Corporate Community Involvement
Establishing a Business Case

Contents | Download PDF (98kb)

Contents

• Executive Summary
• Chapter 1: A Social Role for Business:
  Backgrounding and Concepts
• Chapter 2: State of Play: Corporate Community Involvement in Australia
• Chapter 3: Thinking Strategically
• Chapter 4: Emerging Models of Community Involvement
• Chapter 5: Including Employees
• Chapter 6: Assessing the Benefits Management issues
• Conclusion
• Appendix
• Appendix A: Research Methodology
• Case Studies
• Figures
• Boxes

Chapter 6: Management issues

We have previously concluded that many larger companies are in transition from a model characterised by a donations committee of the board or top management distributing largess to favourite causes. It is not uncommon for senior executives to still sometimes intervene to push their interests, or respond to peer group pressure or ad hoc requests. Some such activity may, of course, be meritorious and a good fit with corporate strategy and this flexibility can be an important complement to more structured processes. However, a number of companies are aware they are behind contemporary practice, are now benchmarking themselves against their peer group approaches, and developing a more strategic approach to managing community investment.

A surprising number of CEOs were not confident that they knew the extent and nature of contributions their company was currently making. Several said there would always be understatement because of the unreported — even unrecognised — contributions made in-kind, or by volunteering by managers and staff at their own discretion. A number of CEOs said they were only just starting to access overall data on their corporate contributions and community activities. Many of those who have done so recently have been surprised at the extent of activity, but also of the mixed value and performance of activities. The current trend and growing community expectation of corporate social reporting is driving some companies to collect this data, including from decentralised company operations.

Decision making

The survey of companies outlined in this report looked at the locus of various decisions affecting community investment activities. It asked about the level of engagement by various categories of decision maker in relation to:

• determining the strategy for decision;
  
• developing broad strategy for community involvement as a basis for recommending action; and
  
• determining specific initiatives, which might include selection of partners, and the nature of contracts and mutual deliverables.

The data shows that in almost all companies surveyed, public affairs staff are involved in developing and determining strategy, and deciding on specific initiatives.

Figure 6.1: Determination and development of overall strategies and specific initiatives for community involvement

Source: Centre for Corporate Public Affairs, Corporate Community Involvement Survey, September 2006

Around 60% of CEOs or boards are always, mostly or often involved in deciding broad strategy, but considerably fewer are always or mostly involved in developing these strategies, or determining specific initiatives for community involvement.

The survey demonstrates that business unit leaders or local managers are ‘sometimes’ or ‘often’ involved in decisions relating to developing and deciding strategy, and determining significant initiatives.

Drawn from the interviews and considerable experience in consulting to companies by the authors of this report, a typical scenario in a company with a considered approach would be as follows.

A board or CEO, possibly with encouragement from public affairs practitioners (who are close to stakeholder expectations and professional practice) would suggest that a strategic framework is required, and might specify some broad directions or strategic objectives.

A public affairs practitioner would explore the issues and seek peer group benchmarking or consultant advice. A draft policy would be developed in discussion with senior business unit or other managers including the CEO, and possibly interested members of the board.

In certain circumstances some key stakeholders might be engaged in dialogue, and valuable advice sought from close relationships of trust.

Some companies would establish a formal advisory body to assist in determining priorities and shaping their practice (see Box 6.1). Others might look to external consultants or a foundation board for this input.

Box 6.1: Advisory bodies on community investment

Source: Telstra, NAB

[Our organisation has created] a external advisory committee to
advise on all community and environment related activity.
We have set up community care committees and a staff steering
committee at each operating site.
Public affairs practitioners

A draft policy would then be put to the board or CEO for ratification and this would provide an ongoing framework for budgets and specific partnerships or programs.

Typical elements of a policy would be the rationale for the program, the nature of its links to business plans, and its key objectives, all of which would be considered within some tangible or intangible business case framework. A range of other factors would be outlined, typically criteria for selecting mechanisms for delivery, and control of protocols and delegations. There would be reference to budgets and how they are derived, and increasingly, a framework for measurement and evaluation.

In a number of companies deemed to be most progressive in this area the CEO (or in some cases another senior executive champion) is the driver of both the extent and nature of engagement, though invariably works with specialist practitioners in the company.

