Chapter Six

Corporate Social Responsibility in Practice

Introduction
 Most business organizations now believe that investing a part of

their profits and efforts in the society and natural environment from
which they draw resources has positive implications for their own
well-being.
 The benefits of CSR are also substantiated by research focusing on

the relationship between CSR activities and firm’s financial

performance, competitive advantage, reputation and legitimacy,
employee attitudes, and synergistic value creation.
 Recent meta-analysis studies have reported an overall positive
relationship between presence of CSR activities and financial
performance.
 The jury is still not out on many such relationships; nonetheless,
organizations are going ahead and making investments in CSR.
6.1. Responses to corporate social responsibility
 Corporate social responsibility (CSR) is increasingly becoming an
important strategic agenda for companies.
 As evidence accumulated by various studies in support of
effectiveness of CSR, strategic implementation of CSR is
gradually replacing the old view of CSR, which simply considers it
an act of charity.
 Consequently, many companies attempt to communicate their CSR
initiatives specifically to their customers who are among various
stakeholders that can have significant impact on their performance.
6.2. Planning for CSR
 (CSR) it is the obligation that corresponds to any profit-making
organization regarding the improvement of the field in which it
operates, that is, with the economic, social and cultural
improvement of the surrounding community.
 This type of responsibility should goes beyond the necessary
compliance with laws and regulations, and the ordinary operation
of the company, and assigns it an active and voluntary role within
the dynamics of supporting local impact initiatives.
 In other words, it is a community social work that the company
carries out, to give back to the community a part of the wealth that,
thanks to it, the organization can generate on a daily basis.
 Thus, a company can support cultural, educational, environmental,
sports, community plans or of any kind, as long as they lead to the
improvement of the quality of life, so that the presence of the
company not only benefits its shareholders, but society in general.
 The larger the size of the company, the greater is expected to be its
contribution to improving people’s quality of life
6.3. Corporate philanthropy, voluntarism, and sponsorship
 Philanthropy is a form of humanity that consists of "private
initiatives, for the public good, focusing on quality of life".
Philanthropy contrasts with business initiatives, which are private
initiatives for private good, focusing on material gain; and with
government endeavors, which are public initiatives for public
good, notably focusing on provision of public services.
 A person who practices philanthropy is a Philanthropist. Corporate
philanthropy is meant to be driven by a desire to make a social
change.
 The company just makes donations of property or money to have
an impact and improve their brand image.
 But it isn’t involved in the corporate main activities.
List some of the famous African Philanthropist being appreciated in
practice?
 According to the Council on Foundations, corporate philanthropy
refers to the investments and activities a company voluntarily
undertakes to responsibly manage and account for its impact on
society. Philanthropic investments and activities include:
 Money
 Donations of products
 In-kind services
 Technical assistance
 Employee volunteerism
 Other business transactions
 The purpose of these investments and activities is to advance a
social cause, issue or the work of a nonprofit organization.
Types of Corporate Philanthropy
The seven most common forms of corporate philanthropy are:
 Matching Gifts: Companies financially match donations that their employees
make to nonprofit organizations.
 Volunteer Grants: Companies provide monetary grants to organizations where
employees regularly volunteer.
 Employee & Board Grant Stipends: Corporations award grants to employees
and/or public boards to donate to the nonprofit of their choice.
 Community Grants: Company programs award nonprofit organizations that
apply for grants based on defined criteria.
 Volunteer Support Initiatives: Companies partner their employees with
nonprofits to provide specialized support
 Corporate Sponsorships: Companies provide financial support to a nonprofit
that in return acknowledges that the business has supported their activities,
programs or events.
 Corporate Scholarships: Corporations provide scholarship dollars to
universities on behalf of students seeking support to continue their studies,
encouraging college education and workforce development.
Benefits of Corporate Philanthropy
 Companies with successful corporate giving strategies publicly live the values of
their organizations and in return benefit from high employee engagement,
employee retention and the ability to attract top talent.
 Corporate philanthropists also see a more positive work environment, increased
employee engagement, a boost to their company’s public image and brand
equity, enhanced customer relationships and consumer confidence as well as
strengthened government relations.
Corporate volunteerism
 Offer your employee’s incentives to participate in your corporate volunteerism.
Corporate volunteerism is a way for corporations and their employees to give
back to their community.
 Volunteer time off (VTO) is a great tool to promote work/life balance and
corporate responsibility, two things that are important to workers today. Some
creative ideas include:
 Paid time off for volunteering
 Rewards for charitable donations
 Contests
 Team building volunteer events
How Does It Work?
 Companies use a few different models in their volunteer efforts.
Your company may already be doing some of this without taking
credit for it:
 Organizing specific events where teams from within the office (or
sometimes the entire office) head out to do a joint volunteer
