March 30, 2009

Why Just Law?

Last week, I wrote a couple of posts (here and here) about law firms deferring starts dates for new hires, and encouraging them (along with recently laid-off employees, in some cases) to take on pro bono jobs, with partial salaries from the law firms. I've been looking for other industries that are doing something similar - that is, recognizing assets that are under-utilized thanks to the business slow-down and loaning them out to nonprofits. Surprisingly, I haven't found much.

The lack of a pro bono or in-kind giving spike in industries other than law made me think about what characteristics would make an industry likely to increase such giving in the face of a recession. For instance, it makes sense to me that the legal firm is increasing pro bono activity for the following reasons:

  • According to a recent CNN article, deferring start dates can save law firms $100,000 per associate, even when the firms are still paying a partial salary. I imagine that this comes not just from the high salaries that are common in the industry (according to the same CNN article, the median starting salary for lawyers in private practice was $108,500 in 2007), but also from the high cost of training new hires, along with benefits, overhead costs, year-end bonuses, etc.
  • All law firms have to sell is their employees' expertise. As such, they are a critical resource - the firms can't allow this recession to have an negative impact their access to talent, or they won't be able to scale back up after it ends.
  • By putting new hires to work in a pro bono capacity, these inexperienced attorneys are getting valuable work experience, reducing the training cost to the firm once they come on board.
  • The legal industry has an infrastructure in place to handle pro bono work - many firms have pro bono coordinators, many lawyers have pro bono experience, and many nonprofits have experience putting pro bono lawyers to work.

So what are principles can we generalize to other industries? I believe that industries are more likely to donate recession-induced excess capacity if they meet some or all of the following criteria:

  • The resource is costly to the firm - if the firm can get even part of the cost off their books, or if it can extract some value out of the resource, it is motivated to do so.
  • The resource is valuable to the firm - the firm will absolutely need this resource after the recession. If the firm disposes of the resource, it will take some time to get it back after the recession ends (inhibiting the firm's ability to scale back up); there may even be a risk that the firm won't be able to recapture the resource.
  • If the firm donates this excess capacity to a nonprofit, it will extract more value from the resource than letting it sit idle. The process of being loaned out may actually add value to the resource (e.g., in the case of lawyers doing pro bono work), or the donation may have some other positive benefit to the firm (e.g., improved reputation).
  • The firm knows how to lend out the resource to a social sector organization; conversely, nonprofits know how to use this resource.

What other industries fit some or all of these criteria, and have seen their business slow down in the face of the recession, thus leaving their resources underutilized?

It seems to me that finance firms, with respect to their employees, are facing much the same challenges as law firms. Their employees are highly paid and highly skilled, and the firms' essential product is their employees' skill - they really can't afford to lose these people, as they'll be critical to the firms' success when the economy recovers. Putting these employees to work in a pro bono capacity should indeed add value to the employees, as a training exercise, as there are many nonprofits dedicated to issues that are closely related to the work these employees do for banks and other finance companies. Because many firms have a history of donating time and money to nonprofits that work on financial literacy, the infrastructure for pro bono work is more or less in place (if not as well developed as in law). Because this recession is creating increased demand for nonprofits in this field, they should certainly be able to use this donated resource.

So are these companies following the legal industry's lead? JPMorgan put
Bear Stearns summer interns to work in nonprofits last summer, but other than that, I haven't seen significant parallels. My gut reaction is that financial firms are in such significant trouble, that they're beyond these kinds of programs - they're saving the people they can to do the work they have left, but they just have to cut costs wherever they can. As a result, they may face some problems when they scale back up, but they don't have any alternatives. Or is there some other reason that the finance industry isn't engaging heavily with pro bono programs?

Consulting is a near-perfect match for law - the hiring process is similar; the types of people hired are very similar; consulting firms also have a pro bono history; their skills are similarly valuable to non-profits; and the nonprofits offer valuable experience for consultants. Furthermore, consulting firms, too, are pushing back start dates. That said, from what I've heard from my many friends going to big consulting firms next year, start dates aren't being pushed back later than January or February; compared to the full year some law firms are delaying their offers, this seems less likely to lead to attrition. (I'd also add that it seems consulting firms have always been pretty flexible about letting employees defer offers to take on short-term positions with nonprofits, even if they don't seem to be creating formal, paid fellowships like the law firms are currently doing.)

