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.

Tech CSR in Emerging Markets - What Would You Ask?

This Sunday is the Harvard Business School/Harvard Kennedy School Social Enterprise Conference. I've organized a panel on CSR by technology companies in emerging markets ("New Markets, New Approaches: Technology Companies and Corporate Social Responsibility in Emerging Markets"). The panelists include:

• Akhtar Badshah, Senior Director, Global Community Affairs, Microsoft Corporation
• Robert Richardson, East Coast Education Manager, Intel Massachusetts
• Michael Yutrzenka, Executive Director, Cisco Foundation and Director, Public Benefit Investment, Cisco
• Chuck Kane, President and Chief Operating Office at One Laptop Per Child
• Jane Nelson, Director, CSR Initiative and Senior Fellow, Mossavar-Rahmani Center for Business & Government, Harvard Kennedy School (moderator)
  
  Here's the official description: "Technology companies are fully engaged in emerging markets—developing, manufacturing, and selling products in developing economies around the world. Just as in developed markets, these companies recognize a responsibility to their emerging market customers, suppliers, employees, and other stakeholders, and have expanded their corporate social responsibility programs accordingly. Many technology companies seem to approach CSR in emerging markets via strategies and business models that are distinct from their developed market initiatives. Are these emerging markets CSR programs truly unique? If so, why are tech companies taking a different approach in these regions? Are there lessons and strategies that could be imported back into developed markets? This panel will explore successful models of technology company CSR in emerging markets, along with the challenges and limitations that these programs face."
  
  What questions should I make sure get asked during this panel? I'll report back on the conference early next week. If you plan to be there, please let me know!

Is the Recession Good for the Environment?

In light of the recession, companies are more concerned with finding the cheapest mode of travel than the mode with the smallest carbon footprint. As companies cut their travel budgets, though, will they increasingly turn toward far-greener technological substitutes like webinars and video conferences? Will this be just the push required to get consumers to change their behaviors, allowing these technologies to disrupt the business travel industry?

Last night, I read this article, entitled "Recession May Harm Green Business Travel, Survey Says". The article reports that, according to a recent poll (details in the article), CSR in general will continue to grow, despite the recession, but some specific initiative, including green business travel, are likely to be cut to save money. In particular, "the survey found that 79 percent of companies rate cost-cutting as a high business travel priority this year, versus 17 percent for whom environmentally sustainable travel is a high priority."

Green travel, while not explicitly defined by the article, seems (as one might expect) to include travel decisions made with consideration for carbon emissions, such as choosing high-speed rail over flights. According to the article, it has "has not yet taken hold among a majority of companies". The article quotes Yves Weisselberger, CEO of KDS, an expense management company in Europe, as follows: "At this stage, green travel choices remain scarce and are usually more expensive." He goes on to say, "Longer term, though, the picture is brighter—companies clearly want to do the right thing through CSR, so once the financial premium is erased, or the economy permits, we should expect to see green business travel become far more popular."

I have to say, I was surprised when I saw this article and its gloomy view of the present situation. In the past month or so, I've noticed that the recession has caused a number of companies to institute travel bans. (Here's an article about a decrease in business travel in the UK; if anyone can back up my anecdotal observations about a decrease in business travel in the US, would you please post a comment?) I'm clearly not an expert in carbon footprints, but I feel comfortable concluding that a reduction in travel is better for the environment than a shift toward green travel.

This got me thinking about what companies will use as a substitute for travel. If they had been willing to shell out cash for place tickets in the past, they must have had a job they needed to do - what are they now using to do that job? I bet their solutions will include an increase in the usage of videoconferencing, webinar tools, and similar technological solutions. (In fact, the above article about travel in the UK mentions a rise in video conferences.)

