Good Honest Dollar $$

Introduction

The purpose of this post is to discuss the advantages of companies becoming actively involved in social or community projects - as opposed to simply handing out large corporate donations to charities.

The potential drawbacks to this approach toward Corporate Social Responsibility (CSR) will be discussed next Friday.

As with all articles on this site, the purpose of this article is to stimulate interactive debate. Accordingly, please feel free to voice your opinion in relation to this topic by clicking on ‘comments’ above.
 

The Coca Cola Story: A River in Trouble

Major problems face the Matagua River in Guatemala, on which millions depend for their water supply.

These include erosion, pollution, water born disease and seasonal overuse.

But do not fear – The Coca-Cola Company is there to help. In conjunction with WWF and CARE, the company created the Water Fund, an initiative in which the above organizations work with local businesses and communities to devise and implement practical solutions. (Refer Where the River Flows - Partnership in Action) These initiatives include:

• upgrading local irrigation systems;
• installing bottle rinses which use clean, highly ionized air instead of water, at the local Coca-Cola plant;
• providing environmentally friendly stoves to residents, which help to reduce dependence upon firewood and improve the water filtering capability of local forests in relation to runoff: and
• educating local communities about the dangers of using unsanitary water.

This is one of almost seventy projects across forty countries in which Coca-Cola is a participant. It’s part of a commitment which the company made in Beijing to become ‘water neutral.’ (2)

Gone are the old days

In addition, the above project illustrates a trend in terms of corporate philanthropy and corporate social responsibility.

Gone are the old days where companies simply doled out cheques at the end of the year. Nowdays, companies are going further.

Firstly, companies are donating more than straight cash. There is a tendency toward donating employee time and expertise as well as inventory and materials.

But more significantly, companies are seeking to engage communities in which they operate. They are seeking partnerships and alliances with government departments, non-for-profit organizations (NPOs) and community groups.

These are commonly being referred to as community business partnerships, and involve one or more businesses and one or more community organizations working together to achieve specific community outcomes.

Advantages of corporate engagement with the community

Is the movement toward greater business involvement with communities in CSR a beneficial trend?

There are many advantages for both communities and corporations of a more collaborative approach. These will be discussed in this article. The following article in this series will discuss potential drawbacks to this approach.

In my opinion, the advantages of a more collaborative approach toward CSR include, but are not limited to:

 
• Greater predictability in funding.

Under the old system, companies would simply send out large corporate cheques to reputable charities and NPOs at the end of the year.

One problem - in difficult economic times, these cheques may not be so large, but the community need for the service is just as great, if not greater. The upshot is NPOs having to curtail their activities at a time of greater need.

On the other hand, under a community business partnership model, companies make long term funding and resource commitments. Companies feel a greater level of commitment to these projects, and a reduction in participation in the event of difficult economic times, management changes or takeover activity is less likely.

The benefit for communities and NPOs is a greater level of certainty in relation to corporate resource commitments – a key benefit of the community business partnership model.

 
• Corporate expertise.

Companies can bring much more than financial resources to business community partnerships. They often bring facilities and much-needed expertise to the project.

In the previous post in this series, I mentioned TNT’s 48 Hour Emergency Response Team (ERT) – a team dedicated to assisting the World Food Program with logistical arrangements in order to enable a fast relief response to emergency situations. (3) With TNT’s vast resources, global facilities and expertise in transport and logistics management, they are extremely well placed to provide effective and reliable assistance to this critical program.

Unlike straightforward donations, community business partnerships allow for the community to benefit from a company’s resources and expertise - not just its cash.

 
• A tangible impact.

Community business partnerships involve tangible objectives, actions and outcomes.

When promoting their participation in such projects, companies can clearly demonstrate how the project meets specific community needs. Accordingly, these projects are likely to have a significantly greater impact on public relations and employee morale than with straightforward donations.

This is particularly true for projects which are high profile and projects which entail a considerable level of employee involvement.

 
• Greater accountability.

Related to the point above, the tangibility of community business partnerships provides both the company and the community with greater clarity in evaluating the effectiveness of CSR projects.

It can be difficult to evaluate the specific impact of a ten-million dollar donation to a charity. However, it less difficult to evaluate the impact of installing three hundred rainwater structures in India to collect rainfall for community use.

The ability to measure specific outcomes against specific objectives provides for much greater accountability in measuring whether companies are meeting their community responsibilities.

 
• Greater understanding of customer needs

Companies can compile mass amounts of data from copious volumes of customer surveys, but spreadsheets and databases have their limitations in helping the companies to understand the dynamics of their target market.

The most effective way for companies to understand their target markets is to become actively engaged in working alongside local communities. Only through active engagement can companies truly gain an understanding of local cultures and customs, and how best to tailor their products and services to meet the needs of the local target markets.

The subtle dynamics of local target markets cannot be learned by staring at numbers on a screen on the twenty-eighth floor of a city office tower.

 
• A true learning experience.

I alluded to the effect of community business partnerships on employee morale above. I wish to now expand on that point.

The effect of community based projects on human resource management extends well beyond ‘warm and fuzzy’ issues. Community based projects, if well managed, can produce real and substantial business benefits for companies from a human resource management perspective.

Community based projects allow employees to challenge and expand their comfort zones by undertaking a different range of tasks than those in their regular position. They also allow companies to experiment and what type of roles which particular perform well at tasks outside their everyday role.

Companies can use this process in at least three ways. Firstly, CSR projects can be used to broaden and diversify the skill base of their human resources. In addition, this process can help identify, develop and nurture future leaders or managers. Finally, it allows companies to experiment with different teams, foster greater collaboration and it helps to break down internal departmental barriers.

Best of all, as these are external projects, companies can experiment without any risk of an adverse impact upon core operations.

Over to you

What do you think? Are there any other advantages of community business partnerships as opposed to straightforward donations?

Please feel free to add your thoughts, insights and opinions in relation to the above topic by clicking on the ‘comments’ section at the head of this post.