Chapter 7: Trends and future directions
SNAPSHOT
Most companies are planning to increase their support of community but with deeper involvement in a narrower range of activities. Companies are also likely to be more proactive in seeking out partners and activities that address corporate needs.
Staff engagement, including volunteering, will continue to grow with greater focus on building capacity with partners that utilise company skills and technologies. While flexibility will continue in order to address local needs, greater focus and cohesion will be sought across company entities, and there will clearer protocols around delegation and operating procedure.
Despite difficulties, companies will press on with attempts to find better approaches to measuring the outcomes of community activities and will continue to redefine relationships with non-profit organisations. These trends will have implications for non-profit management.
Some innovative approaches being taken to build the capital base and capacity in non-profit enterprises provide a model for effective delivery of social benefit.
Contextual factors that are likely to influence future directions include:
- continued growth in community expectations of corporate contributions;
- growing acceptance of mutual benefits accruing from corporate social investment leading to community investment being more deeply embedded in business models, and increased acceptance and sophistication in nonprofit organisations;
- greater demands for transparency and accountabilities on both sides; and
- increased use of corporate community investment activities and relationships as a differentiation for competitive advantage.
As Figure 7.1 shows, the overwhelming majority of companies said they have noted clear trends in corporate community involvement over the past five years.
Figure 7.1: Trends over past five years
Source: Corporate Community Involvement survey, September 2006
These trends are examined in the light of comments accompanying the survey, consulting experience, and interviews with CEOs and public affairs practitioners.
Nature and quantum of activities
While several companies were consolidating their activities, and one reported it was lowering its community contribution, most companies said they had recently increased or were planning to increase their community support:
The quantum of funds allocated for this purpose have progressively
increased and we now actively seeking out ‘worthy’ organisations.
We have a broader approach in terms of types of activities, and more
funding in line with growth of the business.
Public affairs practitioners
Several companies noted that community expectations and government pressure on corporations to support the community would continue to be drivers of greater resource commitment.
Some explained that they had reduced resources to community programs due to financial pressures. One CEO said:
During our recent financial trouble we cut out anything surplus until
we got our financial performance back. We are still coming out of that
and our involvement is modest…we are in transition and don’t have a
thought out view, but we are benchmarking with other companies to
see what they are doing and are moving to develop a proper policy.
CEO interview
Another CEO drew attention to different pressures:
While local management has discretion to do things in their
communities, our current priority has to be addressing some difficult
legacy issues in the health, safety and environment issues.
CEO interview
Regardless of different levels of involvement, there continue to be a number of clear trends in approach to activities.
The most pervasive trend is companies continuing to involve themselves in fewer activities within which they can build closer relationships – relationships that are aligned with corporate competencies and corporate values.
We are focused on providing multifaceted support for several
community organisations over the longer term, rather than providing
support on an ad hoc basis. This involves developing deeper and
broader partnerships that have become more embedded within the
organisation, that is, a genuine two-way flow of value creation.
A trend in our organisation is for a greater reliance on the
sustainability of those with whom we partner as well as alignment to
the broader corporate areas of focus and interest.
Over the next few years we will move away from sponsorship and
towards a few partnerships where there is a greater focus on meeting
community need.
Public affairs practitioners
Companies are continuing to be more proactive in seeking out activities and partners that can best meet on their needs. This means the shift will continue from responding to ad hoc requests and to more strategic consideration of goals and pre-determined criteria.
We are generally becoming more strategic and less ad hoc with more
consideration given to longer-term social benefits, staff engagement
and closer alignment with the business.
We have developed much clearer guidelines and selection criteria…
that supports projects internationally, nationally, locally and at the
employee level.
Public affairs practitioners
Another major trend is for companies to seek activities that afford greater opportunities for staff engagement, including options for volunteering. This is also aligned with a shift in focus from direct aid, towards capacity building, drawing on the skill sets and technologies of corporations.
We have moved from a number of smaller projects to even fewer and
larger. We have clear areas of focus and decision making processes
that involve employees. Employee involvement will be a critical part
of all our social investment projects.
We have a tendency to look for organisations that may provide
suitable volunteering opportunities.
Our organisation has much higher expectations about employee
involvement.
Public affairs practitioners
A more recent trend, which is expected to grow strongly in the future, is for companies with offshore operations to follow their investments with overseas social programs. This corrects a bias that has been noted universally, that companies tend to over invest in community activities in the countries of their headquarters, rather than more broadly in proportion to the scale of their operations. Several companies also said they were exploring a greater commitment to overseas aid activities, which in part also reflected staff aspirations.
In the future, we will be looking at a greater global allocation of
resources to support the developing countries where we operate.