I recently had the opportunity to participate in an online conference/presentation (appropriately, as part of a Proctor & Gamble case competition focusing on sustainability). I have to admit, I was dreading it. The format of the event required each of the five participating teams to present a PowerPoint and video which we'd submitted in advance, and then to go into four or five virtual "breakout rooms" to discuss each presentation in small groups. Between the competing students, the people running the competition, and the P&G executives that were judging us, there must have been at least 25 participants, in literally as many different locations around the country. It just sounded like a recipe for chaos. Instead, I was very pleasantly surprised. The presentations all went smoothly, and in my breakout room, we had a really productive conversation, aided by a "whiteboard" where the moderator could take notes that all of us could see and a polling function. The only equipment we needed to participate was a computer, an internet hookup, and a phone line.

I'm taking a course this semester that's taught by Clayton Christensen, the mind behind the theory of disruptive innovation. As I was thinking through this post, it occurred to me that this is a classic illustration of that theory. I can't do the whole theory justice in this post (I HIGHLY recommend the book The Innovator's Solution, which is the backbone of our class), but here's a short and rough analysis:

Travel is great. It is the best way to do the job that companies need done when they put their employees on planes, trains, and automobiles. That said, it's fairly expensive, so not everyone can travel, and companies won't use travel in every situation - because, in those situations, physical travel over-serves their needs. Tools like webinars and videoconferencing are not great. They simply are not as high quality as truly being in the same room as the people on the other end of the phone line or computer screen. I've certainly observed this myself in my previous role as a consultant - absolutely nothing builds relationships like face-to-face communication. Furthermore, these tools have historically been frustrating, with frozen screens, dropped calls, and other bugs. However, in situations in which travel is too expensive relative to the benefit it offers - that is, when the customer is being over-served by traditional travel, these tools are a great alternative.

The issue is, though, that the current context isn't static - instead, both travel and these travel substitutes are getting better over time. That means that I can fly where I want to go faster, more easily, and generally better. (Well, that's the theory at least - I guess the idea that all companies improve their products on an ongoing basis might not quite take into account increasing security regulations - but think back to travel several decades ago, and this is more or less true.) At the same time, webinars and videoconferencing tools are getting better, too, so that they more and more and more meet my needs. Of course, my own expectations are increasing over time, but not as quickly as the quality of both my travel options and my travel-substitute options.

Someday, the travel-substitutes will meet and then exceed my needs. Real travel will still be better, but since the webinars and videoconferencing will be more than adequate, while at the same time cheaper, why would I bother to get on a plane? Webinars and videoconferencing will have successfully disrupted physical travel.

In reality, of course, it might not be quite so simple. There will always be reasons that I might want to be someplace in person. In general, though, I buy into this theory enough to believe that technological substitutes for physical travel will certainly steal market share from real travel in the long run. With the same disclaimer that I couldn't tell you the carbon footprint of a webinar, I can only imagine that this would be a strongly positive change for the environment.

So what does any of this have to do with the recession and the article about green travel? My number one takeaway from my introductory marketing class last year was this: It's really, really, really hard to get consumers to change their behavior. You might have a product that would seriously benefit them, but if it doesn't fit into the way they currently live their lives, you have a major uphill battle to get them to adopt it.

To illustrate this concept, I'll go back to my experience in the case competition. I didn't want to use the online tool. I wanted to just stand up in front of the room, make my presentation, and meet in a real breakout room with people who were really there with me, just like I've done in the past. When I was forced to adopt this new technology, though, I found that it met my needs, and I would absolutely use it again.

If the recession is forcing companies to cut their travel budgets, it may be the push they need to adopt technologies that substitute for travel - the push they need to change entrenched behaviors. In fact, in researching this post, I came across this article from 2003, when we were emerging from the last recession. The article reports that airlines were likely to benefit from the economic recovery, but that "it may not deliver the rebound in business-travel spending they wish for", because companies were likely to continue to use cost-cutting measures they had adopted in the face of the recession, including video and web conferences.

If this theory pans out, the recession may be just the jumpstart needed not for green travel, but for green travel substitutes.

Google.Org Announcement

Does Google.Org's announcement really represent a big change for the organization? Does it matter if the entity invests in non- or for-profits, and can it be successful doing both at once? Is it fair to criticize Google for taking a "business approach to philanthropy"?

