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]
 

Community Investment: a powerfull CSR tool

The concept of investing in a community, needs to be explored and understood by organisations who want to help their communities, whether they are digging wells or helping the orphanage. The investment approach is about making contributions with the view to seeing clearly defined changes in the local problems in the near future. This is about having sustainable change in mind even before the project starts. This kind thinking significantly affects the way businesses carry out CSR in their communities. The days of throwing money at the local problems and expecting a miraculous change are gone, community investment is the responsible and the sustainable way to approach CSR in our communities.

Community development activities that lack the investment approach will lack the lasting impact that needs to be realised, value for money will also be in question for such projects. This approach requires more planning and coordination, it requires more collaboration with various stakeholders. The issue is, if we are to make a difference in dealing with community problems especially those with long history of failures and recurring situations, we need to take a different approach.

It goes without saying that community investment projects need to tie into the corporate strategy of the company that is supporting the initiative or carrying out a particular project. If the ideology or the vision of the project is not in sync with the corporate strategy, the chances of the project failing is quite high. When there are budget cuts such projects will be the first to get the axe. The company will find it hard to view the project as nothing but a philanthropic project and not a CSR project (or an act of being responsible). CSR is not compulsory but it is difficult to see any responsible organisation without an annual CSR report that is part of the corporate strategy reporting.

CSR Nigeria is working in partnership Business Day newspapers to deliver a ground breaking workshop that will, work with NGOs and businesses to formulate a way forward in community investment and development.

Visit www.csrnigeria.org for more details

CSR is about being responsible.

Philanthropy is about being benevolent, CSR is about being responsible.

CSR goes beyond having a “giving” culture; it goes as far as saying this is our responsibility and if we are a “responsible” organisation we have will do something about it, in a profitable way of course.

Public relations approach to CSR is the act of developing strategies that will help our target audience to see us as a good and understanding organisation. Nigeria has also caught the “branding” bug and this trend is clouding the real purpose and thinking behind CSR. Branding looks at the target audience and communicates the corporate message using various media, while CSR talks to the corporate stakeholders and devise solutions to problems or issues connected directly or indirectly to the organisation. For example a pharmaceutical business that researches and develop drugs for cancer should be looking at

This is a legitimate business practice but the “spirit” of CSR is approached from the angle of “what adverse impact is my organisation having on my staff, community and my environment and what can I do to begin to rectify them.

When a CSR initiative is well researched, planned and orchestrated, it often results in good public relations. CSR needs public relations for the company to enjoy the ultimate brand awareness, customers can see through projects that are primarily motivated by the need for publicity and brand development. A genuine CSR project will go a long way in creating awareness both internally and externally.


Some organisations nevertheless have developed a culture of giving and conducting CSR silently without any public relations attachement.