Public affairs practitioner
Nature of decision making
Consistent with the more strategic approach of developing fewer, deeper relationships are changes in the processes by which programs are determined. On the one hand, there is a tendency to pull back to the corporate centre the development of an overarching framework and decisions concerning, and management of, the few key programs. There is also a trend to more structured protocols about community investment criteria; greater discipline around conformity to policy; ensuring commitment and consistent performance; and greater attention to achieving line management understanding of strategy and value.
We now select projects against predetermined criteria.
There has been a move to tie in programs to business strategy…
[which means] better reporting and leveraging, transparency and
respect for process.
Public affairs practitioners
About half the survey respondents reported changes in the location of decision making during the past five years. This reflects three basic developments: clarification and relocation of decision protocols at different levels of the organisation; increased engagement of communities and community leaders; and engagement of staff in decision making.
A number of companies are turning to stakeholders to help define their priorities in light of community needs. Corporations may seek advice from peak organisations such as consumer, environment or welfare groups when determining broad strategy. It is more common to consult with community leaders at the local level, to articulate local community investment priorities.
We have established a community fund which allows community
members to be involved in the decisions about projects.
[In the future,] we will establish joint committees comprising
company and community representatives administering the local
corporate community involvement program.
We want to see greater engagement of community leaders so that
programs can be tailored to individual communities.
We aim to increase employee involvement, in volunteering, sourcing
projects and decision-making. We also want to ensure continued
engagement at the senior level of the organisation.
Public affairs practitioners
Part of developing a more cohesive strategy has been deciding who should make decisions and where accountabilities lie. This is particularly important in companies operating in multiple business streams, or decentralised by geography or other factors. In recent years there have been shifts to centralise, decentralise and recentralise, as have occurred in other aspects of management.
The dominant trends in this area, however, are captured by comments from two separate companies.
We are pursuing fewer, larger, strategically focused programs with ad
hoc business level donations or programs. Some flexibility around
local programs has been retained, however with tighter guidelines in
place and support provided to the businesses in making judgements
and decisions about community support programs.’
Public affairs practitioner
For small grants we have set up committees of employees at our
sites made up of managers, operators and union representatives
to approve them. For large commitments we have developed a
Partnership Strategic Council made up of the CEO, CFO, Operations
Managers and other members of the executive lead team.
Public affairs practitioner
Finally, as discussed in earlier chapters, there is a continuing growth of staff engagement in decision making, and in particular, direct involvement through matched giving and volunteering.
Our focus is for more emphasis on employee involvement as another
way to engage with employees and retain them in a tight skills market.
Employee engagement has been a key area of focus and commitment
that has grown during the past five years. [We] have implemented
a matching program for staff payroll donations, have implemented
a day of paid leave for staff to volunteer with community partners…
[and] have seen staff become more actively involved in our
community support activities.
Public affairs practitioners
Evaluation
As noted in chapter 6, there has been an increased focus on measurement and evaluation of programs, both for their value to the firm and the community. This is manifest in discussions around establishing the business case for activities, and post hoc evaluation which leads to further commitment and decision making. Some of the feedback that relates to measurement and evaluation includes:
We are looking at better measurement of value to the business,
including measurement of in-kind contributions and employee time.
We aim to have greater participation in benchmarking projects, to
reap better experience around how to measure the intangibles.
Closer alignment with business needs and more focus on ROI and
measurement are two key developments for our organisation.
We will be focusing on more evaluation and benchmarking activities,
including further alignment with Australian and international best
practice, to ensure we have suitable program initiatives that are more
focused on community capacity building.
We will be putting more emphasis on measurement and evaluation.
This includes measuring impacts as well as outcomes of specific
projects and being able to demonstrate the total socio-economic
contribution of the business (rather than just community involvement
in isolation).
Public affairs practitioners
Nature of partnership arrangements
Companies will continue to seek much deeper associations through partnerships that are sustainable and aligned with company values and objectives. This trend increases mutual dependence, with deeper financial commitment and closer relationships in mentoring and capacity building on the one hand, and opportunities for staff engagement, reputational benefits, and greater non-profit accountability on the other.
A number of companies have sought to leverage their community investment by investing considerable funds to achieve the necessary scale to deliver ambitious programs.
The AMP Foundation’s support for the Smith Family is a case in point. It has continued to build and expand its multi-million dollar funding to the Smith Family, building trust and evaluating performance as the relationship develops. The two parties agreed that to maximise fundraising opportunities, some of its resources could be used to invest in Christmas appeals. Annual funding has evolved into triennial funding and other companies such as Macquarie Bank have been brought in to support the organisation’s capacity building and growth capital. Accenture has also joined the process, seconding three staff for a full year to develop customer relations management capabilities. Accenture’s CEO chairs the steering committee for that activity.
