1. community and corporation - current issues

7/30/2019 1. Community and Corporation - Current Issues

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THE COMMUNITY AND THECORPORATION


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2008 The McGraw-Hill Companies, Inc. All rights reserved. 17 - 2

Key Learning Objectives

Defining a community, and understanding the interdependencies between

companies and the communities in which they operate

Analyzing why is it in the interest of business to respond to community

problems and needs

Knowing the major responsibilities of community relations managers

Examining how different forms of corporate giving contribute to building

strong relationships between businesses and communities

Evaluating how companies can direct their giving strategically, to further their

own business objectives

Analyzing how can collaborative partnerships between businesses and

communities can address todays pressing social problems


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The Firm and its Communities


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BusinessCommunity Relationship

Relationship is one of mutual interdependence

There are expectations on both sideswhat the business expects from

the community and what the community expects from the business

List of common expectations shown on next slide

In best situations, community support of business and business support

of community are in balance


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What the Community and Business

Want from Each Other


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The Business Case for Community

Involvement

Civic engagement

The active involvement of businesses and individuals in

changing and improving communities

Reasons for community involvement

Major way to carry out corporate citizenship mission

To win local support for business activity, be granted an

informal license to operate in the community

Helps to build social capitalthe norms and networks thatenable collective action

High levels of social capital enhance a communitys quality

of life


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Community Relations

Is the organized involvement of business with the community

Grown in importance in recent years from fringe function tomainstream/strategic

Corporations have established a specialized community relations

department, either stand-alone or as part of public affairs department

Boston College Center for Corporate Citizenship study:

81% of companies now include a statement in their annual reporton their commitment to community relations

74% of companies have a written policy or mission statement fortheir community relations program

68% of companies factor community involvement into their overallstrategic plan


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Corporate Involvement in the Community

Top concerns identified in 2005 survey of communityinvolvement managers:

Education

10th year in a row was identified as top issue

Health care

Economic development

Higher education

Housing

Others including literacy, environmental issues, crime, job

training, and transportation


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Corporate Involvement in the Community

Social issues areas where a number of corporations arenow focusing their efforts:1. Economic development

2. Crime abatement

3. Housing

4. Welfare-to-work job training5. Aid to minority enterprises

6. Disaster, terrorism, and war relief

Following set of slides gives examples of these types ofinitiatives


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Micro-Credit: A New Model of

Economic Development Grameen Bank (meaning village bank), based in Bangladesh, is an internationally

recognized innovator in the field of economic development.

In 1974, Muhammad Yunus, an economics professor at Chattagong University,took his students on a field trip to a poor rural village.

There, they interviewed a woman who supported herself by crafting bamboostools.

The woman had to borrow money for raw materials at the outrageous interest rateof 10 percent a week, leaving a profit of only one penny per stool.

The professor, shocked by what he saw, began lending his own money tovillagers.

Finding that small loans helped many people pull themselves out of poverty,Yunus founded Grameen in 1983 to provide micro-creditto individualentrepreneurs who would not normally qualify for loans.

Today, Grameen has nearly two thousand branches and serves six millionborrowers. These millions of small people with their millions of small pursuitscan add up to create the biggest development wonder, Yunus has said.


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Corporate Community Involvement

Crime Abatement

Example of Minnesota HEALS

In the mid-1990s, the crime rate in the metropolitan area of St.

Paul-Minneapolis, Minnesota, had become so bad that out-of-

town newspapers called the city Murderopolis .

Collaborative alliance formed by 60 companies, includingHoneywell, General Mills, 3M, and Allina Health Systems, local

and state law enforcement agencies, and civic groups to address

public safety issues in the community.

Among the initiatives were development of an integratedinformation system for law enforcement agencies, better housing,

job training, and after school programs .

Crime rates dropped sharply, and the overall climate for business

in the city improved


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Housing

Life and health insurance companies have taken lead torevitalize housing through nonprofit organizations like the

Neighborhood Housing Services of America (NHS).

New York Citys coalition for the homeless includescorporate, nonprofit and community members.

