The Business and Social Impact of Corporate Community Involvement
By Sabrina El-Chibini
In this next dimension of conducting business from the outside-in, thought-leading companies are engaging with their communities to generate innovative solutions to societal challenges (1). They are harnessing their energy, core competencies, and skill sets to generate value for communities and business. Those that take the leap of deeply engaging employees, non-profit partners, clients, suppliers, and additional stakeholders multiply impact all-around. The benefits of this approach, however, are under recognized because organizations are not routinely measuring the impact of these innovative initiatives (2).
How can we unleash this value?
Measuring the impact of community partnership projects allows for better decision-making regarding the allocation of scarce collective resources. It moves a company from donating to a community partner in a transactional way towards a longer and more impactful relationship. Partners establish benchmarks for progress, evaluate whether or not those benchmarks are reached, and strive to improve community outcomes in a transformative way. These initiatives set the stage for broader stakeholder engagement and leadership positioning (Figure 1). The simple desire to understand impact, in and of itself, promotes critical thinking and raises foundational questions relating to how, why, and when to act. Linking action to desired outcomes focusses energy and helps organizations decide what actions to take and which actions to forego – to focus on what is material.
Figure 2 below presents stakeholder perceptions of a company that embarks on the TCI journey. These are widely supported by a growing body of research that has demonstrated that employee engagement correlates directly with the extent to which employees believe that their company is socially and environmentally responsible (3) and that social responsibility drives multiple favorable employee indicators including engagement, retention, and satisfaction (4). Consumer research is as well directionally aligned (5).
Figure 1: The role of impact measurement in the evolution to a transformative community involvement program
Moving from a transactional to a translational phase of impact measurement can be as pragmatic as engaging select stakeholders in identifying a societal need which then informs the design of an eventual transformative program. Moving to a transformative phase can be as pragmatic as engaging in a pilot demonstration study to uncover the potential business and community impact of a project before embarking in a wider-scale initiative. Companies and non-profits can go on to standardize and replicate these programs that can lead to benefits such as service or geographic expansion. Ongoing data collection then allows for more robust, rigorous research, more credible impact communications, and more generalizable conclusions.
In its transformative phase, a novel partnership project can lay claim to having contributed to a specific, measurable outcome that has filled a real need. It provides an opportunity to move from negligible stakeholder engagement to continuous engagement of multiple stakeholders through impact communications. To make this claim, however, an accurate assessment of program inputs, outputs and subsequent impacts must first be conducted. Program inputs refer to the collective investments made (funds, in-kind contributions) in the program. Outputs refer to the immediate outcomes of the program (i.e. number of participants served; environmental emissions reduced). Impact refers specifically to the value generated by the program in question. It answers the following: What specifically is the impact of my company’s investment in this program?
For example, a corporate sponsor that fully covers the costs of implementing a program offered by a non-profit in one school can claim to have improved school attendance rates if indeed these are proven to have improved (Table 2). School attendance is a short term indicator of school retention, the long-term measure, and can lead to important individual and societal benefits.
Table 2. Sample Input, Output, and Impact for an In-school Program
Understanding program outputs and their societal impacts represents one component of an effective transformative program. Another essential ingredient is the early identification of program inputs. Program inputs may include features of program design, or resources (e.g., paid and volunteer staff hours) required to plan and run the program. The relationship between program inputs and output/impact can be an important indicator of the effectiveness of the program and allows for program revision if results are either unclear or not as expected. Where they are identified, program inputs can be clearly communicated to key stakeholders using grids that present all program parameters (inputs, outputs and impacts), their linkages within the program and their strengths and weaknesses. Corporate community investments can be objectified, where appropriate, to support decision making for future funding requests. For example, if a program in nutritional wellness that was originally designed to target 5,000 participants over six months only recruits 25% of this total, then questions can be addressed to the non-profit organization (NPO) about recruitment strategies and targets or program design can be corrected if required.
One of the more effective ways to assess program efficiency is to link program input costs to the societal cost of the impacts. To do this, the cost of the program inputs is estimated and compared to the perceived “value” of the impact. To value the impact, a cost is applied to all the identified societal impacts. These may include short and long-term financial gains for program participants and the cost-benefits of observed societal impacts. In the nutritional wellness example cited above, better diets could translate into improved participant health (measured in terms of increased productivity, fewer doctor visits, lower personal costs, improved quality of life) and direct medical cost savings (lower prescription drug use, fewer hospitalizations), all of which can be expressed as a societal financial gain. Some impacts may however be difficult to assess. For example, the impact of a sponsor’s community investment on corporate financial performance may be inferred based on anecdotal evidence, but the application of a valid “value” to this impact requires diligent research and a number of testable assumptions.