Moving beyond skilled employees to other types of underutilized assets, the travel industry comes to mind. Hotels, in particular, might have an interesting opportunity to increase in-kind donations. Much of a hotels' costs are fixed - no matter how empty the hotel is, the company still has to pay for the cost of the building itself, along with desk staff, restaurant staff, utilities, etc. Certainly, there is room to scale these costs down if the company expects occupancy rates to decline, but a big portion of these costs are fixed. As such, I expect that the cost of donating rooms - to Make-A-Wish, for instance, or even to nonprofit employees traveling for business purposes - is relatively low; these additional occupants are only incurring the additional fixed costs (e.g., utilities in the room, additional housekeeping, additional wear-and-tear on the room). While the benefit to the company isn't as clear-cut as better-trained employees, there should definitely be a reputational advantage, if the company communicates its donations well.

Airlines are somewhat similar - the vast majority of costs are fixed (the plane, most of the fuel), so putting a sick kid on the plane, off to visit a specialist, has very low additional cost to the airline. As with hotels, the recession is decreasing demand and leaving seats empty. Unlike hotels, airlines can reduce the number of flights they run, so they can somewhat reduce their excess capacity; however, to the extent that they aren't able to eliminate it entirely, there may be an opportunity to donates these extra seats to nonprofits.

What other industries have seen their business slow down as a result of the recession, leading to excess capacity? Of these, which meet the criteria laid out above, suggesting they may be good candidates for increased pro bono activity or in-kind giving? Or do you have other ideas about what makes an industry a good candidate for such programs? What stands in the way of getting such programs into place?


March 24, 2009

Update: Pro Bono Opportunities

Yesterday, I wrote about a trend among law firms to put their employees, idle in the face of a recession-induced decline in business, to work for nonprofits. It seems to be a timely topic, as I've come across a few other recent articles on the topic:

Also yesterday, (where I used to serve as Corporate Philanthropy Editor), published an interview on this subject with Michael A. Rothenberg, Executive Director of New York Lawyers for the Public Interest. One of the concerns I highlighted in my post yesterday was that, as the economy recovers, the pro bono resources will be pulled out of nonprofits which have come to depend on them. This interview points out that a number of the attorneys who take on pro bono opportunities will be working on problems that have been created by the recession, like foreclosures. While the economic recovery may mean that pro bono programs scale back to pre-recession levels, it may also mean that the burden on public interest law organizations is decreased. This makes me feel somewhat better about the sustainability of these programs.

The onPhilanthropy article directed me to
this article published by CNN last week. The CNN article gives some good context, including more examples of firms that are encouraging new hires with deferred offers and laid-off employees to go into public service jobs for the time being; it also explains some of the economics that make paying attorneys to work for someone else attractive to law firms. The CNN article refers to students and attorneys with the same big concern that I have - that is, that students who come with a stipend from a law firm will displace those who have always intended to go into public interest law. However, it also quotes individuals that are hopeful that this situation will cause public interest law careers - not just short-term stints - to become attractive to students who might not have otherwise considered anything but corporate jobs.

AmericanLawyer.Com also took on this issue recently, in an article published on Thursday. The article focuses on the logistical challenges of managing this influx of pro bono resources, and the role that the Association of Pro Bono Counsel is playing in coordinating solutions to these challenges. The article also addressing the difficulty - and yet the importance - of matching specific lawyers with specific opportunities, to ensure that both parties truly benefit from the experience.

Have you read anything else that illuminates this subject, or that illustrates a similar situation in a different industry? If so, please post a link in the comments. Thanks!

March 23, 2009

Recession Special: Pro Bono Opportunities

I just read an article published today on, the San Francisco Chronicle's online edition. It details a trend among laid-off workers to seek volunteer opportunities with nonprofits as part of their job search.

The article reminded me of a conversation I had over dinner last weekend with a friend who is in law school. She's strongly interested in public interest law, to the point that she's not considering taking a corporate job. Before law school, she worked with two nonprofits, one of which provided legal services to those unable to afford it, and she knows for sure that she wants to do this type of work as soon as she graduates from law school.

Over dinner, we talked about the recent trend among big law firms, in the face of the recession, to delay their new associates' start dates. Some of these firms are paying their new hires a partial salary to work in public interest law. According to
a post this past Friday on the Wall Street Journal's Law Blog:

"Morgan, Lewis, for instance, has delayed the start date for 68 incoming lawyers by one year, until the fall of 2010. But the firm will pay the lawyers up to $70,000 each if they take on such jobs as litigating at a public defender’s office or providing corporate-law advice to a nonprofit organization. Pillsbury Winthrop has extended a one-year offer to pay salary and benefits to each of 55 laid-off lawyers who takes on a public-interest job. Simpson Thacher has launched a similar program."

