How Community Investment can bring you good ROI

How Community Investment can bring you good ROI (return on investment ).

Investing in your community ‘/for me is a no brainer, you operate in that community and any improvement in the community adds to your image and your credibility. Your neighbours in the least will notice your work and this could go a long way in. On the other hand the repercussion for not having any meaningful input into the development of your community can be serious.

How do we define our community? The word has a number of definitions and sociologists have not yet agreed on a standard definition. One of Webster’s dictionary’s (Webster n.d.) definitions goes thus “an interacting population of various kinds of individuals (as species) in a common location”. I like this definition of community because it shows the importance of the operative word “interacting”. What makes a community is the interaction that goes on within the various entities in that common location.

A business entity is part of a community because it interacts with other members of the community. It is important for a business to identify who other members of the community are and to discover the role that business is expected to play in the community. While the community may not have clear boundaries and governance, there are clearly defined rules and expectations that go beyond words that are in force all the time. Some of these factors are ethical in nature, a business that damages the environment that other members of the community uses is not going to get on well with the other members of the community. To make matters worst, if the community members are consumers or have influence over the consumers this could have adverse effect on profitability.

The idea of community investment is to show that by taking care of certain things in the community, the business is investing in its community. Every sensible investment should give back good returns to the investor. Businesses do give to the community, but my opinion is don’t just give, invest in the community. The concept of corporate giving is altruism, giving to help the less privileged is a good idea but community investment goes deeper, it looks various issues including sustainability of the project and impact assessment of the investment. Many good intentioned projects start in the community and stops when the money runs out, it doesn’t have to be so when the approach is long term and “investment” minded (Bhpbilliton n.d.) .

Shareholders especially the older ones are generally more interested in using their money to make a different where ever they can. The idea of the company not only helping the community but doing it in an organised way always goes down well with the older investors.

So how do you invest in the community? The place to start this process is in the area of corporate strategy, where are we going as an organisation? What are our goals and objectives? The answers to these questions will form a backdrop for the crafting of a community investment strategy that will fit the overall purpose of the business. For example a pharmaceutical company supporting a cancer charity is a good fit, a telecommunications company providing free telephone services to an orphanage is another great fit.

Community investment strategy should be a mandatory part of the overall CSR strategy for every business, the days of giving to any cause “just to get rid of the money” must stop. Responsible businesses are strategic even in their CSR, they want to optimise their investment, they want good return on invest, they want to make a real difference and not just play lip service to CSR.

Written by
Dr. Tunde Ewedemi
Principal Consultant for
Skyhigh Consulting UK


Reference:

Bhpbilliton (n.d.) Community Investment [Online] Available at:
http://www.bhpbilliton.com/bb/sustainableDevelopment/socialResponsibility/communityInvestment.jsp [Assessed on 2nd March 2010]

Webster (n.d.) Community [Online] Available at: http://www.merriam-webster.com/dictionary/community [Assessed on 2nd March 2010]