The financial relationship between program inputs and impact can be expressed in two ways. Costs can be linked to a specific outcome by estimating a cost-effectiveness ratio, where the input costs are expressed in terms of an incremental gain in a specific measurable societal parameter. For example, input costs can be linked to a clinical outcome by estimating the cost-effectiveness of the intervention expressed in terms of a clinical gain (e.g., on a societal basis the cost per year of life saved or the cost per myocardial infarction avoided by a nutritional wellness program). With careful planning, and using an appropriate clinical outcome, the cost-effectiveness of a specific community involvement program can be compared with other clinical interventions, an outcome that can provide convincing support for continued funding (3). Alternatively, overall cost gains generated by a program through societal impacts can be expressed in terms of input costs through estimation of the social return on investment (SROI) of the program (4). The SROI is estimated as the ratio of program impact costs to input costs; any ratio greater than 1.0 demonstrates that the program generates greater societal value than the initial input investment. In contrast, a ratio less than 1.0 shows that the expected program societal gains are less than the input cost. However, in a well designed transformative community involvement program a negative SROI can lead to the identification of inputs or outputs that contribute to this negative value and the possibility of a program design change that transforms the SROI to a positive value.
At first glance, transformative program models may not be achievable for all community investments. Financial constraints or pre-existing program structures may not allow for a full assessment of project outputs or impacts. NPOs may not be adequately funded or resourced to integrate impact assessment into their organizational activities and may lack the internal capacity to design or implement research tools or methods. This is unfortunate, given the NPO’s proximity to program participants and direct engagement in program activities, which makes them ideally suited to collect the data necessary for impact measurement.
The good news is that with careful planning, NPOs can still participate in effective program transformation by implementing a first step such as a small demonstration study that provides proof of concept. Using pilot results, NPOs can engage corporate or even research partners with strategically aligned missions in supporting larger-scale studies (Figure 3). In general, research expertise is hugely under tapped insofar as its potential to aid decision-making in real-life business and community settings. There exists an opportunity for business and NPOs to harness this skill set through compelling propositions. In certain instances, less expensive research approaches such as expert panels or academic literature searches can dovetail with NPO expertise to identify gaps in knowledge and to highlight areas of best practice that are relevant to program design. Mixed methods researchers can generate an impact set, or a combined qualitative and quantitative argument that provides the full picture of the benefits of a program. In other situations, simple models can be built to aid in decision-making, such as decision grids that align company and social objectives; that generate a guideline for the evaluation of partnership project requests.
Figure 3: Strategic approach to a transformative program when resources may be limited
impact measuring and reporting
A NPO can also consider redirecting resources by answering some of the following questions:
Is every piece of data currently collected justified?
Will the data we collect help us link to eventual desired outcomes?
Should we drop some measures and replace them by new ones?
Eventually, a NPO such as an organization that delivers services to cancer patients will evolve to the transformative stage by answering some of the research questions in Table 3 for example.
Table 3: Sample research questions for a transformative program developed by a non-profit organization
delivering services to cancer patients with support from a corporate sponsor
Transformative community involvement can play a fundamental role in meeting the challenges of a changing society. Accurate assessment of the societal impact through transformative community involvement, and communication of impact to all stakeholders, ensures that directed, sustainable and cost-effective programs add value to society and to the corporations that support the programs. The incorporation of research-driven design, impact assessment and stakeholder engagement and communication increases the effectiveness of community programs, and culminates in transformative projects where meaningful and cost-effective societal changes can be accomplished.
The Collaboration Vector Inc. (TCV) is a next generation consultancy firm specialized in transformative community involvement strategies, transformative employee involvement programs, proactive stakeholder mapping and engagement, transformative partnership designs, partnership facilitation, and impact measurement, reporting and communications. TCV has a team of strategists, business professionals, and researchers in health and wellness, economic growth, education, poverty reduction, entrepreneurship, leadership and climate action. The company works with clients in the private, non-profit, and public sectors.
©The Collaboration Vector Inc. 2016. All Rights Reserved.
1. El-Chibini S. Tranformative Community Involvement: What it Means, What it Takes, What it Gives. The Collaboration Vector Inc. 2016. Available at https://www.linkedin.com/pulse/transformative-community-involvement-what-means-takes-el-chibini?trk=mp-author-card; Accessed June 14, 2016.
2. Daryl Brewster, CEO of CECP, The Business Case for Partnering with Communities: Investing in Non-profits, Through People. Submitted by Blog Moderator on Thu, 06/12/2014 - 1:31pm. Interaction: A United Voice for Global Change.
3. Drummond MF, Sculpher MJ, Torrance GW et al. Methods for the economic evaluation of health care programmes. Oxford University Press. USA; 3rd Edition, 2005
4. A guide to Social Return on Investment. US Edition. 2012. The SROI Network. Available at: http://socialvalueuk.org/component/docman/cat_view/29-the-guide-to-social-return-on-investment/229-the-guide-in-english-us-edition?Itemid=138. Accessed June 12, 2016.