Many corporations work with NGOs, like Habitat for

Humanity


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Welfare to Work

Example of work of Bank of America (BofA) BofA has partnered with Women in Community Service (WICS),

a nonprofit organization that provides job and life skills training to

women who are on public assistance, in prison, or are homeless or

living in public housing

Bank has contributed staff, products and services, internship

opportunities, and money to WICS, and has hired thousands of

new employees out of welfare-to-work programs

BofA has experienced many benefits: an improved reputation, tax

credits, and recruitment of motivated workers


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Aid to Minority Enterprises Example of work of Microsoft:

Microsoft spends $10 billion annually on procuring supplies and

services, 5 percent of this is directed to minority-owned businesses

According to Microsofts Director of Supplier Diversity

The general rule here, is, if all other things are equal, pick the

minority company

Microsoft works closely with its minority suppliers to refine their

business processes to make them more competitive

An example is Group O Direct, an Illinois-based firm thatprovides fulfillment services for customer promotions

Group O Direct, a Mexican-American owned firm, now has

several other high-profile clients, including SBC Communications,

and annual revenues of more than $50 million


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Disaster, Terrorism and War Relief

Example of corporate giving for Tsunami relief inDecember 2004:

Their donations, estimated to be around $2 billion, collectively

exceeded those of most governments

Many companies drew on their own expertise to lend a hand:

United Parcel Service mobilized its planes to airlift disaster relief

supplies to the region free of charge

Pfizer donated millions of dollars worth of medicines

GE sent power generators and mobile water treatment plants

British Airways, Intel, and Cisco collaborated to set up a high-speed

wireless Internet network in Banda Aceh, Indonesia, to enable

communications in and to one of the hardest-hit areas


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Corporate Philanthropy Programs

Important aspect of business-community relationship,involves corporate giving to non-profit organizations

Business is only one part of U.S. societys generous giving

patterns As shown on next slide, in 2005 $260 billion was given to

religious, charitable and other non-profit organizations

Business was small, but important, percentage of overall giving

(5%), remainder through individuals and private foundations


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Philanthropy in the U.S. by

Source of Gift, 2005Figure17.3


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Corporate Philanthropy Programs

Corporations can give directly or through establishingcorporate foundations

U.S. tax rules since 1936 have allowed 10% of companys

before-tax income to go to educational, charitable,scientific and religious purposes

Average yearly corporate giving is between 1 and 2% of pre-tax

income

In selected companies and communities, firms give as much as 5%


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Corporate contributions in the United States, as a

percentage of pretax net income

Figure 17.4


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Forms of Corporate Giving

1. Charitable donations (cash)

2. In-kind contributions

Donating products or services

Category now exceeds cash contributions

3. Volunteerism

Donations of employee time doing community work

Many companies sponsor and encourage volunteer activities

A small number of firms offer paid time off for volunteer

community service


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Corporate Giving in Strategic Context

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. Is made directly

from the company to community organizations, not

through a foundation.

Increasingly popular approach to corporate giving


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Strategic Philanthropy

Areas in which corporate contributions are most likelyto enhance a companys competitiveness, according to

Harvard Business Review study: Factor conditions - supply of trained workers, physical

infrastructure, and natural resources

Demand conditionsaffect demand for a product or service

Context for strategy and rivalry - designed to support policiesthat create a more productive competitive environment

Related and supporting industries - strengthen related sectorsof the economy, may also help companies


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Strategies to Optimize Benefit from

Contributions

Draw on the unique assets and competencies of thebusiness

Align priorities with employee interests

Align priorities with core values of the firm

Use hard-nosed business methods to assess the impact of

gifts


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Collaborative Partnerships

Introduced in Ch. 7 - voluntary collaboration between

business, government, and civil society

Education partnerships have been very effective, have

followed 4 waves:

1. Direct involvement (e.g. Adopt-a-School)

2. Application of management/business principles to school

administration

3. Public policy initiatives in education

4. Collaboration for systemic reform

Partnership model could be equally useful for other

community issues

1. community and corporation - current issues

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