The value of deepening relationships with partners is reflected in the thinking of other companies.
In future, we expect a narrowing of strategy with fewer partners
where we can make more of a difference. At the moment our internal
resource is spread too thinly to give the support to our partners
which we would like.
[There is] increased emphasis on selecting and building durable long
term partnerships. Cash handovers for short-term brand benefit has
almost disappeared. There is increased emphasis on being part of the
recipient organisation’s management and administration and not just
a funding source.
We are increasing our emphasis on identifying social/environmental
issues and community organisations to then develop a partnership
with, rather than reacting to ad hoc requestions. We also ensure
more consistent use of selection criteria and reducing the number
of projects supported to increase our capacity to make a difference
to specific issues. We also have more formalised arrangements with
agreed goals, objectives, accountabilities and KPIs in place for larger
community partnerships.
Public affairs practitioners
These sorts of arrangements will compel many non-profit organisations to reconsider the way that they work with companies. Kramer and Kania suggest non-profits need to consider a number of different issues when creating crosssector partnerships (see Table 7.1).
Table 7.1: Creating partnerships
A new role for non-profits
When creating a cross-sector partnership with a company a non-profit should:
1. Seek business partners, not villains. Non-profits often have a lot of experience developing lists of companies that may have caused a particular social problem, in order to apply public pressure on those companies to change. By focusing instead on companies that have the resources to help solve the problem, a non-profit can come up with a different and greatly expanded list of potential corporate partners.
2. Help companies set affirmative goals. Many companies are looking for ways to demonstrate their corporate responsibility by developing affirmative approaches to solving social problems. But they often lack the ability to understand the issues fully and to frame ambitious but realistic goals. Nonprofits often have a deeper understanding of the social problem, which enables them to help companies devise more comprehensive strategies and set more ambitious and attainable goals.
3. Ask companies for more than money. It is relatively easy for a non-profit to target a company for a grant or a donation. It is much more difficult for a nonprofit to understand the full complement of resources that a company can bring to bear on solving a social problem. To understand those capabilities and know how to ask for them requires that non-profit managers learn a new set of skills. Mastering this approach will not be easy, but the potential power that can be deployed when business and non-profits work together dwarfs what money alone can buy.
4. Share the halo with business. Many non-profits are afraid to align themselves too closely with business partners because it may put their reputation at risk. Non-profits need to overcome that fear, because the benefits that can accrue from doing so far outweigh the risks. Non-profits can look smart, creative, and efficient by tapping business capabilities, and companies can enhance their reputations by taking affirmative steps to solve social problems. It is a win-win solution, but only if non-profits and businesses are willing to share with one another the halo effect that comes with success.
Source: Mark Kramer and John Kania, ‘Changing the game’, Stanford Social Innovation Review, Spring 2006, p.26.
Another continuing trend identified by several companies was for better marketing of the results of community support to existing employees, potential employees and key stakeholders.
Contextual trends
Finally, companies were asked to identify external environmental factors that might influence the development of corporate social investment in the mediumterm future.
The following major themes emerged:
- Growth in expectations of business to contribute to community wellbeing will not abate. Despite distrust of big business and its power, it will be expected to deepen its contribution to solving social, environmental and other community problems. Some believe that not only community and NGO expectation’s will drive this, but governments will also pressure companies to become more active. This is linked in part to the perception that government was withdrawing support in some areas, and that business would be expected to fill the gap.
- There is a growing acceptance, including in the non-profit community, of synergies to be built between corporate and community interests. This in itself would strengthen current trends to more deeply embed social obligation and community engagement into business models, and in turn, add to corporate value. Building those synergies would require increased sophistication in the non-profit sector and some possible concentration (merger or new forms of cooperation) in non-profit organisations to build scale so as to best appropriate the benefits of corporate engagement. This has obvious implications for smaller non-profits that are less able to engage meaningfully with big business.
- As relationships between the sectors deepen there will be stronger demands for corporate transparency and accountability. The trend to corporate social accounting through the triple bottom line or sustainability frameworks will continue, with pressure for external review.
- There will also be more corporate and community demands on non-profit organisations for increased transparency and accountability which will impose a greater administrative burden. But this will facilitate better management decision making. The deeper relationship with companies will bring skills transfer to assist in this area.
- As expectations for corporate community investment continue to build for, the current trend for companies to use programs and relationships as a differentiator and for competitive advantage will itself drive deeper engagement — a virtuous cycle.
Companies are becoming increasingly sophisticated in their
incorporation of community programs and partnerships and this
will most likely continue. Companies will increasingly seek to
differentiate themselves to their consumers by using CSR messages
and activities, and the private sector will play an ever increasing role
in the alleviation of disadvantage in the community.
Public affairs practitioner