Chapter 9. Community Relations and Strategic Philanthropy. Community Stakeholders. A community includes those members of society who are aware of, concerned about, or in some way affected by the operations and output of the organization. Physical vs. cybercommunity.
Community Stakeholders A community includes those members of society who are aware of, concerned about,or in some way affected by the operations and output of the organization. Physical vs. cybercommunity
Community Stakeholders (cont.) Issues of concern include: Pollution of the environment. Land use. Economic advantages to the region. Discrimination. Exploitation of workers and consumers. “Neighbor of choice” An organization that builds andsustains trust within the community.
Shell Malaysia co-sponsored the annual traditional song and dance festival for secondary schools in Miri and Bintulu Division since 2000. YTL Corp sponsored “Tunku – The Musical” at the Kuala Lumpur Performing Arts Centre (KLPac) from 12–15 September 2007 with free tickets given out to the public for all performances.
Community Stakeholders (cont.) The relationship between a business and the community should be symbiotic. A business may support educational opportunities in the community because the owners feel it is the right thing to do, but it also helps develop the human resources and consumer skills necessary to operate the business.
Community Relations The organizational function dedicated to building and maintaining relationships andtrust with the community. Often supports local community through philanthropic activities. More strategic significance within the organization. Develops community mission statements to identify the needs of the people relative to the organization’s competence.
Community Relations (2/3) Because community needs and concerns change, the organization will need to adapt its community relations efforts. A company may need to conduct a community needs assessment to determine key areas in the community that require support and to refine the company’s community mission.
Common Myths about Community Relations No local government/community consent is necessary. Talking to the community will create trouble. One-way communications efforts are sufficient to improve community relations. Implementation is easier without community relations. The community cannot add anything meaningful to this process because it is too technically complex. Community leaders will request costly or unreasonable solutions.
Responsibilities to the Community Economic issues Legal issues Ethical issues Philanthropic issues
Economic Issues Business is vital to the community. Buyer-seller interaction stimulates the economy. Companies hire, train, and buy supplies, raw materials, utilities, advertising services, and other local goods and services. A company’s departure or retrenchment froma community can be devastating tothe local economy. Downsizing Plant closings
Legal Issues A company must operate within legal and regulatory parameters. Companies are granted a license to operate. Business license Many mega-retailers have facedrejection because people believethey threaten small “mom & pop”businesses.
Ethical Issues Companies may evaluate the role and impact of their decisions on communities from an ethical perspective. Business leaders are taking greater responsibility for determining how they can assist in improving communities. Supporting education. Waste management. Safety issues. Supporting environmentalinitiatives.
Philanthropic Issues Historically this has meant providingsupport for worthy causes. Gifts Grants/$ Other resources Volunteer programs Employees donate time in support of social causes (volunteerism). Communities benefit from the application of new skills and initiative toward problems, and companies develop better community relations.
Volunteerism Painting at Selangor Cheshire Home by HSBC’s Deputy Chairman & CEO and volunteers
Philanthropic Contributions Philanthropy- provides four major benefitsto society. Improves the quality of life and helps make communities places where people want to do business, raise families, and enjoy life. Reduces government involvement by providing assistance to stakeholders Develops employee leadership skills. Helps create an ethical culture and the valuescan act as a buffer to organizational misconduct.
Strategic Philanthropy The synergistic use of an organization’s core competencies and resources to address key stakeholders’ interests and to achieve both organizational and social benefits. Goes beyond traditional benevolent philanthropy. Involves both financial and non-financialcontributions to stakeholders. Involves employees, organizationalresources, and expertise.
Strategic Philanthropy (2/2) Strategic Philanthropy refers to corporate giving that is linked directly or indirectly to business goals and objectives. Strategic philanthropy involves both financial and non-financial contributions to stakeholders, but it also benefits the company (i.e. both the company and society benefit from the gift).
- Nestle’s collaboration with farmers in Serkin, Sarawak who plant traditional red rice, a key ingredient for the Nestle infant cereal is an example of strategic philanthropy that strengthens related sectors of the economy and which also benefits the company.
Examples of Corporate Philanthropy
Strategic Philanthropyand Social Responsibility Companies often consider philanthropy after meeting financial, legal, and ethical obligations. Strategic philanthropy is often viewed as an investment that is tied to business strategies and implementation. By incorporating philanthropy in strategic planning, the company can address the needs and concerns of key stakeholders.
Cause-Related Marketing An organization’s products are tied directly to a social concern. Percentage of sales are usually donated to a cause appealing to a relevant target market. Overall goal is to increase product sales for a defined periodof time. Charity partners often assist in promoting the alliance(e.g. Rumah anak yatim Darul Izzah, BBB; Rumah Pemulihan & Penjagaan Warga Tua, JB)
Employees as Stakeholders Key concern of most organizations isattracting, socializing, and retaining competent and qualified employees. Strategic philanthropy initiatives give companies the opportunity to increase: Employee commitment. Employee motivation.
Customers as Stakeholders Companies constantly seek to differentiate themselves in consumers’ minds. Strategic alignments with social causes of interest to customers can help to create differentiation.
Business Partners as Stakeholders Companies are increasingly asking business partners for: Social audits of their companies. Adoption of industry codes of ethics. Socially responsible actions in their business practices.
Community andSociety as Stakeholders Society expects businesses to be good corporate citizens and to contribute to the well-being of society. Groups of companies and industry associations are working to extend the philanthropic efforts of their member companies.
Natural Environment as a Stakeholder Environmental causes are of interest to all stakeholders. Environmental abuses have damaged company and industry reputations and resulted in lost sales.
Benefits of Strategic Philanthropy Firms can declare up to 10% of pretax profits as tax-deductible contributions. Employees can develop a stronger sense of loyalty and commitment to their employer. Customer loyalty can increase as consumers see the synergy between a company’s core competencies and social causes. Overall reputation in the community can beenhanced and government and communityrelations can be strengthened.
Implementation ofStrategic Philanthropy Must have the endorsement and support of the CEO and other members of top management. Top-level support allows organizational members and stakeholders to see the importance of the program to the company. Companies need to find their unique method and not clone what competitors are doing. Positioning in consumers’ minds.
Planning andEvaluating Strategic Philanthropy Research Should cover a company’s internal organization and programs, potential partnering organizations, sponsorship options, and events that might intersect with the interests and competencies of the organization. Organize and design Classifies research information according to level of need and alignment with organizational competencies. Engage Engage top management early. Spend Decide where to invest resources.