Philanthropy

Community & Philanthropic Investments

Corporate investments in communities can be seen from several angles.

Pure charity
Companies across the world are supporting communities without expecting any financial benefit. This can be further divided into cases where companies consciously or otherwise, get or derive PR mileage (visit any company to see photographs of communities) and cases where companies even do not share their identity with the beneficiery community.
These investments can be one time charity acts e.g.donations to communities to celebrate local religious festival, or supporting school gathering for the students from challenged communities or otherwise ..... or can be investment in NGO partners to address social issues like education, water ....

Investment in neighbourhood community
These investments are philanthropic as well as nonphilanthropic in nature.
e.g. supplying water by tanker to the neighbouring community can be seen as philanthropic in nature because it will benefit the community. It can also be a non philanthopic investment because it may result in companies deriving goodwill - which is a big asset for companies with manufacturing facilities in developing zones. It may help companies get - some activists may say "buy" - peace ...All said and done, it still benefits the community.

Investment in environment conservation including climate change
Many companies support several local, regional, national and global issues.
e.g. sensitising school children on environment / climate change, local bird identification competitions, supporting wild life, marine life, biodiversity ...climate change sensitisation and action....
Question : Is planting trees as part of reducing carbon footprint of employees an act of philanthropy or part of business process ? Our take is later.

Investment in "Reduce, Reuse, Recycle" natural resources
Investment in "Reduce, Reuse, Recycle" of natural resources like water and energy surely benefit communities at large. Most of the companies also can not quantify how much benefit the world gets out of their investments.
Looking at these investments under the philanthropy banner may not be a correct formula. These should be seen more from the sustainability agenda.

Investment in institution building
While the earlier generation of corporate support in education has gone in institution building (e.g. Tata's have supported founding of Indian Institute of Science in 1911, Tata Institute of Social Sciences 1936, Tata Institute of Fundamental Research in 1945.), the new generation of companies - including the same companies, have started supporting university departments or chairs on special issues ( e.g. Harvard Business School Received $50 Million Gift from the Tata Trusts and Companies to fund a new academic and residential building on the HBS campus in Boston for participants in the School's broad portfolio of Executive Education programs in 2010 or the same Tata groups investment in JRD Tata Ecotechnology Centre in India in 1996).

Like education, companies have been supporting the health sector, by starting hospitals (e.g. Tata's investments in Tata Memorial Hospital in 1941 which later got converted into Tata Memorial Centre as a classic example of public private partnership or the new Tata Medical Centre in 2011 ).

The support to educational or health initiatives can be classified as pure philanthropy.

In the same space (education & health), and the same country (India), many individuals have started charitable (?) organisations and are getting direct and indirect commercial benefits out of these so called NGOs. The reputation of the NGOs have taken a beating in this area and fortunately, the government seems to have at least paper plans of taking necessary steps.

Financial equivalent of "in kind support"
Companies have been donating old computers, old furniture, and even waste paper to NGOs, and thus far, most of these investments were not part of the annual report.

Now with communities and governments demanding corporates to share their CSR investments, companies will / might (right or wrong is a debate) start putting a financial value to these donations and this might soon enter into audiro's zone.
Afterall there is no rule for equating value to a 5 year old used computer - it may be a waste because the company might want to get rid of it, or it can have a minimal value. What is important from the reputation perspective therefore, is that, companies beome transparent on the value they attach to each item.

Investment in Social Entreprises
We see this as an emerging area and predict that companies will start investing in for profit social enterprises. These investments are beneficial to the community, as well as add to the bottomline of the companies. These therefore can not be pure philanthropy. (Announcement : CSR Consulting will offer Social Entrepreneurs a platform to present their businesses to social investors. We will start with countrywise listing and then move to global listing.)

Philanthropy Search Engine

CSRidentity.com has worked on a search engine which helps you select companies based on their name, group name, country, industry and also the philanthropic interest of the company. The search takes you to the website of the company for further information.

This search engine is getting operational for philanthropic initiatives of Global Fortune 500 companies, Forbes 2000 companies and ET 500 companies.

CSR Budget and number of issues

Companies must make efforts to sensitise multiple stakeholders including their own people, the NGOs, governments, media, consumers at large etc that their CSR budgets are far bigger than their philanthropic investments because CSR runs throgh every business process at every step. Having said this, it is important that companies must have sizeable philanthropic investments, anywhere upwards of 1% PAT. Various governments are now trying to woo corporates to put more. e.g. there is a move in India to force companies to set aside at least 2% PAT for philanthropic initiatives.

Without going in for debates on the percentage points, here is what CSR Consulting recommends for companies.
Please use local currency units for budget

Encourage volunteering for higher involvement and impact

Companies must have strategic nonfinancial investments with their NGO partners to bring more out of the same investments.

At one end, companies must encourage employees to invest time with communities and at the other, ensure management development of their NGO partners (e.g. the brand / product / marketing department can help NGOs market themselves better, the CFO's office can help companies invest their corpus ...)

Working on the larger canvas, companies should support local, regional and national governments with strategic inputs on areas like financial planning, strategies...

Format for documenting investment in community & philanthropic initiatives

Community & Philanthropic Investments
Pure charity
One time sponsorships for eventsdonations
Investments in NGOs to address social causes
Investment in environment conservation & enhancement including climate change
Investments in reduce, reuse & recycle of water and energy resources
Investments in institutional building
Financial equivalent of in kind support e.g. donation of computers
Others

Core competency volunteering : Hours and $ or equivalent currency
Community based volunteering : Hours and $ or equivalent currency
Stakeholder (Beneficiery Community) meetings :
Yearly meeting between CSR team & beneficiery groups without NGO partner
Yearly meeting between CSR team, beneficiery groups, NGO partners, Other funding partners, media just like AGM of the company

Programme Documentation
Documentation of success / failures of the programme as seen by the beneficiery community and other partners by CSR department, external auditors in text, audio and video forat

Withdrawl plans
By the company in units of number of years
By the NGO partner in units of number of years

CSR Consulting Services

Identifying issues, NGO partners
Programme documentation
Volunteering Management (Facilitation / Audit)
Research paper on industrywise philanthropic initiatives
Research paper on issuewise philanthropic initiatives
Research paper on countrywise philanthropic initiatives

To know more, mail to Business@CSRidentity.com