Socio - Economic Development (SED)
How much money must be paid towards SED
Monetary or non-monetary contributions to the equivalent of 1% on NPAT
Definition of SED
Socio-Economic Development Contributions consist of monetary or non-monetary, recoverable or non-recoverable contributions actually initiated and implemented in favour of beneficiary entities by a Measured Entity with the specific objective of facilitating sustainable access to the economy.
What does this mean?
SED seeks to encourage initiatives that enhance the ability of black people who remain non-participants in the economic mainstream to be included in participating in the economy in a sustainable manner.
SED is any programme that creates sustainable access to the economy for its beneficiaries. This means that contributions should be providing sustainable benefit, to use the old saying SED projects teach people to fish rather than giving them a fish. If a company is not creating sustainable access to the economy for beneficiaries then they are not involved with SED.
The following summarises the concept of SED.
“Socio-Economic Development is any programme that creates sustainable access to the economy for its beneficiaries. This means that contributions should be providing sustainable benefit, to use the old saying SED projects teach people to fish rather than giving them a fish. If a company is not creating sustainable access to the economy for beneficiaries then they are not involved with SED.”
Socio-economic development contributions should concentrate on two areas, namely imparting transferable skills, and enabling access to the workplace. Imparting transferable skills ensures that beneficiaries have lasting economic value to the economy. Enabling beneficiaries to access the workplace means that they accrue experience thus making them more valuable to the economy.
These above stated priorities ensure that Socio-economic development is sustainable, and the result is better equipped, more valuable contributors to the economy.
Is there a difference between SED and Corporate Social Investment (CSI)?
There should be no difference except for the fact that an entity gets BEE points if the beneficiaries are more than 75% black.
Qualifying Socio-Economic Development contributions can include:
- Monetary or non-monetary contributions
- Recoverable or non-recoverable contributions
The following is a non-exhaustive list of some examples of qualifying Socio-Economic Development contributions:
- Development programmes especially for Black Designated Groups.
- HIV/ AIDS & healthcare support.
- Support to schools and educational assistance through bursaries.
- Skills development for the unemployed.
- ABET programme support.
- Support for arts and culture.
- Guarantees/ security for beneficiaries.
- Development capital for beneficiary communities.
- Training/ mentoring of communities to assist them to increase their financial capacity.
- Investment in the social wage of employees (for example: housing, transport and healthcare).
- Infrastructure Development.
- Reconstruction in underdeveloped areas.
- Rural Communities.
- Geographical areas identified in the government’s Integrated Sustainable Rural Development and Urban Renewal projects.
Note: Contributions to third party organisations that perform qualifying SED initiatives on behalf of the measured entity will earn BEE points; it means that an entity could contribute to NPO’s with a good track record of performance. Most of these well managed NPO’s are also able to issue an Article 18 Tax Certificate, which allows the entity to claim back on Tax, which then becomes a double gain for the entity.
The following can be used as a guideline in determining whether a contribution is a qualifying SED contribution:
Socio-Economic Development Programmes commonly take the following forms:
- Development programmes for women, youth, people with disabilities, people living in rural areas;
- Support of healthcare and HIV/AIDS programmes;
- Support for education programmes, resources and materials at primary, secondary and tertiary education level, as well as bursaries and scholarships;
- Community training: skills development for unemployed people and adult basic education and training; or
- Support of arts, cultural or sporting development programmes.