Research indicates there are three lessons for companies that want to ensure giving is effective and strategic, and adds value to their business

This report gives a qualitative overview of community investment by looking at some examples of how it is being practised in companies today. It finds that there is no single model, or set of guidelines, for doing community investment well. Rather, companies direct their approach so that it fits in with their own particular culture and overall strategy for responsible business. This means companies use employees, partnerships and communications in very different ways in their community investment work, as this report details.

Yet there are three overall themes that characterise the best community investment, as demonstrated by the companies surveyed for this report, whatever the profile of the business.

· Companies focus on the effectiveness of community investment, rather than its size.

· Community investment feeds into wider corporate responsibility strategy; it does not replace it.

· Companies understand the business reasons for involvement in community investment.

Quality not quantity

The best companies focus less on the scale of their investment and more on how they can make these investments in smarter, more effective ways. IBM’s corporate citizenship and corporate affairs executive for Europe, the Middle East and Africa Celia Moore says: “If you go back 15 years it was a contest of who was giving the most. Now it’s about the effectiveness of what you do.”

At Microsoft, community investment work is increasingly focusing on how best to improve the employability – or workplace IT skills – of programme participants. The company does this by supporting programmes with direct links to workforce development.

The shift to smarter community investment is evident in the increasing importance placed on measurement. Many companies surveyed here use the London Benchmarking system, or employ external researchers to help them track the impact of their activity.

The shift is also clear in the way companies are recognised for community investment work. Business in the Community, the UK membership group that promotes responsible business, recently decided to stop running its PerCent Standard scheme that, since 1986, had recognised companies that invested 1% of pre-tax profits in their communities. Its new Community Mark assesses companies on criteria such as how well they are working in partnerships, whether they are measuring and evaluating their activity, and whether they are focusing on the social issues most relevant to them as a business.

BITC’s Catherine Sermon says: “We want companies to be clear about what they want to achieve. So it’s no longer about saying ‘I want to give about a million pounds’ but rather ‘I want to make a difference to this particular cause and these are my objectives’.”

Link to strategy

In the most forward-thinking companies, community investment is strategically planned and delivered as a tool to support a much wider responsible business strategy. Companies clearly understand that community investment cannot replace managing their relationships with suppliers, or their environmental impact. Giving employees a day off a year to volunteer does not devolve you of the responsibility to develop a clear policy on unionisation or maternity rights.

While not all the companies we looked at have a separate corporate responsibility function, none is making the mistake of confusing this function with community investment. This clarity of purpose enables companies to use community investment as an effective business tool.

Business case

The best companies understand the importance of a clear business case for community investment. The case varies according to the nature of the business and its particular challenges. For an extractive company such as BP, community investment forms a key part of its ability to operate in a given area. Providing training and employment to local people and developing local suppliers are important components of BP’s ability to make a success of any given project.

For consumer-driven industries, the business case for community investment tends to centre on reputation. For Procter & Gamble, its work on building schools, vaccinations or water purification speaks in very positive ways to its consumers about the values of the company and its brands.

For Royal Bank of Scotland, with a strong tradition of looking after employees, the potential for community investment to attract, retain and develop staff is a large part of the business case.

A clear business case is essential because it enables a company to justify spending to shareholders. It also ensures all community investment has direction, since it is aimed towards specific business objectives.



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