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Strategic Community Investment: Inspiring Community Leadership

By Tom Watson on October 17, 2007No Comment

Strategy, Focus and Measurable Results

Like many other companies, Capital One invests in its communities not only because it’s the right thing to do, but because vibrant communities make for a healthy business. When a company invests in a community, it strengthens its relationships with customers and gains a better understanding of their needs. Such investment also enhances employee pride, loyalty and improves overall job satisfaction.

Companies need to apply strategic best practices to their philanthropic endeavors with the same rigorous intensity they have for their for-profit activities. When it comes to community investment, how organizations contribute is as important as what, where and to whom they contribute.

When social and economic goals are strategically connected, corporate philanthropy supports shareholder interests. Corporations benefit because such charitable efforts improve their competitive ability in communities where they operate, and society benefits when corporate expertise is applied to solving important social problems.

There are three essential components required for this strategic approach to community investment. They are:

  1. The strategy needs to address social or environmental issues that clearly impact the company’s bottom line.
  2. Community investment programs should utilize the company’s core competencies assets and expertise that it can fully exploit.
  3. A program’s goals should be measurable, objectively justifiable and consistent with the organization’s business.   

“City Lights” Draws Upon Strengths of Corporation and Community 

Capital One’s “City Lights” initiative is a good example of strategic community investment. The company made a three-year commitment to help rebuild and restore Jackson Ward, a historic neighborhood in downtown Richmond, Virginia, where Capital One has its corporate roots. Working together with five local community organizations, Capital One contributes business guidance, technology assistance and volunteer resources. The company also donated $1.5 million to the revitalization effort.

Successful corporations realize that educated and prosperous consumers are the backbone of their businesses. For a diversified financial services company, knowledgeable, solvent consumers are tantamount to its ability to thrive. Capital One has taken that awareness one step further, fully integrating it into its corporate citizenship agenda. This has been done in two ways: first, by working to expand economic opportunity among low-to-moderate income families, and second, by investing in innovative, scalable strategies.

Narrow Scope and Highly Focused Objectives

From the very beginning, “City Lights” had a single objective: to revitalize the Jackson Ward neighborhood through the formation of a limited, reciprocal partnership with five principal community organizations. The initiative isn’t so much about delivering programs as it is about supporting and empowering the community’s existing leadership and residents to realize their own vision. 

Look for Measurable Results

Anyone involved in corporate philanthropy will attest to the challenge of making a business case for programs like “City Lights.” Community affairs directors spend a great deal of their time in executive boardrooms justifying and explaining the benefits of programs that can be difficult to quantify.

The philanthropic programs with the highest degree of success in the boardroom are those that provide the greatest returns to the company’s established businesses. In terms of measurable benefits, some are easier to calculate than others. For example, counting houses that have been refurbished, re-sold or brought up to code is a straightforward matter. So, too, is totaling the number of graduates from a “City Lights” financial education class or the number of jobs attained through a workforce development program. It’s much harder, however, to assess the sense of well being that pride in one’s neighborhood creates. It may also be difficult to measure the ultimate outcomes of a philanthropic program, as some results take years to become manifest and resist efforts to be quantified. 

Corporate Returns Redefined

Companies want to associate their corporate name with successful community investment programs. Too often, however, such programs amount to little more than the funding of special, one-time events, with community-based organizations spending tremendous energy putting on a show for donors. In terms of overall, sustainable change in the community, little is accomplished.

If company leaders want to create sustainable social change associated with their name (and reap the benefits flowing from it), they must set specific, measurable goals. And they must scrutinize whether the company’s resources human, financial, technical or otherwise are being used to achieve those goals in an optimal fashion. In short, a firm’s philanthropy must be guided by the same strategic principles that drive its for-profit business activities.

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