Business unit leaders and local managers in decentralised operations will normally have a delegation to spend and engage within the overall corporate framework, or will frequently have autonomy within their own profit centre to deploy resources in the direction and to the extent they see fit (though rarely these days without reference to overall corporate priorities and policy).

One problem has been keeping a handle on what is happening in decentralised companies. A reason for this concern is the increasing demand for a social or triple bottom line report on overall activities. Another is to ensure conformity with corporate positioning and policy. A third is to access information needed to ensure corporate resources are being used efficiently and effectively.

A lack of cohesion in some organisations has led to ‘forum shopping’ with supplicants approaching different business units, as well as undisciplined association with activities that do not fit the desired corporate image or indulge the interests of a particular manager.

However, overcentralisation has also been a problem. For example, one bank attempted to control all giving from the centre, leaving a local manager exposed when he was forced to deny a community group’s last minute request for a $1000 donation for the Easter Parade.

The local operations of multinational companies share some of the characteristics of business units in large Australian firms. Typically, a global company will have a framework with a set of focused priority areas such as environment (including possibly water or energy), education, or public health and hygiene. European companies, in particular, have major partnerships with global NGOs or UN agencies to assist in the delivery of global corporate programs.

Some will have a global foundation to manage some or most of their community investment. Their business entities in Australia may have access to these global resources but subsidiary companies in different geographical areas are largely responsible for funding their own programs and building their own relations within countries or regions.

The corporate headquarters of a multinational company may well have a number of specific program packages, with support materials and internal consulting support, so regional or business line entities can apply them to local conditions when appropriate.

Each entity or country will have its own mandate within its territory, but may also participate collaboratively in global activities.

Companies take a number of approaches to the issue of how narrowly defined or broad activities should be and the level of global corporate control over them. One global company in the IT industry, for example, is very specific about the narrow band of activities a division can support; others are much more permissive, allowing decentralised management to respond broadly according to specific stakeholder needs or priorities expressed by local communities.

Regardless of the content of a particular program, key factors will determine its success or value. Box 6.2 illustrates questions to ask when considering a project, as recommended by one advisory group working in this area. These questions illustrate the clear business case considerations underlying company decisions.

Box 6.2: Key evaluation questions

Source: The Consulting Network, Vienna, Virginia, USA.

 

Company initiated activities

It is not uncommon now for companies to proactively establish organisations or programs as part of their suite of community investment activities. These can sometimes involve non-profit partners. Reasons to establish a community organisation include a very specific opportunity or need that is not being addressed; an inability to find an appropriate partner; or a deep and direct contact with the ultimate beneficiaries or programs. See Box 6.3 for examples.

Box 6.3: Company initiated programs

 

Managing staff involvement

We outlined earlier in this report that a major and growing driver of corporate community investment is the expectations of staff, especially young people who are sensitive to the reputations of the firms they work in and want to include and exercise their personal altruism through their employment. It is natural then for companies to include staff in at least some areas of decision making.

There are a number of avenues for direct employee involvement in corporate community investment:

• seeking employee input into the selection of community investment programs by engaging representatives of a cross section of staff on relevant committees or foundation boards;
  
• seeking input on the direction of, for example, matched grants to specific notfor- profit partners through focus groups or staff survey;
  
• providing salary sacrifice opportunities for matched grants to nominated organisations; and
  
• direct volunteering, which can be structured in a variety of ways.

Figure 6.2 suggests staff are engaged to some extent in decisions on community investment, but not commonly in relation to strategy. In almost 50% of companies staff are engaged often, mostly or always via consultation in relation to specific initiatives.

Figure 6.2: Staff are involved via consultation in:

Source: Corporate Community Involvement survey, September 2006

It is apparent that staff are particularly involved in selecting the direction of matched giving (see Box 6.4). Through this process companies offer, for example, dollar for dollar or two for one dollar contributions (sometimes with an individual or total company cap) to worthy causes.

