Corporate Community Involvement: for whose benefit?

December 01, 1994

Business in the Community’s latest analysis of the megatrends in corporate community involvement* argues that a well conceived and professionally executed policy of CCI can benefit both business and the community. Leading practitioners can use community involvement to increase the company’s name recognition among consumers, develop and widen employees’ interests and skills, improve internal corporate communication and morale, influence government, even to reduce research and development costs.

Encouraged by BITC and other CCI advocates, many of the UK’s big companies, such as Shell, National Westminster Bank and British Petroleum, now concentrate support for community activities where they can perceive a business case for doing so. Paradoxically one corollary of their choosing to employ this touchstone to rationalise community involvement has been an increase in corporate activity. Today’s company defines its community as a large and heterogeneous group; no longer is it restricted to a relatively small number of stakeholders (directors, investors and senior management) who are primarily interested in short-term performance and profit. The corporate community now includes the company’s employees and their dependents; the neighbourhoods and towns which surround a firm’s locations; suppliers and business partners, and an increasingly wellÄinformed customer who is often as interested in a firm’s contribution to the quality of life, as in the quality of its product.


Yet, irrespective of how broadly a corporation chooses to identify its community, it will always be an exclusive concept. Companies which define community as a common interest group will identify their key stakeholders as their staff, customers and business partners. Firms which prefer the geographical definition of community tend to practice ‘doorstep philanthropy’ and primarily support the health and welfare of areas in the vicinity of their businesses. Both these approaches, however well intended, are divisive, either excluding particular social groups, or ignoring entire areas.

This trend highlights the principal problem of relying increasingly on private charity for social welfare provision: its lack of universality. Corporate community involvement is exacerbating the development of a twoÄtier society in which a “contented majority” of the population is catered for by a range of social investors, including private companies. An excluded minority, with little or no stake in society, is left to depend on meagre state handouts, or to fend for itself. This division is perpetuated by the stigma attached to public services which now focus almost exclusively on the minority and by the tax inducement of the majority to participate in private initiatives. In short, public equals bad; private equals good.

Countertrends in CCI

Few businesses are consistent in the practice of social responsibility when it requires reconciling the conflicting needs of many different stakeholders. An indication of the magnitude of the task is that Body Shop, one of the leading practitioners of social responsibility, has set up a Value and Vision Centre at its Littlehampton headquarters in order to monitor the coherence and consistency of all its business practices.

Several of the UK’s leading companies fail to communicate with their different audiences in a consistent way. The profit motive and the interests of shareholders are paramount even, on occasions, if they conflict with a company’s involvement in the community. British Airways, for instance, a member of BITC and the Per Cent Club, has a wellÄresourced programme of community affairs which concentrates on issues of inner-city deprivation, physical disability and youth development. However the impact which this community work has in enhancing BA’s reputation as a responsible and caring organisation has been undermined by the barrage of bad publicity received over allegations of less than scrupulous activities of some (rogue?) departments in a so-called dirty tricks campaign against BA’s rival Virgin Atlantic.

The privatised utilities – gas, telephone, electricity and water – have all greatly increased their community involvement activities, but then been subject to press criticism on issues such as executive pay rises. British Gas is only one recent example. The company could increase its CCI tenfold tomorrow, but it would do little to counter the public’s impression of corporate insensitivity and greed when the Chief Executive is awarded a £200,000 pay rise just when gas prices are rising, VAT is being applied to domestic fuel and the government is calling for pay restraints.

Some sectors of industry are realistic enough to admit that they are unlikely to achieve total consistency and that the nature of their work sometimes makes the pursuit of profit and caring for the community incompatible. Potential polluters like the major petrochemical companies appreciate that, however comprehensive their community programmes (Shell’s Better Britain Campaign will be 25 years old next year), corporate reputation can be lost in a matter of days in the wake of an oilÄtanker disaster or a pipe line spillage. In Shell’s case, its track record as a corporate citizen enabled the company to escape with a reduced fine following an oil spill in the river Mersey in 1989. Although Shell called this a “spin-off benefit” rather than the raison d’?tre for the company’s role in the community, it is an example which is regularly cited by those who argue that corporate community involvement must be for business reasons.

So is the business case about corporate reputation really sustainable when community involvement carries so little public impact?

Another trend which runs counter to corporate community involvement is the changing nature of work. The requirement for businesses to be flexible in order to remain competitive has created an environment of constant change. Ninety percent of the UK’s largest organisations have restructured in the last five years. The impact of new information technologies is revolutionising the way in which businesses employ people and the shape of their organisations. The association of company with place (Boots of Nottingham, Rowntrees of York, Colmans of Norwich) is becoming increasingly rare. The recent causes c?l?bres involving Timex and Hoover, both of which chose to move their factory locations within Europe in order to benefit from differential labour and social costs, emphasised how corporate business decisions are often made with scant regard for the local community.

Rising turnover rates among company executives are also changing the ways in which companies interact with charities and nonÄprofit organisations. Staff who have two or three years to make a mark before moving on may either not find time for community affairs or will favour shortÄlife projects which can deliver immediate results. The growing attraction of causeÄrelated marketing schemes is evidence of this. Ambitious managers are disinclined to make investments in the community which might only yield benefits in the future to persons unknown.

In contrast to the turnover rates of middle management, changes at the top of the UK’s major corporations are far less frequent. In the 50 leading companies, four top executives have already served for more than 15 years and five for more than 10. If this dichotomy continues, the Chef Executive Officer will be the only guarantee of continuity in a company’s community affairs as business managers become more inclined to use charity for commercial purposes. In terms of Business in the Community’s three waves of corporate community involvement, the future promises a return of the first wave (giving at the whim of the CEO) as much as any advance of the third (integrating corporate responsibility into all aspects of the business).

This article is an extract from The Acceptable Face of Capitalism? Corporate Involvement in the Charitable and Voluntary Sector by John Griffiths published by the independent think-tank DEMOS as part of a study on the future of the sector funded by the Joseph Rowntree Foundation and the Charities Aid Foundation. Copies are available from DEMOS 0171 353 4479. Price £5.

* Megatrends in CCI, by David Grayson, Business in the Community Occasional Paper 3. BT’s Community Programme supports the series. Contact Joan Mitchell, BITC, on 0171 629 1600

Corporate Citizenship Briefing, issue no: 19 – December, 1994