Using the B-BBEE legislation to access Enterprise Development funding

BEE OVERVIEW BEE has become a strategic focus for most businesses. Why? Licencing Preference policies of private sector (transformational agenda) Tenders Public perception 7 elements of BEE scorecard, each with a weighting Ownership – 20 points Management Control – 10 points Employment Equity – 15 points Skills Development – 20 points Preferential Procurement – 20 points Enterprise Development – 15 points Socio-Economic Development – 5 points 25 points for each element of the scorecard for small businesses; they may pick any four

Re-think and re-position Potential areas in B-BBEE Codes that facilitate funding BEE CODES SEDPROCUREMENTED SKILLS DEVELOPMENT

Re-think and re-position PAIN: - Points on BEE scorecard - No time to search for strategy aligned projects - BEE verification process - Play a positive role in society - Prepare integrated reports PAIN: - Require income to meet objectives - Require recurring stable income Corporate SA Non-Profit Sector

Re-think and re-position VALUE OFFERING: -Provide income to non-profit sector in exchange for services and Value Offering VALUE OFFERING: -Provide points on BEE scorecard -Provide credible offering aligned to NPO objective -Provide necessary documentation required by verification industry -Highlight and implement Corporate SAs role in society -Describe value-add in context of integrated reporting requirements Corporate SA Non-Profit Sector

What does the Codes say about ED? 3% of Net Profit after Tax needs to be spent on Enterprise Development initiatives (2% by entities who have a turnover of between R5million and R35million) Objective of Enterprise Development: assisting or accelerating the development, sustainability and ultimate financial and operational independence of that beneficiary

What does the Codes say about ED? Who can benefit? – Black owned enterprises or 25% black owned enterprises with a level 6 BEE certificate Problem – NPOs typically do not have owners Type of contributions and % claims for contributors – Grants – Loans – Equity – Human Resource Capacity – Shorter payment periods

A possible solution NPO (Pty) Ltd Corporate SED contribution ED contribution Procurement Skills spent in certain instances Dividend flow NPO required to restructure as broad- based scheme or partner with BEE partner

What BEE certificates are required NPO (Pty) Ltd Dividend flow NPO required to restructure as broad- based scheme or partner with BEE partner Independent Competent Persons Report - confirming qualification as BBOS Independent Competent Persons Report - confirming SED contributions qualify as SED for BEE purposes BEE verification certificate for procurement purposes and/or Independent Competent Persons Report - confirming ED contributions qualify as ED for BEE purposes

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