There is strong need for Businesses and nonprofits to reject their stereotypical roles. They must give up their defensive and cosmetic approach to social issues. Business must be willing to exploit their full capabilities to find and implement solutions to social problems, even if they had nothing to do with creating the problem.
By Suresh Kr Pramar
Many state governments are growing increasingly weary with the seemingly lack of adequate interest among business to solve societal problems. A number of heads of states have publically denounced industrial units operating in their respective states for not fulfilling their Corporate Social Responsibility commitments. Many of these disgruntled Chief Ministers have warned industrial units that the state will have to take a very serious view of their failure.
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Unhappiness with Corporate Social Responsibility (CSR) Compliance
As a sequel to the ‘non cooperation’ by business, the Chhattisgarh government recently directed industrial units to submit their CSR proposals to the district administration. Units that were not undertaking CSR schemes were asked to deposit their CSR funds with the district authorities. This decision is evidence of the unhappiness of the state administration with companies.
Challenges in Implementing CSR Programs
With the Ministry of Corporate Affairs making serious efforts to promote CSR, industrial units are increasingly setting aside funds for social investments. Many units are taking up programmes, which they feel, would qualify them to be regarded as responsive business. Unfortunately though money has been set aside, and in many cases spent, benefits have not reached those for whom they are meant.
Barriers to Effective Collaboration: Business and Civil Society
Companies are handicapped by the fact that they do not have the right manpower to draw up and implement CSR schemes which will satisfy the government and the community. Two years ago, the World Business Council for Sustainable Development (WBCSD) at its meeting stressed the need for business and civil society to work hand in hand to solve the problem of poverty and deprivation. The WBCSD said that only a partnership between the two would help fight poverty.
Stereotypical Roles of Businesses and Nonprofits
The two have not been able to work together successfully because they consider themselves to be in opposing teams. The stereotypical roles of businesses and nonprofits suggest that businesses are purely self-serving, pursuing profit in ways that are inherently destructive to human culture, well-being, and the environment. Nonprofits are viewed as altruistic, charged with identifying and solving the world’s problems, and acting as public watchdogs to raise the alarm about harmful business activities.
Overcoming Stereotypes for Game-Changing CSR
Mark Kramer and John Kania in their paper “Game-Changing CSR” say “One of the primary reasons CSR has not yet significantly improved society is that the nonprofit and business sectors are for the most part still stuck in their stereotypical old roles. By ceding responsibility for solving social problems to nonprofits, companies have forsaken their ability to intervene directly in solving the world’s problems.
Utilizing Resources Effectively for Social Impact
“We do not suggest that merely because businesses could solve social problems, they must do so at the expense of their primary calling. Yet many billions of dollars are spent every year on philanthropy and CSR initiatives, and billions more are spent on the defensive advertising, lobbying and PR with which companies attempt to sidestep the social concerns for which they are blamed. These resources, already committed, could be spent far more effectively without detracting from the company’s overall purpose.”
Recognizing the Roles of Business and Civil Society
The WBCSD pointed out that both business and civil society have a significant role to play in eliminating poverty. It has been pointed out that businesses have vast resources, an ability to get things done, and readily measurable results. Nonprofits are struggling for daily survival, work slowly on more complex problems, and do good works in ways that often cannot be measured.
Need for Collaboration and Rejection of Stereotypes
Business may not be intentionally altruistic, but it provides the economic base that enables a self-sufficient livelihood, the creation of wealth, and the practice of philanthropy. On the other hand, nonprofits may be dedicated to social goals, but they pursue contributions with the same intensity that businesses pursue profits. Most nonprofits have far fewer resources, but they are often able to focus media attention on issues that mobilize consumers and governments. Many nonprofits struggle to survive.
Unlocking Full Potential for Social Progress
There is a strong need for businesses and nonprofits to reject their stereotypical roles. They must give up their defensive and cosmetic approach to social issues. Business must be willing to exploit their full capabilities to find and implement solutions to social problems, even if they had nothing to do with creating the problem. Nonprofits, on the other hand, must be willing to share their halo by accepting business as an ally rather than an opponent and welcoming its enormous capacity to solve social problems.
Balancing Profit Generation and Social Responsibility
It is universally agreed that companies are not in business to save the world. Their resources exist to generate profits and reward shareholders. Yet companies have far greater ability to lead social progress than they currently exercise from the narrow and defensive role into which they have retreated. Exploiting their full potential to develop and implement solutions not only offers more powerful benefits to society but enables companies to distinguish themselves and earn a reputation for corporate responsibility that can enhance their brands, motivate their employees, and strengthen their licenses to operate.
