CSR is for SMEs also but, it is not sponsorship or philanthropy.
First of all, let us outline what our understanding of what Corporate Social Responsibility (CSR), is. We believe that it applies to any company’s activity where they assess and take responsibility for their effect on the environment and their social impact. It is not a regulatory function and therefore is an entirely voluntary route that a company, big or small, may choose to follow.
Yes, we are all aware of examples of companies that describe marketing activity as CSR, in an attempt to enhance brand reputation with the media, the public and their stakeholders. That being said, many large companies do devote real time and money towards environmental programmes and social initiatives that benefit staff, customers and the communities in which they operate. Here is a list of good examples and winners from the 2014 Chambers Ireland Corporate Social Responsibility Awards.
CSR activity is usually associated with large companies, but it shouldn’t be – it is the motivation for undertaking the CSR activity that counts – O’C&K.
Usually, large companies can run high-profile CSR programmes because they are probably better resourced to do so, in terms of people and funds. We would be of the opinion that size shouldn’t matter as to whether a company invests in CSR or not. The real considerations should be the why and how it can do so.
Whatever size it is, a company has an impact on its local community, be it through employment, purchasing power, sustainability or just social. Accordingly, a company can decide to integrate local concerns into its business activities in order to ‘play its part’ in addressing societal needs. Some might consider this to be a ‘good deed’ strategy, but in fact it is a sound business strategy of being relevant to customers. At the end of the day, it might well become a competitive advantage.
CSR is not sponsorship or philanthropy.
As referred to on many previous posts on this blog, sponsorship is a joint marketing activity between a rights holder and a sponsor (usually a company). There is a mutually beneficial ‘value exchange’ for the benefit of a defined audience. It is a planned business transaction with all that that entails – goals, audience engagement, objectives, communications, milestones, measurement, reviews etc.
A business will use sponsorship as a marketing tool and will expect a return on the investment. It is not a ‘tool’ for looking after the needs of a local community, contrary to popular beliefs.
On the other side of the coin, there is a popular belief held by companies, which is that CSR is associated with philanthropy. We acknowledge that the precise meaning of philanthropy could be argued ad infinitum, but in our opinion, it is definitely not corporate giving or corporate citizenship.
In its simplest form, we take it to mean, the desire to increase the well-being of others, expressed by a donation of funds to a cause. No return of monetary value is expected, by the philanthropist. Without appearing pedantic about the description, we believe that under no circumstance can CSR be seen as philanthropic activity.
By confusing a CSR strategy with philanthropy, businesses automatically presume they will gain an enhanced brand reputation and increased trust from customers and employees. However, it may be a waste of time or it might even backfire on the brand because these benefits are not automatic. It is the perceived ‘fit’ and impact of a partnership with an NGO that earns these benefits.
Other benefits might include, improved risk management, increased staff motivation or even the provision of new business opportunities. But our point here is, if you are going to implement a CSR strategy as part of your business, make sure you understand what it is not.
What could NGOs bring to the corporate table?
Sometimes non-governmental organisations (NGOs) get caught up on fundraising for their cause and neglect fundraising for their own financial sustainability. Because of this, they don’t do the homework in order to find a commercial partner. As a result, they often don’t appreciate what value they can bring to a company.
Also, because companies (especially SMEs) will not have the time to think about and plan for CSR activity, they don’t see an NGO as a potential business partner. For example, here are some elements that NGOs might take for granted, and that companies don’t consider.
- NGOs have an existing stakeholder group (potential audience for a company)
- NGOs communicate in human language using stories (the audience believes in them)
- NGOs can provide an element of ‘trust’ (in doing the right thing by society)
- NGOs can bring new experiences and ideas (that relate to a company’s business)
- NGO’s beliefs can intersect with a business (and may resonate with a particular audience)
- NGOs can provide the vehicle for a company to impact positively on society
SMEs might use CSR differently than larger companies.
The majority of SME founders also manage the business, on a day to day basis. Because of this hands-on approach, they can be more in touch with the needs of their immediate community. So it is probably fair to say that they might have a different commitment to impacting on society, than that of a larger company.
Often this manifests itself by donations to local sports clubs, art societies or charitable groups. In fact they might not even call it CSR, but they do because they can react quicker due to their size and flexibility. Often, therefore, they can appear to be more ‘responsible’ than larger companies. SMEs might even argue that CSR is a license to operate a business in a local community.
Also, from an SME point of view – CSR can be much more of a personal experience. Being a smaller entity, relationships are key to an SME’s success, both internally and externally. It’s the usual ‘everybody knows everybody in town’, story. Obviously, the majority of employees are going to be local and they bring a further network of relationships to the table.
In such scenarios, you can imagine that the SME owner / manager has more opportunities to be more in touch with societal needs than his/her larger counterparts. It is also in their own interest that the local economy is vibrant and projects such as infrastructure improvements are undertaken.
Of course, it is also a factor that SMEs will have less funds to make available. However, in their own small way can play a positive role in the community e.g. allowing staff to volunteer, offering a premises for meetings, providing transport solutions etc.
In addition, as larger companies undertake a programme of CSR they might well insist that suppliers adhere to sustainability standards and measurements. In this way, reputational pressure on a larger company might well translate into pressure on a SME (supplier), whether they like it or not.
Tips and Timesavers.
Last year, O’C&K had the pleasure of contributing towards a publication written by Sandra Velthuis on behalf of The Wheel. The publication is called ‘financing your future – a guide to building a sustainable income for community and voluntary organisations’. In the preface, Deirdre Garvey, CEO refers to the funding challenge that organisations are experiencing, nowadays.
We received a copy last week and I am going to summarise a 10 step framework for action suggested therein, which is excellent. It is part of ‘doing the homework’ mentioned above and is the professional way that companies would expect an NGO to go about raising support.
- Have an active board and articulate the organisation’s purpose clearly
- Analyse your current resource profile in detail (income, expenditure, assets etc.)
- Calculate how much you need, what you need it for and plan to make savings where possible
- Generate as many options for income growth and diversification as possible
- Assess all options, decide on a shortlist and undertake in-depth research on them
- Develop an action plan and monitor progress, adapting where necessary.
As we say on our own website, here, there is a growing realisation by the corporate and the social sectors that they need to engage with each other more, in order to ensure a positive impact on society.
We believe that this changing landscape of social responsibility will transform the relationships between social and business partners into the future. Businesses need to be a little more like NGOs and NGOs need to be a little more like businesses.
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