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.