The Community and the Corporation The Business-Community Relationship Community Relations Corporate Giving Corporate Giving in a Strategic Context Building Collaborative Partnerships Chapter 17

The firm and its communities Site community Geographic location of a company’s operations, offices, or assets Fence-line community Immediate neighbors Cyber communities People who use the Internet to learn about the company Communities of interest Groups that share a common interest with the company Employee community People who work near the company’s facilities Figure 17.1

What the community and business want from each other Business Participation Desired by Community Pays taxes Provides jobs and training Follows laws Supports schools Supports the arts and cultural activities Supports local health care programs Supports parks and recreation Assists less advantaged people Contributes to public safety Participates in economic development Community Services Desired by Business Schools—quality educational system Recreational opportunities Libraries, museums, theaters, and other cultural services Adequate infrastructure Adequate transportation systems Effective public safety services Fair and equitable taxation Streamlined permitting Quality health care services Cooperative problem-solving approach Figure 17.2

The business case for community involvement Civic engagement The active involvement of businesses and individuals in changing and improving communities. Reasons for community involvement To act in a socially responsible way. To win local support for business activity. Helps to build social capital—the norms and networks that enable collective action.

The importance of community relations Center for Corporate Citizenship study: 80% of companies now include a statement in their annual report on their commitment to community relations. 78% of companies have a written policy or mission statement for their community relations program. 65% of companies factor community involvement into their overall strategic plan.

The 10 most critical social issues facing communities 1. Education (K-12) 2. Economic development 3. Health care 4. Environmental issues 5. Literacy 6. Education (higher) 7. Transportation 8. Housing/job training (tie) 9. Child care 10. Unemployment Figure 17.3 Source: Kathleen Witter, Community Involvement Index 2003 (Boston: Center for Corporate Citizenship at Boston College, 2003), p.2

Corporate involvement in the community Economic development Crime abatement Housing Welfare-to-work job training Aid to minority enterprises Disaster, terrorism, and war relief

Three kinds of corporate philanthropy Cash In-kind contributions Volunteer time

Philanthropy in the United States (by source of gift, 2002) Figure % 5.1% 11.2% 7.5% Source: AAFRC Trust for Philanthropy, Giving USA 2003, p. 8. Total: $240 billion

Corporate contributions in the United States (as a percentage of pretax net income, ) Figure 17.5

Priorities in corporate giving (percentage of corporate cash and in-kind contributions to various sectors) Figure % 31.6% 12% 8% 16.5% Source: Sophia A. Muirhead, Corporate Contributions in 2001: Executive Summary (New York: The Conference Board, 2002), p.8.

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.

Strategic contributions Areas in which corporate contributions are most likely to enhance a company’s competitiveness (Harvard Business Review study): 1. Factor conditions—such as the supply of trained workers, physical infrastructure, and natural resources. 2. Demand conditions—that affect demand for a product or service. 3. Context for strategy and rivalry. Company donations sometimes can be designed to support policies that create a more productive environment for competition. 4. Related and supporting industries. Charitable contributions that strengthen related sectors of the economy may also help companies.

Strategies to help companies get the most benefit from their contributions 1. Draw on the unique assets and competencies of the business. 2. Align priorities with employee interests. 3. Align priorities with core values of the firm. 4. Use hard-nosed business methods to assess the impact of gifts.