Staff contributions are normally salary sacrificed and paid to tax exempt nonprofit organisations. Most companies manage contributions to a limited number of organisations in order to simplify payroll management and administrative. They might select categories for employee choice, for example, specifying one organisation in each of the fields of environment, community welfare, overseas aid, the arts and public health. Staff are frequently involved in selecting partners by a representative committee, focus group or survey. Other organisations manage a multiplicity of recipient organisations through individual staff selection and report they have adequate payroll systems to accommodate this.

A variation is the quite common practice of offering a specific dollar amount annually, through staff, to organisations with which employees are actively involved. This occurs particularly where external engagement is encouraged to enrich staff development and experience.

Box 6.4: Employee giving and volunteering

Companies also take a variety of approaches to volunteering. As noted, it is common for CEOs and senior management to engage in the governance of organisations to demonstrate the value of this to others. Despite enormous pressures on CEOs, one is the chairman of one major charity, and active in two others.

We give through our Foundation, but not to any charity. Only where
our people get involved. Every one of our relationships has a Partner
of the firm involved. He or she makes the case for and is responsible
for the activity including oversighting our volunteers. It’s also tied
into their personal development — leaders in the community, leaders
in the profession.
CEO (accounting firm) interview

Volunteering, however, normally involves groups of staff engaged together on projects, or individual members of staff taking a certain amount of time on full pay to participate in community activities. It is now very common for companies to offer up to three days of paid leave annually and some companies expect their staff to engage in workplace volunteering.

Motives for programs organised in groups includes team building, as can be seen when t-shirted corporate volunteers work together on tree planting expeditions or Clean Up Australia Day.

The rapid growth of volunteering, built in part on employee interest, has resulted in a number of stress points, and unless addressed can limit the real potential value to the community.

Problems arise when there is insufficient preparation and planning in conjunction with recipient organisations. Some non-profit organisations tell horror stories of teams of volunteers seeking to help when no meaningful task has been arranged (“There are only so many times we can paint the woman’s refuge”), or when resources needed to host and use the volunteers become a greater burden than the positive contribution that can be made.

Australian business and non-profit organisations are rapidly climbing the leaning curve to ensure that goodwill converts to optimal outcomes. This is an area for urgent and deep consideration with both sectors working together.

Foundations

There has been a proliferation of domestic and international corporate foundations that operate with relevance to Australia. In recent years these are sometimes established as a separate local entity from the parent company and are funded in a variety of ways including fixed budget allocation or earnings on investment reserves.

Box 6.5 provides examples of corporate foundations in Australia. Some are ‘inherited’ and established many years ago as charitable trusts. Most have evolved into more strategic vehicles for corporate community investment.

The Westpac Foundation is an example. It evolved from the Buckland Fund set up in 1879 to help families of deceased bank officers who faced financial difficulties. The Buckland Fund was expanded into a modern charitable trust in 1999. The foundation is an independent charitable trust that provides funding to non-profit organisations that address the causes of social problems in disadvantaged communities and is an integral part of Westpac’s community investment strategies.

A number of the foundations established in recent years have been formed by American CEOs importing the concept from their home environment where foundations are more common, due to tax considerations peculiar to the USA.

While a number of foundations have been established in Australia in recent years, most companies have not established this structure. Our survey of corporate community involvement shows 37% of respondent companies includes the global foundations of overseas multinational companies, as well as the Australia foundations of their local subsidiaries, and indigenous firms. The majority of survey respondents who do not have foundations said their company was not considering establishing one in the future. Of those with a foundation, nearly half have been in existence for more than a decade, and a fifth have been in existence for six to ten years. Most indigenous Australian companies that have foundations established them since 2000. Those with longstanding foundations tend to be in the resources sector and in the finance sector, with some in the latter category initially established as a charitable trust.

Box 6.5: Foundations in australia

Source: various corporate and foundation websites

The rationale for establishing a foundation cited in the survey responses includes:

• to provide focus and visibility to corporate community involvement activities;
  
• to provide an effective and accountable means for distributing community funds;
  
• to provide independence in decision making (through a separate charter and external representation on the board);
  
• to centralise global corporate giving; and
  
• for tax and administrative purposes.

The following quotes from public affairs practitioners reinforce the various rationales.

[Our foundation] is the pure philanthropic arm of our community
involvement as opposed to our other strategies which are
implemented at a business unit level.

