Beyond Check-Writing: How Companies Can Rework Their Philanthropic Approach to Addressing Social Problems

Tuesday, June 29th, 2021

The economic, social, and health crises of 2020 dealt a blow to many US cities—especially the disadvantaged communities within them. As detailed in a new report from The Conference Board, the detrimental effects of COVID-19 further highlighted the opportunities for companies to make enduring differences in the lives of those city residents who need help the most.

But as the study emphasizes, for companies to fully seize the opportunities, in many instances they should consider shifting their approach toward corporate philanthropy by becoming far more involved in the people and communities they seek to help.

The report's insights are primarily derived from The Conference Board ESG Center's Corporate Social Responsibility Council tour of four US cities: Detroit, Newark, Los Angeles, and Baltimore. Participants heard directly from local corporate, university, non-profit, government, law enforcement, faith-based, and community leaders. Through this listening tour, they gained a first-hand understanding of the unique social and economic challenges afflicting their communities, and the steps corporations can take to address the problems more effectively.

Based on these conversations, recommendations and insights for what's ahead on corporate philanthropy in US cities include:

More candid conversations between companies and their non-profit partners about mutual needs and expectations will improve outcomes of companies' social programs:

  • Conventional practices, miscommunication, and funding concerns can all stymie progress:While corporate citizenship departments have been addressing social problems in cities through their philanthropy, community relations, and employee volunteer programs for decades, companies sometimes take an approach that is driven more by internal programmatic goals than by an in-depth understanding of community needs. At the same time, nonprofit grantees are sometimes reluctant to fully disclose their needs and those of their communities because they are concerned that their candor may deter companies from providing funding.

  • Achieving more enduring, positive outcomes requires a thorough grasp of stakeholders' perspectives: Overcoming those hurdles to having more open and honest conversations with a wide variety of stakeholders to understand their points of view on how best to address the problems their community is facing is critical. The Conference Board ESG Center's Corporate Social Responsibility Council's tour of four US cities is an exemplar of this approach. The Council's tours afforded participants multiple opportunities to hear local corporate, university, nonprofit, government, law enforcement, faith-based, and community leaders' candid perspectives on social problems their communities are facing and suggestions for how to address them.

Candid conversations need to be followed by close collaboration between a company and other stakeholders in defining the problem, identifying goals, and developing solutions:

  • A willingness to let other stakeholders lead the conversation can improve a company's impact: It may be natural for companies to lead discussions on how they can have impact, but companies can achieve better results if they begin by listening. This can also avoid feelings of disempowerment and distrust if community stakeholders believe there is not much they can do when companies are intent on realizing their own agenda.

  • To collaborate effectively with communities, companies may consider: 1) coming to a common understanding of the problem being addressed; 2) mutually defining the objectives and goals of the collaboration; and 3) together, deciding which steps to take to achieve the desired change. In short, working collaboratively to adopt a joint plan with clear goals and assignment of responsibility.

"This more candid and collaborative approach sometimes requires companies to be open to hearing messages they may not like; working with people who may be skeptical of companies' motives; and whose perspective may be very different from those of company representatives," said Robert Schwarz, the author of the report and Senior Researcher at The Conference Board ESG Center. "But it can yield tremendous benefits. Companies will learn about the problems they are seeking to address from those living them. Companies will also learn the challenges and opportunities being faced by the organizations they are considering supporting, thus informing conversations about each other's capabilities, needs, and expectations as well as achievable goals."

Companies can use new sources of data to guide their efforts in addressing social problems, all while strengthening collaboration with other stakeholders:

  • Data for defining the cost of achieving positive social outcomes: As companies and communities alike are focused on programs that have a measurable and meaningful impact on addressing social problems, they also have new sources of data to improve their decision-making. For example, the Impact Genome Project® (IGP) Sentinel Outcomes Initiative is now quantifying and tracking Americans' unmet needs in the areas of financial health, social capital, food security, housing, employment, and education.

  • Data for measuring outcomes: In addition to helping to define the cost of addressing social problems, there are now data sources to help companies better measure the efficiency of their efforts. IGP's Price of Impact Index provides the "cost per outcome" (CPO) for achieving over 100 different results in areas from arts to economic development, and education to public health. These data, derived from thousands of nonprofits in the US, enable funders to benchmark the cost of their programs, estimate the impact of their programs given a funding amount, assess the efficiency of their programs, and inform budget decisions.

Companies should consider taking a longer-term approach in their financial and other commitments:

  • Short-term grants can be useful for, among other things, funding research and establishing a relationship with new grantees. But if companies limit themselves to annual grants, they can also limit their ability to address the causes of large, complex, interconnected social problems.

  • Multiyear grants can help yield deeper, lasting change: While short-term annual grants can be useful in establishing relationships with non-profits and can ensure accountability, companies should also consider longer-term commitments, as many companies announced in the aftermath of George Floyd's death, to address large, complex, interconnected social problems such as racial inequality. Companies can reduce risks associated with providing multiyear unrestricted grants by having honest, open, and collaborative discussions with grantees and other stakeholders up front, as well as by beginning with a one-year unrestricted grant that can be extended provided performance goals are met.

"To help corporate citizenship functions maximize their impact in addressing social issues, they can leverage their company's broader set of business resources, bringing the full suite of corporate capabilities to bear. Indeed, other departments such as marketing, sales, human resources, and procurement can all lend support in their respective areas," said Jeff Hoffman, Leader of the Corporate Citizenship and Philanthropy area at The Conference Board. "A practical first step is for the corporate citizenship department to meet with its internal colleagues to determine ways the business can address the issues communities have identified and establish opportunities for collaboration."

Media can contact The Conference Board for a copy of the main report and/or the city-specific reports.