© 2005 by nelson, a division of thomson canada limited. 1 business and community stakeholders...

© 2005 by Nelson, a division of Thomson Canada Limited. 1

Business Business and and CommunitCommunity y StakeholdStakeholdersers

Search the WebThe Foundation Center is a clearinghouse that publishes the “The National Directory of Corporate Giving”: www.fdncenter.org

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Chapter Fourteen Objectives• Discuss the reasons for community involvement,

various types of community projects, and management of community stakeholders

• Explain the pros and cons of corporate philanthropy

• Differentiate between strategic philanthropy, cause-related marketing and cause branding

• Characterize the nature of, magnitude of, and reasons for business and plant closings

• Address steps that a business might take before a decision to close is made

• Identify strategies that a business might employ after a decision to close has been made

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Chapter Fourteen Outline• Community Involvement• Corporate Philanthropy or

Business Giving• Business and Plant Closings• Summary

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Introduction to Chapter 14• Positive and negative effects of

the business stakeholder– Community involvement– Corporate philanthropy– Plant closings

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Reasons for Community Involvement1. Business people are efficient problem

solvers.2. Employees gain satisfaction and improved

morale.3. A positive image facilitates hiring.4. Business gains prestige and community

acceptance.5. Social responsibility over government

regulation.6. A company benefits from helping institutions

essential to the continuation of business.

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Community Involvement

Recognition through articles, awards, and commendations

Publicity about volunteer opportunities

Executives who have board memberships

Company-sponsored projects

Ongoing endorsement of programs by CEOs

Encourage Employee Volunteerism

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Community Involvement

Company Benefits From Employee Volunteerism

• Indirect community benefits• Employee benefits• Bottom-line benefits

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Community Involvement

Resourced-Based Giving• Assess resources• Assess competencies• Determine where resources

and competencies will achieve the most good

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Managing Community Involvement• Business Stake in the Community

– Self-interest and preservation– Direct or indirect benefits

• Developing a Community Action Program– Knowing the community– Knowing the company’s resources– Selecting projects– Monitoring projects

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Managing Community Involvement

• Demographics• Environmental

and land use• Infrastructure

and physical services

• Leadership

• Leisure• Local economy• Local education• Local

government• Local health and

human services

Community Needs Assessment

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Managing Community Involvement

Knowing the Company’s Resources

Mix and range of resources•Personnel•Money•Meeting space•Equipment•Supplies•Time

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Managing Community Involvement

Selecting Projects• Plan and organize projects• Meet cost effectives business standards• Capitalize on corporate talents and resources• Involve employees in projects• Select communities familiar to the corporation• Select projects with high probability of success• Use corporate policy to support ongoing programs• Select projects that allow people help themselves

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Managing Community Involvement

Monitoring Projects• Review execution strategy for

congruence with plan and schedule

• Obtain feedback from participants

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Managing Community Involvement

1. Knowing the Knowing the communitycommunity—The corporation shouldget involvedin the communities it knows.

1. Knowing the Knowing the communitycommunity—The corporation shouldget involvedin the communities it knows.

2. KnowingKnowingthe company’s the company’s resourcesresources—Community involvementmust be cost-effective.

2. KnowingKnowingthe company’s the company’s resourcesresources—Community involvementmust be cost-effective.

3. Selecting Selecting projectsprojects—Programs should affect and interest those employees involved.

3. Selecting Selecting projectsprojects—Programs should affect and interest those employees involved.

4. Monitoring Monitoring projectsprojects—Management must run communityinvolvement like other parts of the business.

4. Monitoring Monitoring projectsprojects—Management must run communityinvolvement like other parts of the business.

Developing Community Action Programs

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Community Involvement of Foreign-Based Firms• 81% had community involvement

projects• 71% reported community

expectations were important parts of their business plans

• 50% were satisfied with their community involvement programs

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Community Involvement of Foreign-Based Firms

Motivations• Moral obligations • Community expectations • Image strengthened • Self-interest

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Business Giving:Why Do Companies Give?Nondonors: No evidence of charitable giving . . .

““What’s in it for Us”

“We Are a Good Citizen”

“We Care”

Competitiveness, even for companies with lofty goals, competitiveness still determines that corporate giving be strategic—aligned with profitability objectives.

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Business Giving:Who To Give To?• Education• Health and human services• Civic and community activities• Culture and the arts • Other organizations

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Business Giving:Managing Corporate Philanthropy• Public purpose partnerships• Global philanthropy

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Business Giving:Managing Corporate Philanthropy

Public Purpose Partnerships• A for-profit business enters into a

cooperative agreement with a nonprofit for their mutual advantage– Reconciles financial and social goals

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Business Giving:Managing Corporate Philanthropy

Strategic Philanthropy• When giving fits the firm’s overall

mission, goals or objectives by: – Contributing to a firm’s economic

success– Aligning with the firm’s business

endeavors

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Business Giving:Managing Corporate Philanthropy

Cause-Related Marketing• Direct link between product or

service and charity• Purposes of cause-related marketing

– Global marketing– Image building– Marketing to interest groups

• Cause branding

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Business Giving:Global Philanthropy - Advantages

•An improvedcorporate image

•A boost in market penetration

•Improved personal relations

•Improved government relations

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Business and Plant Closings• What should business do?

– Before deciding to close:•Propose new ownership•Explore employee ownership

– After deciding to close:•Conduct community impact analysis•Provide advance notice•Provide transfer, relocation and

outplacement•Act to phase out business gradually•Assist community with replacement

industry

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Business and Plant Closings

• Employee readiness for ownership• Union attitudes• Skills among employees• Products and markets• Technology• Proposed organizational structure• Potential funding sources

Employee Ownership: Factors

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Business and Plant Closings

What groups will be

affected?

What groups will be

affected?

How will they be affected?How will they be affected?

What is the timing of initial and

later effects?

What is the timing of initial and

later effects?

What is magnitude of the effect?

What is magnitude of the effect?

What is the duration of the impact?

What is the duration of the impact?

To what extent will the impact be

diffused in the community?

To what extent will the impact be

diffused in the community?

Community Impact

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Business and Plant Closings

Advance Notice• Worker Adjustment and Retraining

Notification Act• More notice than the law requires

Attracting Replacement Industry

• Cooperation • Assistance

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Business and Plant Closings

Gradual Phase-Outs• Buys time for employees• Buys time for communities

Benefits• Transfer• Relocation• Outplacement

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Business and Plant Closings

Factors in Plant Closing Assistance

• Size and impact of closing• Extent of corporate commitment• Length of time firm located in

community• The time the firm employed employees• Resources available to provide

assistance• Firm’s sense of social responsibility

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Business and Plant Closings

Community Lawsuits• General Motors case

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• Cause branding• Cause-related

marketing• Community

action program• Community

involvement

• Employee owned• Philanthropy • Resource-based

giving• Strategic

philanthropy• Third sector

Selected Key Terms