[The foundation] is semi-independent and does not distract or overly
involve management. It takes subjective interests and agendas out of
the decisions.
Public affairs practitioners

A notable trend in Australian company foundations is the move from ‘chequebook philanthropy’ to a broader and more strategic focus.

[Our foundation was established] to place a structure around the
large amounts of community donations and projects undertaken
by the company.

We are in the process of establishing a foundation. The rationale
for this decision is to provide focus for our corporate social
responsibility program.

We are pulling most of our engagements through to a Foundation
to enhance their visibility, and to make them better aligned to our
overall strategy.
Public affairs practitioners

Foundation activities are more likely than general company programs to respond to requests, and spread resources to a number of causes and activities, with less stringent business case criteria.

The global foundations of multinational companies often provide an international focus for community investment activities. Some foundations focus on specific issues, which may be more relevant in particular countries. For example, Nike’s global foundation focuses on empowering of disadvantaged girls, and its projects are focused in Bangladesh, Brazil, China, Ethiopia and Zambia. Australian businesses contribute to these efforts when local profits are repatriated. Other global foundations will be the major source of community funding for all its decentralised country operations.

In Australia, Citigroup’s major community partnerships are funded by its global foundation. In some cases, such as Shell, the Australian business will compete with other locations and business units for access to funds from the global foundation, while managing almost all domestic programs from within their own local budgets.

Virtually no foundation money comes to Australia — our local
initiatives are funded from local businesses.
Public affairs practitioner

Of companies that have a foundation (global or Australian foundation), our survey shows that 61% have external representatives and 64% have junior or mid-level staff engaged in foundation governance. The majority of directors on the Telstra
Foundation board are independent. Most corporate foundations in Australia however, have a working committee comprised of company executives. A review of foundations in indigenous Australian companies, however, indicated that only a minority had independent directors and published their own reports. A global foundation is more likely to have independent directors and publish regular reports.

Internal executives, including public affairs professionals who typically manage the programs, have a heavy influence in determining priorities, and these are normally pursued in the context of agreed overall corporate community involvement strategy.

While some organisations funnel a significant proportion of their community resources through a foundation, in many cases it is still only a small proportion.

Our foundation spend represents about a third of our total spend, the
remainder being stock donations and brand activities.

Only the annual return on the trust investment is disbursed on
community programs each year and this is minimal in relation to the
total spend.
Public affairs practitioners

Figure 6.3 indicates the proportion of resources channelled through the corporate foundation.

Figure 6.3: Percentage of community resource channelled through foundation

• 8% of companies do not channel any of their community resource through the foundation;
  
• 27% of companies estimate that between 1% and 19% of their community resources flows through the foundation;
  
• 4% of companies allocate 20% to 39% of their resources to the foundation;
  
• 23% of companies allocate 40–59%;
  
• 15% of companies allocate 60–79%; and
  
• 23% of companies channel 80–100% of their community resources through the foundation.

Source: Corporate Community Involvement Survey, September 2006

 

Budgets

It has not been the purpose of this study to quantify the contributions allocated to, and spent on, community investment by major companies. Attempts in any case would be complicated by inadequacies of internal corporate data, problems of definition and so on. Definition is an issue for all social reporting. For example, does a utility that provides a waver or phased payment for their services to families in emergency call the consequent opportunity cost a social contribution or should they be counted on market value that would otherwise be the cost? What of the community service obligations associated with telecommunications? And should contributions be measured in terms of direct cost to the company with or without reciprocal benefits, to recipients?

In our survey, when asked what proportion of pre-tax profit they contributed, 9% said they contributed more than 2%, 22% contributed between 1 and 2%, 15% between 0.5 and 1% and 36% contributed less than 0.5%. Asked about annual dollar amounts in cash and kind, 45% contributed less than $500,000, 37% contributed between $1million and $5 million. Thirteen companies contributed between $5 million and $20 million, and eight companies contributed more than $20 million each year.

As in other aspects of corporate community investment there is wide variation in company approaches to budgets and resourcing. As noted earlier in this report, some decentralised business units or profit centres have full autonomy concerning levels of spend while others are tightly controlled at the centre. In one company with a prescribed total pool, business units ‘pitch’ their particular needs and the value that contributions can add to the company, to determine their share.

