Corporate Social Investment – A strategic approach to CSI initiatives

Corporate Social Investment (CSI) has come a long way in South Africa. No longer is CSI simply seen as a charitable donation, an elixir for the corporate conscious, enhanced corporate image, or a tax write-off, but rather contributing to the real needs of communities the Corporate’s operate in. Taking social responsibility seriously in order to make a sustainable contribution to the development and economic growth of the country is important when considering CSI impact. Although not universally popular, it is recognised that corporate social organizations play an increasingly vital role in the democratisation of societies.

In the last few years, CSI has come increasingly under the spotlight. Executive management is getting the message that CSI can be good for business as well as the communities they serve. Potential benefits include an enhanced corporate image, improved employee morale, stabilising the social and economic environment and been seen as a good corporate citizen. If only management could see CSI as part of the strategic environment, more sustainable development could be delivered, contributing to real social development and economic growth.

If CSI is not regarded as a strategic activity, companies will keep falling into the trap of using CSI as an extension of their marketing or public relations activities. Companies need to realise the importance of the development side of their CSI initiatives. CSI needs as much attention as any other strategic initiative in order to be a real contributor to company growth.

In order for this to happen, however, companies need to look much more strategically at their CSI initiatives. Strategic CSI should produce:

  • alignment to business objectives, inclusive of philanthropic and investment opportunities
  • interactive, proactive and reactive investments – a combination of ad hoc funding, flagship projects and integration to other sustainability or corporate citizenship activities
  • formal strategy with objectives and deliverables
  • continuous internal and external reviews of programs & funding initiatives
  • defined communication strategy for all completed projects to all corporate stakeholders
  • professional management of all CSI activities
  • autonomy and accountability to manage funds
  • most importantly however, active executive management and board level participation.

Establishing any CSI effort should have a logical fit within the organisation. It is important that all efforts should be on engaging the complete company and all its resources to support CSI initiatives, driven by the corporate mission and regularly measured, evaluated and adjusted.

What are the contributing elements when establishing a strategic CSI department?

The CSI Mandate:

Generally, all CSI efforts have a sectoral and geographic focus as well as a connection with the company’s areas of operation. Secondly, the implementation of channels for service delivery in the social development environment, different levels of involvement, size of donations, relationship with services providers, NPO’s or intermediaries are important.

Other factors for consideration are partnership requirements from service providers, the extent of giving (financial or donations-in-kind), selection and funding criteria and the expectations of the corporation.

When looking strategically at CSI, companies generally also consider the structure of their CSI initiatives. This include decisions around whether to in-source or outsource their CSI initiative, whether to create a trust, foundation or a separate CSI department, or simply extend company resources and make their CSI initiative part of the deliverables of an existing department.

When a corporation considers its approach to CSI, it is generally guided by funding sources, the composition of the governing board and their grant making philosophy. Underlying principals that must be adhered to include the strategic direction the company wishes to follow, selection of communities they wish to serve and how to achieve their development objectives.

When it comes to the measuring the impact of allocated resources, it is a given that a company’s CSI strategy should be reviewed annually. Does it deliver clear communication of policies and procedures, effective communication of projects, well planned resource allocation (human and financial) and use clearly defined reporting systems? Once CSI strategy and objectives are clear, delivery can be achieved effectively and efficiently, with focus. A clearly defined CSI strategy enables hard measurement and meaningful impact analysis.

The following checklist is useful when considering strategic CSI:

Why a strategic plan?

  • It allows for planning, reviewing and assessment of progress
  • It assist in securing executive support, especially for future plans
  • It allows for proactive involvement within all levels of the organisation
  • It sends out coherent messages to all company stakeholders
  • It assists in monitoring expenditure and results achieved

Why Stakeholder reviews?

Stakeholder reviews should be conducted on a regular basis both internally and externally. Reviews are generally:

  • Peer reviews – measuring similar companies in the same industry. What gets measured is the visionary and creative involvement of all stakeholders.
  • Clearly identified partnerships to measure the extent and reach of development. Obviously, maximized impact is what is required through the leveraging of additional resources.

The Benefits of strategic CSI:

  • enhanced company image
  • improved community relationships
  • improved employee loyalty and involvement
  • a stable economic and social environment, enhancing the long term survival of company
  • improved business performance
  • strong brand identity
  • strategic goal achievement
  • government recognition/tenders
  • opportunities to build relationships with business partners
  • increased customer goodwill and loyalty

The Value Chain of strategic CSI:

  • alignment of CSI initiatives with business vision and mission
  • positioning CSI programmes as win/win initiatives, from philanthropic community investment to commercially-based projects
  • sound planning, management, delivery and evaluation practices
  • strategic use of the company’s core competencies
  • sustainability for both CSI departments and CSI initiatives
  • a choice of proactive or reactive considerations and the competencies to deal with all projects
  • management and company leadership commitment

What resources to consider for strategic CSI?

Financial – no mater the size of the investment, management must ensure that it is affordable and consistent. The most successful strategic CSI initiatives are generally funded via a percentage of pre-tax profits.

When considering the size of the investment, great care must be taken to ensure that the level of funding is sufficient to make a meaningful impact.

The size of the investment is generally measured and benchmarked against other sectoral allocations.

Companies generally consider government’s strategic objectives as well as the development sector, to ensure favourable press.

Non-cash contributions should also be considered for a successful social investment business model. This can be in the form of equipment, surplus goods and merchandise, training, etc.

It is important that the whole company and therefore all its stakeholders are involved in its CSI initiatives.

Successful Strategic CSI:

It has been said before that the involvement of senior management is so important, that it should become part of their performance review. CSI not only involves employees, but great care should be taken to ensure that there is sufficient CSI capacity for the future. Skills transfer is also critical as are reporting and tracking systems.

A strategic structure for CSI:

It is important to have a well-defined and documented structure, to address issues such as centralised vs. decentralised activities, the number and size of grants, the focus of the company’s CSI efforts and its partnerships for CSI initiatives.

Strategic Communication for CSI:

It is vital to disclose and promote community contributions and the regular communication of the programs; partners; community stakeholders. It is also important to communicate the level of marketing expenditure and key learning’s such as impact and change that the company has created through its strategic CSI efforts.

Regular, sustained and strategic communication will benefit all social partners. It will extend the company’s public profile, ensure increased networking opportunities and contribute to project sustainability.

Measuring Impact of strategic CSI:

Continuous project evaluation, benchmarking against local industry and international best practices, stakeholder reviews, service provider reviews all add to the value of strategic CSI.

Cause related marketing:

Donating a portion of product sales towards a social cause or charity benefits the business. It strengthens customer loyalty, increases the morale and motivation of employees, contributes to enhanced public image and ensures increased sales and profits.

Tracking strategic CSI initiatives:

The automation of administrative procedures will assure the quality and consistency of information and will provide for easy access to information and enhanced dissemination.

About Reana Rossouw

Reana Rossouw is the owner of Next Generation Consultants, a leading boutique Management and Business Consulting Firm with a wealth of experience in the business development environment. She is a regular speaker at national and international conferences and is regarded as one of South Africa’s leading experts in the areas of social investment, socio economic development, corporate responsibility, sustainability and sustainability reporting.
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