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Potential Benefits of Community Involvement

Potential Benefits of Community Involvement. Businesspeople are efficient problem solvers and may bring needed skills to community issues. Employees may gain personal satisfaction which often leads to improved morale. Employees may gain new skills including in areas of leadership.

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Potential Benefits of Community Involvement

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  1. Potential Benefits of Community Involvement • Businesspeople are efficient problem solvers and may bring needed skills to community issues. • Employees may gain personal satisfaction which often leads to improved morale. • Employees may gain new skills including in areas of leadership. • A positive corporate image may facilitate hiring and retaining employees. • A company may gain prestige and greater community acceptance i.e. more legitimacy. • A company benefits if it can help institutions essential to the continuation of its business.

  2. Potential Costs of Community Involvement • Staff are spending time on activities not directly associated with the firm’s strategy. • Employees may resent distractions from work assignments. • Employees may see the activity as not appropriate or valuable. • Potential conflicts among stakeholders as to whether the community-based activity is appropriate or valuable.

  3. Managing Community Involvement • Business stake in the community • Self-interest and preservation • Direct or indirect benefits • Developing a Community Involvement Program • Knowing the community • Knowing the company’s resources and capabilities • Selecting projects • Monitoring projects

  4. Community residents Ethnic/racial composition Unemployment level Inner-city problems Organizations and leadership Social needs Managing Community Involvement KnowingtheCommunity

  5. In-kind services and goods Cash KnowingtheCompany’sResources and Capabilities Meeting space Equipment and supplies Employee paid/volunteer time Managing Community Involvement

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

  7. 1. Leadership 2. Issues Management 3. Relationship Building 4. Strategy 5. Accountability 6. Infrastructure 7. Measurement Keys to Excellence inCorporate Community Involvement

  8. Managing Community Involvement Community Involvement of Foreign-Based Firms • 81% had community involvement policies • 71% reported community expectations were important parts of their business plans • 50% were satisfied with their community involvement programs • Motivations • Moral obligations (61 %) • Community expectations (56%) • Strengthened image (56%) • Self-interest (50 %)

  9. Categories of Corporate Philanthropy Programs Non-donor “What’s in it for us” donor “Company President believes in art support” donor “We are a good citizen” donor

  10. The Evolution of Corporate Philanthropy • Coporate Philanthropy was a one time, illegal. • The test there again is not whether it [an expenditure] is bona fide, but whether as well as bona fide, it is done within the ordinary scope of the company's business, and whether it is reasonably incidental to the carrying on of the company's business for the company' benefit. . . . It seems to me that charity has no business to sit at boards of directors qua charity. (Hutton v. West Cork Railway 1883 • It seems to us that just as the conditions prevailing when corporations were originally created required they serve public as well as private interests, modern conditions require that corporations acknowledge social as well as private responsibilities. . . . such expenditures may be readily justified. . . . in terms of actual survival of the corporation (A.P. Smith Manufacturing v. Barlow et al., 1953)

  11. Others (including religious) Culture and the Arts Civic and CommunityActivities Health and Human Services Education To Whom Do Companies Give?

  12. StrategicPhilanthropy Cause-relatedmarketing PublicPurposePartnerships Sponsorships Vendorrelationships Licensingagreements In-kind donations Managing Corporate Philanthropy

  13. Managing Corporate Philanthropy Strategic Philanthropy A requirement of strategic philanthropy is to make as direct a contribution as possible to the financial goals of the firm. • Bring contributions into sharp alignment with business endeavors • Ensure that philanthropy is well planned and managed • Find the overlap providing both social andeconomic benefits

  14. FactorConditions DemandConditions Competitive Context Strategy andRivalry RelatedIndustries Managing Corporate Philanthropy Philanthropy must be congruent with competitive context

  15. Managing Corporate Philanthropy Implementation of an Effective Strategic Philanthropy Program • Integrate philanthropy into strategic goals and company mission • Connect philanthropy with other community involvement programs • Budget appropriately for philanthropy • Ensure effective program infrastructure • Formalize policies and guidelines for funding • Involve employees in philanthropy-related activities • Incorporate stakeholder communication • Develop long-term business/nonprofit partnerships

  16. The direct link of a business’s product or service to a specified charity (e.g. Ford and Susan Komen • Breast Cancer Foundation) “Quid pro quo strategic philanthropy.” A longer term commitment than cause marketing.(e.g. Body Shop and animal testing)Directly relates to the firm’s line of business and target audience. Cause-RelatedMarketing Cause Branding Cause-Related Marketing

  17. Advantages of Global Philanthropy An improvedcorporate image • A boost in market penetration Improved personal relations Improved government relations

  18. The use of outside resources to accomplish a task that was once done in-house • Relocating company owned facilities • to other countries to take advantage • of lower wage rates or other favorable • conditions. “Outsourcing” “Off-shoring” The Loss of Jobs

  19. Business and Plant Closings Diversification Before Decidingto Close New ownership New owner Employee ownership

  20. Business and Plant Closings Advance Notice • Worker Adjustment and Retraining Notification Act • Requires firms with 100 or more workers to provide60 days advance notice before shutting down or conducting layoffs

  21. Business and Plant Closings Community Impact How will they be affected? What groups will be affected? What is the duration of the impact? What is the timing of initial and later effects? What is magnitude of the effect? To what extent will the impact be diffused in the community?

  22. Conduct a community impact analysis Provide advance notice After Decidingto Close Provide transfer, relocation, andoutplacement benefits Phase out the business gradually Help attract replacement industry Options with Business and Plant Closings

  23. Emotional support The Needs ofSurvivors Directional support Tactical support Emotional support Business and Plant Closings

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