The survey asked companies how their community involvement budgets were set (see Figure 6.4). In almost half of the companies surveyed, budgets for corporate community investment activities are set on an annual basis by the board, CEO or executive committee. A further 29% have a set annual budget based on decisions of both the corporate centre and business units, but with business unit autonomy. In only 5% of the companies is this spend ad hoc, and based on opportunities or needs as they arise. In all companies, however, senior management or the Board will have the capacity to make an exceptional case, with an ad hoc contribution, for example in relation to a catastrophic national or human event.

Nine percent claim to set their budgets within a continuing, overall fixed policy, for example, a fixed percentage of pre-tax profit or other similar method.

Figure 6.4: Budgets are principally set:

Source: Corporate Community Involvement survey, September 2006

Further investigation suggests a fixed policy for setting community budgets may be growing in popularity. Allocating 1% of pre-tax profit for non-marketing sponsorship and other aspects of corporate community investment seems to be developing as a benchmark as it is in the large corporate sector in the USA (although many companies contribute less and a number contribute significantly more).

Taking a fixed longer-term view may contribute to stability, but one risk is that recipients generate high expectations at the top of the business cycle and puts pressure on resources at the bottom of the cycle (at which time the community need might be greatest). At least one company benefiting from the mid-decade resource boom is dealing with this is ‘smoothing’. Surpluses from large funds in the best years are saved and provisioned to top up available funds in less prosperous times.

Box 6.6: BHP Billiton — funding arrangements

Source: BHP Billiton

Measurement

There is a strongly held view in some companies that ‘if you can’t measure it, you can’t manage it’. In a number of areas in public life however a more apposite statement is Einstein’s, ‘Not everything that can be measured counts, and not everything that counts can be measured.’

A number of corporate CEOs interviewed cautioned against having to have precise return on investment data before making decisions to invest in community activities, because of the intangible and amorphous nature of potential outcomes. In any event, the search for precise post hoc evaluation of community investment has been difficult. As noted in an earlier chapter, while there is an overwhelming focus on establishing a business case for these investments, a large majority of companies do so broadly, with reference only to intangibles.

Some types of activity are easier to measure than others. Some forms of causerelated marketing can generate relatively clear metrics. The value to a firm of sponsorships, for example, can be assessed more easily than partnerships and activities associated with relief of poverty or drug rehabilitation.

When assessing the performance of community initiatives, it is easier to measure inputs than outputs, and outputs than outcomes, yet the value of the activity can only be really assessed in terms of outcomes.

It is also common for companies to resist spending resources on measurement, preferring to keep overheads low and maximise the available dollars for direct community benefit. This can be a false economy and some companies routinely allocate a fixed amount (10% has been cited) of the community investment budget for evaluation.

Despite difficulties, evaluation of outcomes is important and many companies are appropriately attempting to improve their capacity in this area.

A small majority (55%) of companies surveyed said they measured the business benefits of community involvement activities. ‘Feedback from projects’ and ‘employee attitudes’ were the most commonly used measures. Least used measures nominated were ‘market share’ (most relevant when there is a connection to product or service promotions), ‘return on investment’, and ‘costs avoided’ (however these are assessed) (see Figure 6.5).

Figure 6.5: Measures used to gauge business benefits

Source: Corporate Community Involvement survey, September 2006

Figure 6.6 demonstrates that a small majority of companies surveyed felt they were moderately accomplished at measuring community involvement value for the company. A significant number (36%) felt they were not very accomplished and only 9% felt they were very accomplished.

Figure 6.6: Capability to measure and evaluate community involvement value/impact

Source: Corporate Community Involvement survey, September 2006

While only a small majority of companies measured benefits to the business, about two-thirds of companies made some attempt to evaluate benefits to the community.

For some companies, this is only done in areas deemed most easily evaluated, such as arts sponsorship (and even this would assess only direct or first round benefits). Many companies reported that evaluation was informal, anecdotal or on the basis of judgements made on stakeholder feedback. Some relied on performance in external reputation indices or rankings.

[We hold] an annual review of all programs, based mainly on
observations, rather than hard evidence.

