contributions "with the specific objective of facilitating income generating activities for targeted beneficiaries" will be eligible for full socioeconomic development scoring, will be that companies withdraw funding from any but those organisations facilitating income generation.

The final sweeping imperative in the draft is that the full value of socioeconomic development contributions may be scored only "if at least (sic) 100% of the value directly benefits black people".

The mistake that Davies and his advisers have made is twofold and may in fact be founded in a profound misunderstanding, or even more ominously, a negation of the role of the civil society or nonprofit sector in South Africa. Most nonprofit organisations do not — and indeed should not — be in the business of facilitating "income generating activities" (although many do).

The majority of these organisations work in critical poverty alleviation and developmental areas such as healthcare, home-based care, education, child care, child-headed households, care for the aged and care for the disabled.

They help to build social capital and facilitate social cohesion.

It is ironic, given the proposed changes to the socioeconomic development requirements, that without its partnerships with this sector, the government’s developmental programmes would be very significantly compromised.

Article continues on page two: What would South Africa look like if the nonprofit sector was destroyed or drastically weakened?