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Michaela Hayes
The nonprofit sector's role in corporate social responsibility: Part 2
By: Michaela Hayes
Jun 22nd, 2008

This is part two of a two-part article on corporate social responsibility (CSR) and the nonprofit sector. Part one: The nonprofit sector’s role in corporate social responsibility appeared in May 2008.

The nonprofit sector, along with government, can (and does) play a major role in shaping and monitoring CSR initiatives. International NGOs and NGOs in developing countries are playing a central role in influencing corporate policies in these countries—especially those related to human rights and labor.

In Europe, where much of this activity was conceived, all three sectors (nonprofit, business and government) have been working closely together for many years to find viable solutions to global climate change. In this work, the government sector has been integrally involved in developing CSR-related policies and in shaping requirements for social and environmental reporting. These efforts are supported by the European Union, which constitutes the world’s largest market and thus wields significant regulatory power.

Nonprofits have a leadership role in developing reporting guidelines and monitoring CSR activities

For their part, NGOs have taken a leadership role in setting guidelines for reporting. As might be expected, NGOs’ reports on corporations’ SR activities are more trusted by external stakeholders than the corporations’ own reports, which are often suspected of bias or “spin.” This role was mentioned in the proceedings of the Foundation Center’s recent “Symposium on the Future of Philanthropy,” which noted the existence of more than 360 international organizations, termed “civil society organizations,” that have developed to respond to a need to scrutinize corporations’ “global activities and try to condition behavior.”1,2

Nonprofits are knowledgeable and trusted community partners

In a recent article, Michael E. Porter and Mark R. Kramer reference the role the nonprofit sector is playing in helping U.S. corporations develop effective CSR strategies: “… corporate leaders have turned for advice to a growing collection of increasingly sophisticated nonprofit organizations, consulting firms, and academic experts.”3 In advocating for “strategic CSR,” Porter and Kramer focus primarily on the corporation’s role; however, this approach cannot be effective without a partnership between the corporation and the social sector in which it operates. As they state, when CSR is strategic, a “symbiotic relationship develops: the success of the company and the success of the community become mutually reinforcing.”

As society demands more of corporations, foundations and nonprofits can actively work to help corporations understand how to design CSR strategies and to effectively implement these at the local level. Who is in a better position than nonprofits, especially community-based ones, to help corporations understand the local community’s needs and how to best meet these needs in a mutually-beneficial way? Nonprofits are trusted community partners who can assist corporations in engaging and listening to their stakeholder communities—a process that will contribute to their learning how to be better corporate citizens. 

Nonprofits have the content expertise and hands-on experience that businesses need

With increased scrutiny on corporations, there is a growing understanding of the need for these efforts to result in a “win-win.” The nonprofit sector can play a lead role in helping corporations understand how to implement successful CSR policies to provide sustainable benefits to communities. The smart corporation would do well to solicit input from nonprofits that have expertise in addressing the types of issues that fall under the CSR umbrella.4

The corporation that neglects doing its homework does so at significant risk. For example, consumers are becoming savvier, as well as more cynical, about corporate claims of being “green.” Those businesses found guilty of “greenwashing”5 will quickly find themselves exposed and even blacklisted. By consulting environmental advocacy groups and community organizations when developing their CSR initiatives, corporations can obtain valuable input into designing sound “green” practices.

In a recent presentation to local San Francisco Bay Area business and nonprofit leaders, titled “Building Partnerships for Social Responsibility,” Dr. Kellie McElhaney, executive director and founder of the Center for Responsible Business at UC Berkeley’s Haas School of Business, stated: “Nonprofits have everything that businesses need” to develop and implement effective CSR strategies. This includes an understanding of the needs of the community and how to effectively solve them. She urged nonprofits to “think about what you bring to companies” and to leverage this. McElhaney gave the example of the Girl Scout/Dove Self-Esteem program, Uniquely ME!, and commented on Dove’s decision to partner with Girl Scouts: “Who better to go to to understand healthy self-esteem in girls?”

Nonprofits have sound experience in board development and governance

Another area where corporations can draw from the nonprofit sector’s experiences is in efforts to create boards that are more representative of all those impacted by a corporation’s work. With the well-publicized corporate abuses of the public’s trust and shareholders’ investments over the past decade, corporate governance has come under increased scrutiny. 

Nonprofits know all too well the challenges of board development and engagement, and many struggle themselves with these issues on an ongoing basis. Nevertheless, the sector has deep knowledge about how to effectively engage community stakeholders. This is a valuable resource for corporations to tap into to help them achieve greater diversity, broader representation and increased engagement on their boards. This will support corporations in developing and implementing sound and successful CSR initiatives—ones that reflect a true understanding of the community’s needs and how to solve them—and in monitoring them on an ongoing basis. This will help maximize the benefits to society.6

Next steps: Increasing awareness and dialogue

This article has outlined some basic ways that nonprofits can increase their visibility and voice in helping corporations shape CSR strategies. Through these efforts, nonprofits will further their own work in solving society’s most pressing concerns. These ideas are intended to stimulate dialogue within the nonprofit sector and between the nonprofit and corporate sectors. Foundations, management support organizations (MSOs), associations and affinity groups can help foster these conversations and determine how to best leverage the skills, knowledge and expertise of the sector. This will help assure that nonprofits have a prominent seat at the table when CSR strategies are formed and evaluated.

Conclusion

A number of factors are converging to motivate corporations to increase their involvement in CSR. The nonprofit sector has deep and specific knowledge and expertise that corporations need in order to develop effective CSR strategies. Nonprofits should take an active role in partnering with corporations to shape these strategies. These partnerships can result in a win-win for both sectors, with society as the ultimate beneficiary.

 

By Michaela Hayes, principal of Hayes Marketing & Communications, a consultancy specializing in market research, strategy and planning, and communications.

 


1 The Foundation Center. Transcript of the “Symposium on the Future of Philanthropy,” November 9, 2006.

2 Among the numerous groups developing and disseminating CSR principles, standards and guidelines, two organizations—both NGOs—are most frequently cited: the UN Global Compact (http://www.unglobalcompact.org/) and the Global Reporting Initiative (http://www.globalreporting.org/).

3 Michael E. Porter and Mark R. Kramer. “Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review, December 2006, Reprint R0612D, http://www.hbr.org/.

4 Salamon et al. refer to this same interdependence between sectors with respect to the nonprofit and government sectors, stating that nonprofits “often develop expertise, structures and experience that governments can draw on in their own activities.” Salamon, Lester M., S. Wojciech Sokolowski and Helmut K. Anheier. “Social Origins of Civil Society: An Overview,” working papers of the Johns Hopkins Comparative Nonprofit Sector Project, December 2000.

5 As defined by EnviroMedia (http://www.enviromedia.com/), which developed the “greenwashing index” (www.greenwashingindex.com), greenwashing is a term used to describe “advertisers who spend more time and money promoting environmentally-friendly practices than actually implementing them.”

6 Although he does not speak to the role the nonprofit sector might play, Allen L. White addresses the need for corporate boards to become more representative of all stakeholders in an article titled, The Stakeholder Fiduciary: CSR, Governance, and the Future of Boards (April 2006). Source: http://www.bsr.org/.

 


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