On face value, this seems like a great CSR move on the part of the law firms. Because of the business slow-down, companies have a lot of underutilized assets sitting around - in this case, that's employees, but in other industries it might include physical assets, too. According to the WSJ blog post, nonprofits are embracing the opportunity to receive this resource:"But for now, the public-interest world is loving it. 'It seemed like manna from heaven when law firms approached us about underwriting the costs of having [lawyers] work for us,' says Dinah PoKempner, general counsel of Human Rights Watch."

In talking to my friend, though, a big concern came up. She's worried that this move will create significantly more competition for public interest jobs, and that this will affect her job search. I'm worried about the sustainability factor if her concern is realized.

Let's say that incoming lawyers accept such paid "pro bono" opportunities in significant numbers. In year one, this could be terrific for nonprofits - they get access to a significantly larger talent pool, while law firms shoulder some or all of the burden of paying for it. In year two, though, those attorneys go back to their real jobs. Depending on the state of the economy, the nonprofits might get a new crop of untrained employees, or they might get no one.

Meanwhile, the students who were dedicated to public interest careers all along may have gotten boxed out of nonprofit jobs, because they didn't come with a nice $70,000 subsidy. But these are the lawyers who would have stayed with the nonprofits long-term, rather than taking their knowledge and training with them back to big firms, leaving the nonprofits to train a fresh batch of inexperienced new hires. This just doesn't seem very sustainable.

I absolutely commend businesses that recognize they have assets sitting idle and that work to deploy those resources in a way that serves the community. I think this kind of thinking is the source of a major growth opportunity for corporate community engagement. However, I think we need to give careful thought to how we can implement these programs in a way that is sustainable, that won't leave nonprofits in a lurch when the economy picks up and we can once again fully utilize these assets in our businesses.

Does anyone have thoughts or advice on how we can do this, or examples of companies that are doing it well? Thanks!

March 20, 2009

Engaging Consumers - Starbucks Shared Planet

I was in Starbucks earlier today, and saw an poster with this interesting message:

Work with 1.2 million people to grow and harvest even better coffee that earns even better prices.

Everything we do, you do. You buy coffee at Starbucks. Which means we can work with farmers to help improve their coffee quality and their standard of living. We call it coffee that is responsibly grown and ethically traded. And thanks to you, we've grown big enough to be able to do this kind of good on this kind of scale.

Good job, you."

The poster ended with messaging for the company's "Shared Planet" CSR campaign, with the tagline "You and Starbucks. It's bigger than coffee."

It looks like Starbucks is attempting to engage its consumers in its CSR activities by drawing a clear connection between consumption and the work Starbucks does with coffee farmers. I find this interesting on a few levels. It's great for Starbucks from a business perspective - in the second to last sentence, the company is basically saying that, the more consumers buy, the more good Starbucks can do. For a company that relies on repeat customers, that's a pretty decent sales pitch. Furthermore, in addition to making consumers feel good about buying one more cup of Starbucks coffee, it also educates them about what Starbucks is doing through its CSR program (at a high level), and specifically about what "responsibly grown and ethically traded" means (though the definition isn't very detailed). For a company that makes social responsibility a core part of its brand, it's critical to do this effectively.

One thing I thought was missing from the poster was a call to action. Reading the poster, I found it rousing - it told me how effectively I was enabling Starbucks to have a positive impact on coffee growers. Getting to the end of the poster, though, there was no way for me to have a bigger impact, other than buying another latte.

I checked out the
Starbucks Shared Planet website, though, and saw some of my questions answered. The website offers customers the opportunity to pledge to use their own mugs for their Starbucks coffee (4,733 people had done so as of 6:50 today), as well as a "Volunteer to Volunteer" section, where website visitors can learn more about volunteer opportunities. In particular, the Starbucks V2V area of the website, which has a social networking component, is designed to be "a catalyst for conversation and connection that inspires people to contribute to a cause greater than themselves". I didn't, however, find any opportunity to have an impact on the issue highlighted in the poster - improving the quality of living in coffee-growing communities - via this website.

A few days ago, I
asked for examples of companies that engage consumers in their CSR activities. This is a very interesting example of such an initiative. I think it has the potential to educate consumers about Starbucks' CSR, thus possibly increasing loyalty; to make customers feel a stronger relationship with the company; and to increase the impact of the company's overall CSR activities. However, this will all depend on how the initiative is executed. The time and effort of Starbucks customers has the potential to be a powerful resource - how will the company deploy it? I look forward to following this initiative, and also to hearing any of your thoughts on this project in the comments section.

Enjoy the weekend!

March 17, 2009

Putting Employees to Work

Ever since Google.Org announced its reorganization last month, I've been thinking about the types of resources that companies give away. Basically, companies mostly give away cash, products, or employee resources. Employee resources can be subdivided into time (labor) and talent (expertise). There are a few exceptions (including several detailed in this article that I wrote for onPhilanthropy a few years ago), but most corporate philanthropy (broadly defined) fits into these categories.

