The Community and the The Community and the CorporationCorporation

The Business-Community Relationship Community Relations Corporate Giving Corporate Giving in a Strategic Context Building Collaborative Partnerships

ChapterChapter

17

The firm and its communitiesThe firm and its communities

Site community

Geographic location of a company’s operations, offices, or assets

Fence-line community

Immediate neighbors

Cyber communities

People who use the Internet to learn about the company

Communities of interest

Groups that share a common interest with the company

Employee community

People who work near the company’s facilities

Figure 17.1

What the community and business want from What the community and business want from each othereach other

Business Participation Desired by Community

Pays taxes Provides jobs and training Follows laws Supports schools Supports the arts and cultural activities Supports local health care programs Supports parks and recreation Assists less advantaged people Contributes to public safety Participates in economic development

Community Services Desired by Business

Schools—quality educational system Recreational opportunities Libraries, museums, theaters, and other

cultural services Adequate infrastructure Adequate transportation systems Effective public safety services Fair and equitable taxation Streamlined permitting Quality health care services Cooperative problem-solving approach

Figure 17.2

The business case for community involvementThe business case for community involvement

Civic engagement

The active involvement of businesses and individuals in changing and improving communities.

Reasons for community involvement To act in a socially responsible way. To win local support for business activity. Helps to build social capital—the norms and networks that

enable collective action.

The importance of community relationsThe importance of community relations

Center for Corporate Citizenship study: 80% of companies now include a statement in their annual report

on their commitment to community relations. 78% of companies have a written policy or mission statement for

their community relations program. 65% of companies factor community involvement into their

overall strategic plan.

The 10 most critical social issues facing The 10 most critical social issues facing communitiescommunities

1. Education (K-12)

2. Economic development

3. Health care

4. Environmental issues

5. Literacy

6. Education (higher)

7. Transportation

8. Housing/job training (tie)

9. Child care

10. Unemployment

Figure 17.3

Source: Kathleen Witter, Community Involvement Index 2003 (Boston: Center for Corporate Citizenship at

Boston College, 2003), p.2

Corporate involvement in the communityCorporate involvement in the community

Economic development Crime abatement Housing Welfare-to-work job training Aid to minority enterprises Disaster, terrorism, and war relief

Three kinds of corporate philanthropyThree kinds of corporate philanthropy

Cash In-kind contributions Volunteer time

Philanthropy in the United States Philanthropy in the United States (by source of gift, 2002)(by source of gift, 2002)

Figure 17.4

Corporations

Foundations

Bequests

Individuals76.3%

5.1%

11.2%

7.5%

Source: AAFRC Trust for Philanthropy, Giving USA 2003, p. 8.

Total: $240 billion

Corporate contributions in the United StatesCorporate contributions in the United States(as a percentage of pretax net income, 1964-2002)(as a percentage of pretax net income, 1964-2002)

Figure 17.5

0

0.5

1

1.5

2

2.5

1964 1968 1972 1976 1980 1984 1988 1992 1996 2000

Priorities in corporate giving (percentage of corporate Priorities in corporate giving (percentage of corporate cash and in-kind contributions to various sectors)cash and in-kind contributions to various sectors)

Figure 17.6

Education Health & human services

Civic and community Culture and arts

Other

81.9%

31.6%

12%

8% 16.5%

Source: Sophia A. Muirhead, Corporate Contributions in 2001: Executive Summary (New York: The Conference Board, 2002), p.8.

Strategic philanthropyStrategic philanthropy

Strategic philanthropy

Corporate giving that is linked directly or indirectly to business goals and objectives. In this approach, both the company and society benefit from the gift.

Strategic contributionsStrategic contributions

Areas in which corporate contributions are most likely to enhance a company’s competitiveness (Harvard Business Review study):

1. Factor conditions—such as the supply of trained workers, physical infrastructure, and natural resources.

2. Demand conditions—that affect demand for a product or service.

3. Context for strategy and rivalry. Company donations sometimes can be designed to support policies that create a more productive environment for competition.

4. Related and supporting industries. Charitable contributions that strengthen related sectors of the economy may also help companies.

Strategies to help companies get the most Strategies to help companies get the most benefit from their contributionsbenefit from their contributions

1. Draw on the unique assets and competencies of the business.

2. Align priorities with employee interests.

3. Align priorities with core values of the firm.

4. Use hard-nosed business methods to assess the impact of gifts.