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5. Step 3. Which Nonprofits Qualify—And Which Don’t

Weeden, Curt Berrett-Koehler Publishers ePub

They come in all different sizes and shapes. Some operate on a shoestring and a prayer. Then there are others like the YMCA of the USA, which rakes in $2 billion a year to conduct its activities. There are quite literally hundreds of thousands of them and they are known as the citizens of the nonprofit world, an aggregation of all kinds of organizations that are becoming more and more of an economic powerhouse in America. Gross revenues of service groups, education institutions, community hospitals and certain other nonprofit operations exceed more than a trillion dollars a year according to some estimates, and that doesn’t include what many churches, synagogues, and other religious agencies are collecting.

Finding the most appropriate business-relevant organizations as candidates for support is what Step 2 of the corporate social investing process tells us that we need to do. This is quite a feat given the mammoth size of the options. So where does a corporation begin the sorting process? Believe it or not, the best place to start is by calling upon our friends at the Internal Revenue Service.

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13. Step 10. The Day-to-Day Manager

Weeden, Curt Berrett-Koehler Publishers ePub

Corporate social investing has little hope of meeting its expectations without competent day-to-day leadership. The difference between a sluggish, lackluster program and a highly energized, robust initiative often comes down to a single individual—the person who’s holding the management reins.

It is not only essential to find the right corporate social investment manager but also critical that the individual be positioned at a level high enough in the corporation to (a) collect the information needed to make good decisions, (b) interact with other senior executives in the company, and (c) command attention and respect from those inside and outside the business. These points lead us to the tenth and final management step:

Step 10. Assign day-to-day management responsibility for corporate social investing to a position that is no more than one executive away from the CEO or COO.

This is a big change from the way corporate philanthropy programs have historically been managed in many—particularly large—businesses. The point person for a corporate contributions program is often several layers down from the chief executive. With corporate social investing, that won’t work. The function must be elevated to a higher executive level.

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15. The Power of Corporate-Nonprofit Alliances

Weeden, Curt Berrett-Koehler Publishers ePub

Amultitude of impressive corporate-nonprofit initiatives dot the private-sector landscape:

Aetna and U.S. Healthcare are spending $7 million to educate women about heart disease and stroke.

Microsoft and the American Association of Retired Persons (AARP) are collaborating to run Lifetime Connection seminars to educate older adults about personal computers.

Pfizer has a $5 million program involving several nonprofit institutions that is aimed at improving children’s health.

MCI donates a percentage of phone payments made by business owner customers to the Nature Conservancy or the Audubon Society.

These are examples of effective corporate-nonprofit partnerships that were born and raised without the helping hand of the ten-step corporate social investing model. And that leads to the obvious question: Is social investing really necessary if businesses are already forging strategic relationships with nonprofit organizations? The answer is yes for a number of reasons.

Many corporations deliberately keep their social responsibility activities in a dim light or in the closet because they aren’t sure how different stakeholders will view such commitments. In contrast, corporate social investing should encourage businesses to be more open about what they are doing with nonprofit organizations. Because the ten-step model makes it clear that a company is using its nonprofit investments to enhance the value of the corporation as well as to benefit society, businesses should be less inclined to want to hide such sensible, business-enhancing expenditures.

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14. Making It Work

Weeden, Curt Berrett-Koehler Publishers ePub

The year was 1982.

“The major sandbag for the socially conscious executive is in the corporate world itself,” Thomas Drohan observed. The speech by the president of Foremost-McKesson was not only a statement of the day but a prophecy that would hold for nearly two decades.

“It is absolutely chilling,” Drohan went on to tell an executive symposium, “that fewer than 30 percent of all U.S. corporations give anything, and only 6 percent give more than $500 a year to charity.”

Drohan speculated about why corporations were so miserly when it came to supporting nonprofit organizations. He pointed to a “missing ingredient” that causes businesses to come up short in their charitable giving. “Like the Purloined Letter,” he said, “what’s missing is right under our collective noses.” Then he delivered the punch line: “That missing ingredient is very simply—a goal. No one really knows how much corporations in particular, or business in general, should be targeting.”

America’s private sector was mum. Drohan’s call for a common goal that all companies could use to calculate their philanthropy never did materialize. However, whether because of Drohan’s urging or for several other reasons, businesses began carving out a higher percentage of their profits for charitable giving, a trend that continued through the mid-1980s. Then in 1987, corporate generosity began to slide back. As we have already pointed out, by 1996 businesses were giving about 45 percent less of their profits to charity than they had been donating only ten years before.

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2. A New Way of Thinking and Acting

Weeden, Curt Berrett-Koehler Publishers ePub

Frank Sinatra had nothing on Herbert Stein when it cames to reviving a Golden Oldie. In 1996, Stein, the former chairman of Richard Nixon’s Council on Economic Advisers, wrote an oped piece for The Wall Street Journal. The lyrics may sound familiar: Corporate America—mind your own business!

To rely on “corporate responsibility” to solve major social problems—other than the problem of how to put our people and other resources to work most efficiently—would be a wasteful diversion.

The same song had been belted out by others in previous years. Maybe the most often-heard rendition was Milton Friedman’s, which was a hit back in 1970. That’s when economist Friedman wrote in a New York Times Magazine article that businesses had no business doing anything but generating profits. Friedman complained that corporate social responsibility costs a company money; ergo, a business has to either charge higher prices for its products or lower employee wages—outcomes that are contrary to the best interests of society. And then along comes Herb Stein, putting only a slightly different spin on the same old standard when he tells companies that they “discharge their social responsibilities when they maximize profits.”

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