activity. (Habitat for Humanity has some great options.)
 Giving employees a bank of time (separate from vacation and sick
time) to use at their discretion
 Offering flexibility to leave during the day for a couple of hours (to
allow a parent to volunteer with their kid’s school or for an
employee attend a volunteer board meeting, for example)
 Matching employee’s hours with a monetary donation to the
organization
 Formalizing a program is not only a good way to track employees’
volunteer work, but it’s also a great tool to promote the company
and recognize employees for the hard work they do outside of the
office.
Corporate Sponsorship
 A corporate sponsorship is a form of marketing in which a
company pays for the right to be associated with a project or
program.
 A common template for corporate sponsorships entails a
collaboration between a nonprofit organization and a sponsor
corporation, in which the latter funds a project or program
managed by the former in exchange for recognition.
 Corporations may have their logos and brand names displayed
alongside of the organization undertaking the project or program,
with specific mention that the corporation has provided funding.
 Corporate sponsorship is common for programs at museums and
festivals, but is also seen in the commercial sphere, such as athlete
endorsements.
 For example, athletic facilities may bear the name of a company
and the name of a sporting competition may be proceeded by the
name of a company
6.4. Social venture philanthropy (SVP)
 Venture philanthropy is the application or redirection of principles
of traditional venture capital (VC) financing to achieve
philanthropic endeavors.
 Often, it is exercised in the context of charitable startups, green
companies, or corporations, as the venture capitalists offering
funding to these types of firms will have the greatest extent of
experience in these areas.
6.5. Social auditing and reporting
Concept of Social Audit:
 Although no unanimous definition has yet been evolved, the term
Social audit, in its simple sense, may be defined as the audit of the
social responsibilities that should have been discharged by a
business enterprise.
 Its meaning and content are synonymous with that of social
responsibility accounting.
The term ‘social audit’ is understood in different connotations by
different men to include various practices, such as:
 Inventory of ‘social programmes’ undertaken by a company.
 Inventory of their ‘social impacts’.
 Estimates in terms of money of various company activities having
‘special social significance’.
 Results of surveys on environmental pollution, employment
discrimination, occu­pational health and safety, etc., undertaken at
the instance of the Government’s regulatory measures.
 Critical report or surveys made on an area external to a company
or industry, for example, sexual discrimination, caste
discrimination, etc.
Major reasons advanced in this respect are:
 Increasing awareness of society about corporate social
contributions; that is, comparatively better-off citizens in business
should develop an emotional involve­ment in the improvement of
socio-economic conditions,
 Providing means of identifying and rewarding business for social
contributions,
 Identifying adverse effects on the environment,
 Improving the credibility and reputation of business, and
 Transferring costs of social activities to other various segments of
society.
 In the words of some eminent writers’ “social auditing is defined
as a systematic attempt to identify, analyses, measure (if
possible), evaluate, and monitor the effect of an organization’s
operations on society (that is, specific social groups) and on the
public well-being.”
Social audit may have three objectives basically:
1. To identify and measure the periodic net social contribution of
an individual firm, which includes not only the costs and
benefits internalized to the firm, but also those arising from
externalities affecting different social segments;
2. To help determine whether an individual firm’s plans, strategies
and practices that directly affect the relative resource and
earnings are consistent with social princi­ples;
3. To make available in an optimum manner to all social
commitments, relevant information on a firm’s objectives,
ultimate goals, policies, programs, perform­ances and
contributions to the social goals. Relevant information is that
which should provide for a scheme of public accountability and
public decision—making regarding capital choices and social
resources allocation.
Social Audit Report
Contents of a Social Audit Report
 When work of social audit is completed by a social audit team a
report is prepared by it and submitted to the management of the
business organization whose social audit it has conducted.
The major items which are included in the social audit report
are as under:
Activities related to the shareholders/owners
 Use of capital is it done in an optimum way and if not, which
alternate uses are suggested.
 Precautions taken for safety of the capital.
 Is return given on the capital satisfactory from the
shareholders’/owners’ point of view? Where the rate of return
stands for the current year in comparison with previous year’s
rate and in comparison with the rates of other similar
organizations?
 Has capital appreciation taken place and is it satisfactory from the
owners’ point of view?
6.6. Corporate reputation and CSR
 Corporate social responsibility (CSR) as a strategy is an essential
part of your company’s reputation.
 Not only will your CSR help build your corporate reputation and
customer base, it will also help protect your business from
reputation damage and accelerate your recovery time after a
crisis.
 Corporate social responsibility mistakes can damage or even ruin
your reputation, so it’s vital to properly plan and implement your
strategy. Because as Ethiopian Oromo saying goes” Maqaan badu
mannaa mataan badu wayya” To mean it is better to die than
having bad name or than being unhonoured in one’s individual or
organization’s name.
 End of chapter six!!
THANK YOU
FOR YOUR
FULL ATTENTION!