Johannesburg — STRATE Charity Services (SCS) recently handed over cheques worth R400 000 to four charities. This is not an unduly rare event for the section 21 company, but what makes it significant is that this money was essentially fashioned from nothing; created from where previously there was nothing but incurred costs.

The money comes from share "odd lots", the small quantities of shares of little or no value that "clog up" systems and share registers and, sometimes, people's lives; stories of a single, long-forgotten share or a misplaced share certificate can hold up the finalisation of a deceased estate for years.

"They call it salami slicing," says SCS chairman Tom Wixley. "This cutting off or rounding down of the tiny odd lots."

These small quantities of shares have no value, or incur costs to either sell or simply maintain, which amount to more than the market value of the shares themselves.

But the often tiny share allocation can be ceded to SCS at no cost, and the money goes to charity. SCS, which started eight years ago, has handed over R1,6m in that time. The idea came from now retired stockbroker David Cobbet, who is on the SCS board. Wixley says Cobbet is at pains to point out it's not an original idea and that an outfit in the UK does it, and they copied them.

Cobbet approached Wixley about the idea and they went to Strate, SCS's sponsoring company, itself a nonprofit organisation, which is SA's licensed Central Securities Depository. Strate was once a department of the Johannesburg Stock Exchange (JSE) but was created as a standalone organisation in the mid-1990s. One of its functions is the dematerialisation of shares.

Once upon quite a long time ago in technological terms, if you were allocated shares, or even a single share, you would be given a certificate confirming same, which became cumbersome. Strate converts share certificates to a digital platform and all transactions can then be done electronically.

"If you have lost a share certificate," says Wixley, "as long as you're in the company share register and, hopefully, if you want to cede the shares to SCS, we work with Strate to 'recover' the allocation and move it to a digital platform."

Not that the computer world is without errors. "I have a few shares from a company I know I never bought," says Wixley. "But the computer says I did, so...."

The costs incurred in maintaining these tiny share lots, for which annual reports still have to be produced and dividends paid -- which may mean creating and delivering a cheque for 20c -- are Pythonesque in their absurdity. Whether due to the size of the odd lot or simply due to shares being devalued to being almost worthless, they are often worth less than the paper on which they used to be issued. Transactions to SCS are exempt from tax and South African taxpayers get a tax deduction under section 18A of the Income Tax Act for the amount of the donation.

All this as well as doing good and keeping a portfolio pristine by getting rid of something that has become a liability rather than an asset, practically makes it a public service initiative.

Wixley says Strate and, most importantly, stockbrokers saw enormous benefits in not only dematerialising these shares but "rounding them down" to SCS so the proceeds could go to charity. "Not only were they keen to give the money to worthy causes, but it would mobilise shares that were really just lying around and being a nuisance, and for listed companies with a large share register, they are really a pain, as they still have to write annual reports - for a share lot that may be worth as little as R50."

But they all add up.

For me it's analogous to that inspired piece of embezzlement in the UK years ago, when an employee at one of its major banks rounded down all the unmissed 1p and 2p remainders to his own account. He got caught only when he hit £1m.

Wixley concurs, in principle, though now the money goes to the needy rather than the greedy. And a large part of the project's success is the buy-in of the stockbroking world.

Stockbrokers have had a difficult time of things of late, what with Wall Street becoming a dead-end and that recession thing, but Wixley says they've got the buy-in of stockbrokers, all of whom offer this service to SCS pro bono. "They obviously have to get their clients' approval to cede the shares to us, and sometimes they actively market the initiative to their clients, which is great, because we obviously have no money to market the concept ourselves."

If you don't have a broker but have an old share certificate (that you may have mislaid), SCS will put you in touch with a broker if you want to let the shares go to charity.

"There's really no limit to how big this could get," says Wixley. "Getting the word out there is the thing.

"Computershare, a transfer and share registration company, organises and maintains the computer records for us pro bono, so every single cent can go to charity."

Odd lots can also come about when a company is taken over and there are share allocations based on fractions resulting in tiny allocations. With unbundling of companies, there are also small lots generated, which are often not worth much -- but accumulatively all of these "worthless" shares add up.

"On occasion companies go into big share swaps and sometimes it is put into the transferring agreements that any amounts less than a stipulated figure should be ceded to us. Not often though, we'd like it to happen more regularly."

One significant lump sum came from a stockbroking firm that bought another company and found some unlabelled money that had, they presumed, been set aside for charity but with no specifications, and they gave it to SCS.

Wixley, who describes his life story in five seconds - "I studied at UCT, was with Ernst & Young for 41 years, eventually becoming chairman, then retired and now sit on the trust of several boards, including Avusa " - says the charities are identified by the board, which comprises himself, Cobbett, other Strate and JSE representatives and, more recently, Paul Pereira of Tshikululu Social Investments.

Wixley notes that while the King 3 report doesn't talk about philanthropy per se, "its focus on things other than profit" has prompted business thinking around aspects of corporate social investment - a term he finds "pretentious" as he has no problem with the term charity.

"We always focus on children's charities. I feel particularly strongly about kids in SA, especially with AIDS orphans and so many child-headed households. Our society is pretty fractured anyway, and this only makes the problems worse, so we do what we can."

This year's beneficiaries are Bethany House Trust; Child Welfare; the South African Institute of Chartered Accountants' WeCare Campaign; and the African Children Feeding Scheme.

Wixley's daughter works for New Philanthropy Capital in London: "She helps the wealthy there decide where to spend their money; she's the family conscience."

I'm not sure she has sole familial rights to that description any longer; she may have to share it.