Intombazane consists of 2 coexisting entities, namely Intombazane Holdings RF (Pty) Ltd (IH) and Intombazane Development Trust (IDT).
Intombazane Holdings is the investment arm of Intombazane and Intombazane Development Trust is its sole shareholder (100%). Intombazane Holdings is a ringfenced private company and its Memorandum of Incorporation is set up so that it exists to manage its investments, loans and dividend receipts on behalf of the trust.
Intombazane Development Trust is in the final stages of being registered as a “Not for Profit” (NPO) or Public Benefit Organisation (PBO) in terms of Section 18a of the Income Tax Act. This will allow more flexibility for companies and sponsors to contribute to this important initiative.
Sources of Funding for Intombazane Holdings (RF)
Due to the nature of the structure, each entity is positioned to maximise the benefit it could offer companies in terms of their contributions and in particular, it is geared to optimise the BEE scorecard recognition from each such contribution.
Dividends from Investments
Intombazane Holdings is the investment company and as such it’s main source of income is from dividends. A portion of dividends received are retained after repayment of share purchase loans related to each investment. Loans are ring fenced and they are managed in isolation, so there is no spill over in liabilities between investments, so if one investment may fail, it would not create a liability outside of the loan for that particular transaction.
Most of the investments are structured as vendor financed deals or done at a nominal or par value, meaning that there are no third-party security or sureties required and the interest and integrity of the structure is protected. Once the original purchase price is paid, all of the dividends can be used for the development of beneficiaries.
Enterprise Development Contributions
As a 100% Black Women Owned Entity, Intombazane Holdings also qualifies for Enterprise Development Contributions in terms of the Amended B-BBEE Codes of Good Practice and BEE Act. This funding is mainly used for marketing campaigns to promote Intombazane as a BEE partner of choice and funds are used to manage the website, develop marketing collateral and also to fund any costs related to new investments.
Depending on the negotiated transaction structure and deal value, Intombazane may agree to a deposit of not exceeding 10%, to meet the initial Net Equity requirements of the BEE Codes, or if the price for the transaction is nominal, Intombazane may pay the full purchase price upfront, as long as it does not compromise the programmes we run.
Sources of Funding for the Imtombazane Development Trust
Socio Economic Development Contributions
The Trust qualifies for SED contributions in terms of the BEE Codes. These contributions are directed to the programmes we run and form a major and sustainable component of the funding.
Companies may select Intombazane as their preferred beneficiary for Socio-Economic Development even if Intombazane is not a shareholder.
Bursaries and Stipends
Bursary funding, especially funding for studies at Higher Education Institutes are managed by Intombazane and typically forms a core pool of the Working Student Program.
Depending on the compliance requirements of Gestalt clients and contributing companies, it might be appropriate for the client to contribute a portion of their Skills Development spending to Intombazane as we offer the service of co-ordinating the application process, selection and implementation of bursary programmes without any additional fees or costs to the sponsor.
There is also a strong focus on Life Skills and all students form part of the mentorship circle and work readiness programmes run by Intombazane. As students progress in their studies, many of them become mentors for new students.
Operational Costs
We manage Intombazane’s operation costs to a minimum, but there are inevitable expenses. Gestalt agreed to a management fee agreement with Intombazane that covers the cost of setting up transactions, management of the operations and finances. The fee is 15% only and is based on net receipts, so for example if a loan has to be repaid, that repayment is deducted prior to the determination of Gestalt fees. There are also Incidental third party costs such as auditing fees and trustee fees and the cost of the marketing to attract new opportunities. Both entities conduct audit reviews annually and investment companies and sponsors are welcome to ask for access to the accounts.
We try our best to ensure that the maximum funds are available for the beneficiaries.