Google.Org, in the announcement cited above, suggested that, while it has been pleased with its efforts to support its philanthropic goals via cash donations, it has had the biggest impact when it has donated employee talent. As such, it plans to increase its focus on delivering impact via "engineers and technical talent".

This got me thinking about other companies that really get behind employee engagement as a key part of their philanthropic strategies. Of course, most companies (at least large ones) have volunteerism programs and most make at least some cash donations. However, which companies seek to make a social impact primarily via their employees' skills? What have been the results of these programs?

Thanks so much for your insights!

March 12, 2009

Engaging Consumers in CSR

I'm interested in learning more about companies that do a good job of engaging consumers in their CSR programs. This includes companies that effectively increase their social impact by getting their customers to work alongside them toward their goals. It also covers companies that successfully use CSR to foster relationships with their customers, in a way that directly serves their business goals.

Does anyone have good examples of such companies or opinions on this topic? Are there any awards that address these types of strategies or resources I should check out?

I'd love to hear your thoughts in the comments section. Thanks!

March 10, 2009

CRO Magazine's 100 Best Corporate Citizens

CRO Magazine recently released its annual list of the 100 Best Corporate Citizens. Bristol Myers-Squibb is number one this year - after spending last year in CRO's "Penalty Box". (In fact, five of the 8 company's in last year's Penalty Box are ranked in the top eleven this year.) General Mills, IBM, Merck, and HP rounded out the top five. Intel, Cisco, and Starbucks have all made the list each of the ten years it has been released; they are the only companies to do so.

I find the methodology of the report interesting. According to the company, in its statement accompanying the list, "CRO’s 10th annual 100 Best List (compiled by IW Financial and edited by CRO) is completely based on publicly available information." On the one hand, I'm concerned that publicly available information might not fully represent the companies' corporate citizenship programs. As a corporate philanthropy consultant, I did a lot of benchmarking, and I know that I could get significantly more information talking to company representatives than by looking solely at public sources. That said, this methodology may encourage companies to make more information publicly available.

Perhaps most importantly, CRO also reports that last year, "76 companies that fell short contacted CRO to ask what they needed to do to make the list next year." By establishing criteria for what constitutes good corporate citizenship, CRO establishes best practices, providing a road map that companies can follow in a still-evolving field. By publishing the results of its evaluation in a "100 Best" list, the magazine provokes the competitive instincts of companies seeking to eek out an advantage in competitive markets. As such, this list gives us a snapshot of where we stand today, but it may also help us move forward tomorrow.

Have any of you used this list, or another ranking, to evaluate and improve your programs?

March 3, 2009

News Update: Conference Board Survey Suggests "Economic Downturn Will Have Major Effects on Corporate Philanthropy"

Here's another update in our ongoing discussion about the impact of the economic downturn on CSR (or in this case, specifically on corporate philanthropy): Today, The Conference Board released the results of a recent survey, which suggested that the recession will indeed be a blow for corporate philanthropy, from the perspective of quantity. In particular:
  • 45% of survey respondents (corporate giving officers at major U.S. companies) have reduced their 2009 giving budget, while an additional 16% are considering such cuts
  • 35% will reduce the number of grants they make this year, and 22% might do the same
  • 21% will cut the size of their grants, and 27% are considering this option

However, the survey gave me hope that these economic pressures could potentially increase the quality of corporate philanthropy. According to Carolyn Cavicchio, Senior Research Associate, Global Corporate Citizenship, The Conference Board (and, when she ran Changing Our World's Corporate Social Engagement Division, my former boss!), "There is a definite shift toward more critical business issues and an increased emphasis on measuring giving outcomes."

Why is that a good thing? I am a strong believer that corporate philanthropy should be a strategic as possible - and by that I mean, it should be a clear fit with the company's overall business model (just like every other part of the business - the HR strategy, marketing strategy, manufacturing strategy, etc. should also all support the overall corporate goals). The more a company sees a business benefit to corporate philanthropy, and to CSR in general, the more resources it will invest in such programs. (I see some CSR programs - say, employee safety - as a responsibility, rather than merely an opportunity, but to the extent that we can align business goals and social goals, we create more buy-in for CSR.) I also believe CSR should be results-oriented - I want to know, rather than simply believe, that we're having an impact on our goals. That way, if we're not, we can modify our approach.

I'm certainly concerned about the quantitative decline - especially since, as the survey respondents indicated, we're in a time of particularly high need. However, I’m hopeful that corporate philanthropy, and CSR in general, will emerge from the recession a bit stronger than before.