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According to Mark Kramer and John Kania while setting up Game Changing CSR there are four key principals a company should keep in mind when developing its CSR program.
1. Pick the right issue. To succeed in solving a significant social problem and enhancing its corporate image, a company needs to find the right problem to solve. It should find a single issue that is important, timely, and leverages the company’s core competencies. An issue such as this is more likely to attract media attention, which will help bolster the company’s reputation. Equally important, an issue that captures media attention will make it easier for the company to engage nonprofits and government agencies and create the sort of cross-sector partnerships that are essential to solving the problem.
2. Establish concrete goals and report progress. Business stakeholders long ago grew jaded to the vague pledges companies often make to address social issues. To stand out from the crowd, a company needs to publicly commit to an ambitious and quantifiable goal that goes beyond what is expected, and provide regular reports on its progress using independent external audits or reviews. A company should set ambitious goals, but it must also deliver the results it promised within a reasonable period of time.
3. Deploy the company’s key assets. The truly valuable assets that a company has — its products and services, skilled employees, industry expertise, global infrastructure, and its network of connections, credibility and influence — are rarely tapped for social progress. Yet these company assets are every bit as powerful in solving social problems as they are in creating economic value for the company. Once a company learns to break down internal barriers and integrate its CSR initiatives with its entire value chain, new and more powerful opportunities for solving social problems will arise.
4. Work in cross-sector partnerships. The term “partnership” in CSR or corporate philanthropy is often used loosely to apply to any relationship between a company and a nonprofit organization or government agency. Often these partnerships are no more than large cash contributions accompanied by joint press releases. The most effective solutions to social problems are those that engage nonprofit, business and government agencies in cross-sector partnerships where each sector concentrates on what it does best.
It will be foolhardy to expect that the economic motivations of business will never align perfectly with the altruistic mission of nonprofits however interdependent the nonprofit and business sectors may become. Companies may find many advantages in meeting the needs of the underserved or abating environmental harms, but there will always be social and environmental problems that run contrary to business interests.
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That is why the role of the nonprofit sector can never be replaced by business. But on those social issues where companies have reason to be involved, whether they are motivated by reputation or profit, substantially greater progress can be made if nonprofits can find effective ways of engaging them in cross-sector partnerships. By embracing a new and positive perspective on business’ involvement, nonprofits can tap into a wealth of resources that have long been beyond their reach. There are four basic principles that a nonprofit should keep in mind when inviting a company to help change the game:
1. Seek business partners, not villains. Many nonprofits have a lot of experience developing lists of companies that may have caused a particular social problem, in order to apply public pressure on those companies to change. By focusing instead on those companies that have the resources to help solve the problem, a nonprofit will come up with a different and greatly expanded list of potential corporate partners.
2. Help companies set affirmative goals. Many companies are looking for ways to demonstrate their corporate responsibility by developing affirmative approaches to solving social problems. But they often lack the ability to fully understand the issues and frame ambitious but realistic goals. Nonprofits often have a deeper understanding of the social problem that enables them to help companies devise more comprehensive strategies and set more ambitious and attainable goals.
3. Ask companies for more than money. It is relatively easy for a nonprofit to target a company for a grant or a donation. It is much more difficult for a nonprofit to understand the full complement of corporate resources that a company can bring to bear on solving a social problem. To understand those capabilities and know how to ask for them requires that nonprofit managers learn a new set of skills. Mastering this new approach will not be easy, but the potential power that can be deployed when business and nonprofits work together dwarfs what money alone can buy.
4. Share the halo with business. Many nonprofits are afraid to align themselves too closely with business partners because it may put their reputations at risk. Nonprofits need to overcome those fears because the benefits that can be accrued from doing so far outweigh the risks. Nonprofits can look smart, creative, and efficient by tapping business capabilities, and companies can enhance their reputations by taking affirmative steps to solve social problems. It is a win-win solution, but only if nonprofits and businesses are willing to share with one another the halo effect that comes with success.
About the author
Suresh Kr Pramar, Trainer, Writer, CSR Consultant and the Executive Director, Centre for Training & Research in Responsible Business is a veteran journalist presently actively involved in promoting CSR through his publication CRBiz and by conducting workshops and Consultancy on Corporate Social Responsibility Sustainability. He is regular contribution to INDIACSR.