This is more informal than formal but we look at employee
engagement, benefits of the program itself and positive outcomes
generated with key stakeholders for us and the community partner.
Public affairs practitioners

The most common form of evaluation however is by survey at various levels of rigour and formality, including surveys of recipient organisations and affected communities.

The London Benchmarking Group (see Box 6.7) provides a model for measuring community investment. It has recently established a facilitated process between companies in Australia to assess comparative performance collaboratively (see Figure 6.7).

Box 6.7: London benchmarking group

Source: London Benchmarking Group

Figure 6.7: LBG model

Source: London Benchmarking Group

An increasing number of companies are specifying, in formal agreements, key performance indicators for both corporate and non-profit partners, which require periodic evaluation of value for both parties.

Mutually agreed outcomes must be reached on an annual basis by
the community partner; this determines the availability of funding for
the following [period].

We require financial statements and governance arrangements to be
presented up front.

[We evaluate community benefits by] commissioning independent
research into the performance of the programs against initial
goals/objectives. Targets for participation in programs are set
annually in advance.
Public affairs practitioners

Another issue of growing importance is the need of companies to be satisfied with non-profit organisation stewardship of resources. An increasing number of companies encourage staff engagement in the governance or management of organisations they support financially, partly to ensure adequate stewardship of resources.

We conduct an audit of sponsorship/community engagement
program that includes a random review of community organisations.
We also have company representatives at board or management
committee level on a number of recipient community organisations.
Public Affairs Practitioner

Companies were asked whether they evaluated fiduciary controls, governance and efficiency of donations to community organisations; about half claimed to do so (see Figure 6.8) and others indicated their intention to do so in the future. Many companies that evaluate community programs require reports including metrics, audited accounts and in some cases they insist on external audits.

[We conduct an] internal and independent review of the level and size of
involvement both pre engagement and post engagement. These reviews
include focus groups, random telephone surveys and staff surveys.
Public affairs practitioner

It is also common for companies to carry out detailed due diligence at the outset of a relationship to ensure beneficiaries can deliver on their promises, that organisations are compatible, and that there are no potential reputational risks involved.

We undertake due diligence of organisations to which we support to
ensure they have adequate governance structures in place.
Public affairs practitioner

As with accountability frameworks for government grants, this performance monitoring and reporting on performance adds an administrative and cost burden on not-for-profit organisations. In some cases it has been welcome in retrospect, because it can provide new and valuable internal management information. Support for management accounting and cost benefit analysis is a common area of corporate volunteer assistance. While enhanced accountability is seen as an inevitable (and, by many, a positive) trend, companies should be sensitive to the increased demands and possible diversion from the core non-profit task that excessive administrative burdens can create.

Figure 6.8: Do you evaluate fiduciary controls, governance and efficiency of donations to community organisations?

Source: Corporate Community Involvement survey, September 2006

Companies listed in the USA (including Australian jointly listed companies) have expressed concern at the excessive bureaucracy imposed by the Sarbanes-Oxley legislation which requires detailed reporting of non-profit relationships and requires that all board members of non-profit organisations that receive funds be subjected to probity checks.

Partnerships

As can be seen in examples given in chapter 5, partnerships between business and non-profit or government (or semi-government) agencies play a major role in community investment. Government partnerships might include, for example, initiatives in communities with local government, or with welfare agencies to deal with specific social problems.

We have developed a new community investment model with specific
aims and areas of focus that we want to achieve in the community
through partnership with selected key charity partners. This model
will utilise all our resources from capital to staff, skills and other
resources available across the [organisation].

Most community programs delivered in partnership with NGOs,
however one program is delivered in partnership with Commonwealth
Government and local community organisations — in other words a
tripartite model.
Public affairs practitioners

Working with host government agencies is very prevalent for multinational companies, particularly for those working in Asia. Semi-government partnerships include relationships with UN-related organisations such as UNICEF.

While some partnerships have existed for many years, the growth in corporatecommunity partnerships reflect a shift from the ‘arm’s length’, donor–recipient characteristics of pre-strategic corporate philanthropy.

