Chapter 9 – Community Relations and Strategic Philanthropy – Summary
More firms are investigating ways to link their philanthropic efforts with consumer interests. From a strategic perspective, a firm’s ability to link consumer interests to philanthropy should lead to stronger economic relationships. Community relations are the organizational functions dedicated to building and maintaining relationships and trust with the community. To determine the key areas that require support and to refine the mission statement, a company should periodically conduct a community needs assessment.
Companies play a major role in community economic development by bringing jobs to the community, interacting with other businesses, and making contributions to local health, education, and recreation projects that benefit residents and employees. When a company leaves an area, financial repercussions may be devastating. Because they have such a profound impact on the economic viability of their communities, firms that value social responsibility consider both the short- and long-term effects of changes in their workforce on the community.
For many firms, a series of legal and regulatory matters must be resolved before launching a business. On a basic level, society has the ability to dictate what types of organizations are allowed to operate. As more companies view themselves as responsible to the community, they consider their role and the impact of their decisions on communities from an ethical perspective.
The success of a business can be enhanced by the publicity generated from and through stakeholder acceptance of community activities. One way that organizations are exercising their philanthropic responsibilities is through volunteerism, the donation of employee time by companies in support of social causes. In structuring volunteer programs, attention must be paid to employee values and beliefs.
Many companies are finding creative ways to satisfy their responsibilities to consumers and the community. These relationships must be managed, nurtured, and continuously assessed. Resources devoted to this effort may include programs for educating and listening to consumers, surveys to discover strengths and weaknesses in stakeholder relationships, hiring consumer affairs professionals, the development of a community relations office, and other initiatives.
Generally, philanthropy involves any acts of benevolence and goodwill. Strategic philanthropy is defined as the synergistic use of organizational core competencies and resources to address key stakeholders’ interests and to achieve organizational and social benefits. Strategic philanthropy involves both financial and nonfinancial contributions to stakeholders, but it also benefits the company. As such, strategic philanthropy is part of a broader philosophy that recognizes how social responsibility can help an organization improve its overall performance. Research suggests that companies that adopt a more businesslike approach to philanthropy will experience a better image, increased employee loyalty, and improved customer ties.
Corporate giving, volunteer efforts, and other philanthropic activities should be considered and aligned with corporate strategy and financial, legal, and ethical obligations. The concept of strategic philanthropy has evolved since the middle of the twentieth century, when contributions were prohibited by law, to emerge as a management practice to support social responsibility in the 1990s. Whereas strategic philanthropy links corporate resources and knowledge to address broader social, customer, employee, and supplier problems and needs, cause-related marketing ties an organization’s product(s) directly to a social concern. By linking products with charities and social causes, organizations acknowledge the opportunity to align philanthropy to economic goals and to recognize stakeholder interests in organizational benevolence.
Many organizations have skillfully used their resources and core competencies to address the needs of employees, customers, business partners, the community and society, and the natural environment. To pursue strategic philanthropy successfully, organizations must weigh the costs and benefits associated with planning and implementing it as a corporate priority. The benefits of strategic philanthropy are closely aligned with benefits obtained from social responsibility. Businesses that engage in strategic philanthropy often gain a tax advantage. Research suggests that they may also enjoy improved productivity, stronger employee commitment and morale, reduced turnover, and greater customer loyalty and satisfaction. In the future, many companies will devote more resources to understand how strategic philanthropy can be developed and integrated to support their core competencies.
The implementation of strategic philanthropy is impossible without the support of top management. To integrate strategic philanthropy into the organization successfully, the efforts must fit with the company’s mission, values, and resources. Organizations must also understand stakeholder expectations and the propensity to support such activities for mutual benefit. This process relies on the feedback of stakeholders in improving and learning how to better integrate the strategic philanthropy objectives with other organizational goals. Finally, companies will need to evaluate philanthropic efforts and assess how these results should be communicated to stakeholders.