As noted above, benefits for companies of establishing deeper, longer-term relationships include establishing trusted vehicles for the delivery of activities close to the social marketplace by people who have a deeper understanding and relationship with that marketplace. Some companies have sought to develop partnerships with issues adversaries in an attempt to find common ground, break down negative stereotypes, and provide opportunities to explore each other’s perspectives.

Companies can also gain reputational capital by association with highly regarded community organisations.

The trend to develop some form of contract (formal or informal) between companies and their partners helps to optimise the value for each party. This is well illustrated by the approach taken by CRA, and as it evolved, into Rio Tinto.

The company was an early mover in Australia and internationally in developing sophisticated relationships with NGO partners. The CRA/Rio approach emerged following conflicts between the community sector and mining industries in the 1980s and early 1990s, and was driven by ‘stakeholder dialogue and engagement as an attempt to build social capital in the communities’ in which the company operated.

Criteria for success included that :

• both parties (the company and its partner) are committed to mutual benefit that can be articulated and understood by both parties;
  
• neither will be in a dependency relationship to the other as a result of the partnership;
  
• both parties are able to demonstrate the relevance of the partnership to their own stakeholders, and society at large;
  
• both parties recognise the strategic importance of the partnership beyond the immediate program’s objectives and deliverables, to the longer-term importance of sustainability, reputation, and social cohesion;
  
• both parties are committed to transparency and accountability in all aspects of the partnership, having the highest regard for individual rights and ethical, social, legal and environmental imperatives;
  
• both parties are committed to a set of principles for the relationship, including respect, recognition and regards; and
  
• both parties are committed to establishing a mutually agreeable exit strategy.

These objectives were articulated in comprehensive and formal contracts with community investment partners which set out mutual expectations and obligations, and criteria for evaluating performance.

Our organisation always establishes a Memorandum of
Understanding with organisations and evaluates the agreed
objectives at end of project.
Public affairs practitioner

Not all partnerships are established smoothly. Some non-profits are reluctant to lend their own reputations, through public association, to companies or sectors and sometimes have to manage internal constituencies that are hostile to these relationships.

The partnerships can also be mismanaged on both sides. Sue Nattrass, leader of a number of cultural organisations said, for example:

…with the drive for corporations to get their maximum value out of
sponsorships, they sometimes pressure too hard. If the ‘sponsee’
feels under pressure to be something they are not, it can destroy their
very essence, which is what the sponsor was interested in the first
place. Sometimes the sponsorship departments are under pressure
to keep working things harder and get maximum benefits — they
need to sit back and look at the wider benefits. (45)

At the same time, some organisations are reluctant to acknowledge the contribution of their supporters (although this is becoming less common). Others may be willing, but have an inadequate appreciation of the expectations or value propositions of supporters. As one researcher has suggested:

…important factors for non-profits to consider include stakeholder
orientation, stakeholder goal congruence (do the donors, non-profits
and recipients agree on the goals?), and the degree of the non-profit
inter-functional coordination (do the fundraisers communicate the
donors wishes correctly within the non-profit so that goal congruence
can be reached?). These considerations or donor satisfaction present
different challenges for non-profits to those of “profit” driven
organisations. Specifically, non-profit organisations must understand
the motivations and drivers of corporate support behaviour in order
to maximise both the level of corporate support and the level of
satisfaction of corporate supporters. (46)

Figure 6.9: Programs delivered with medium to long-term NGO or government partners

• 12% of companies do not allocate any of resources to projects delivered with NGO or government partners;
  
• 29% of companies estimate that between 1% and 19% of their community contribution resources is allocated to these projects;
  
• 29% of companies allocate 20% to 39% of their community resources;
  
• 16% of companies allocate 40–59%;
  
• 5% of companies allocate 60–79%; and
  
• 9% of companies allocate 80–100% of their community resources to projects that are delivered with medium to long-term NGO or government partners.

Source: Centre for Corporate Public Affairs, Corporate Community Involvement Survey, September 2006

 

 

Return to top

Next: Chapter 7: Trends and future directions

Previous: Chapter 5: Nature of activities

Copyright & Disclaimer | Privacy policy | Contact us | FaHCSIA home

© Commonwealth of Australia, 2006
Last modified 28 July, 2008