Google.Org has announced a reorganization, in the wake of a review of its operations. According to Dr. Larry Brilliant's post yesterday on the Google.Org blog, he will move on from running the company's philanthropic arm to become Chief Philanthropy Evangelist, while Megan Smith, Vice President of New Business Development, will take responsibility for managing Google.Org (in addition to her current role).

While I'm intrigued by the leadership change (I've long believed there's a strong fit between business development, which is all about relationships with external actors, and strategic CSR, which is typically executed via partnerships), I'm most interested in the following piece of Brilliant's statement:

"During our review it became clear that while we have been able to support some remarkable non-profit organizations over the past three years, our greatest impact has come when we've attacked problems in ways that make the most of Google's strengths in technology and information; examples of this approach include Flu Trends, RechargeIT, Clean Energy 2030, and PowerMeter. By aligning Google.org more closely with Google as a whole, Megan will ensure that we're better able to build innovative, scalable technology and information solutions. As a first step, Google has decided to put even more engineers and technical talent to work on these issues and problems, resources which I have found to be extraordinary."

A New York Times article interpreted this announcement to mean that Brilliant "signaled that Google.org might curtail its financing of nonprofit groups unless they are closely aligned with Google projects" and said that the "announcement represents a shift in Google’s approach to philanthropy". I'm not sure I agree this is actually a major change. Of course, the reporter may have had access to information that I don't have, but the article indicates that no Google executives were willing to comment, so I'm assuming he came to that conclusion based only on the text of the blog post.

Instead, it sounds to me like Google.Org is continuing on with what it's always sought to do - utilize the company's unique assets to address social issues. Many companies have money (perhaps less right now), and this is certainly an asset they can deploy. However, they have unique access to their employees' skills, their products, and their proprietary technology and information. Anyone can give money, but Google is one of the very few entities that can, for instance, track flu outbreaks before they hit hospitals or help citizens visualize the impact of environmental disasters half a world away. I think Google has always tried to do this - I read this announcement as a reaffirmation of that goal, and perhaps an indication that the organization thinks it needs to do a better job of this, but I don't think this is a major change in how Google.Org does business.

I really don't care if the projects Google.Org invests in are for- or non-profit. It sounds like Google has found that, to date, the projects where it has made the biggest impact have been for-profit initiatives. I don't know if that's just been how it's happened to play out, or if Google is, for some reason, better equipped to make a difference via for-profit initiatives. It doesn't sound like the organization knows that, either - it sounds like its employees have just observed that, empirically, they've worked well with for-profits in the past. Going forward, Google.Org should certainly focus its activities on the initiatives where it expects to make the greatest impact.

The one red flag I do see here (if, in fact, Google.Org is considering moving more towards for-profit initiatives, as the New York Times article implies) is that it's easy to see an organization's tax status as a defining characteristic of that organization, and in many cases, this isn't the case. If Google.Org's goal is to earn a financial return while also having a positive impact, then of course they should focus their funding on for-profit initiatives. However, if their goal is to reinvent the energy infrastructure or change the way people in emerging markets access information (which may provide financial benefits to Google in the long run), I hope they focus on the operations of prospective partners, not their financing decisions.

That said, I'm not sure how easy it is to structure and staff an organization so that it is good at both for- and non-profit investing. In my experience as both a grantmaker directing funding to nonprofits and an MBA student evaluating prospective for-profit investments, I'd say that while the required skill sets are absolutely closely related, they're not identical. While the same person can certainly develop both skill-sets, the terrific grantmaker and the wonderful investor may not always be the same person. What organizations do both of these things well, and how are they structured and staffed to make this possible?

Getting back to the New York Times article, though, I was especially interested in these few lines:

"The company has drawn criticism for relying to much on a business approach to philanthropy and on a belief that engineering could be applied to solve the world’s problems.

'They are doubling down on the technocratic approach,' said Siva Vaidhyanathan, a professor of media studies and law at the University of Virginia, who is writing a book about Google. 'The habits and ideology of the company will lead the philanthropy rather than the needs of the communities or the planet.'"

I really take issue with the idea that someone would criticize the company for taking "a business approach to philanthropy" or for allowing "the habits and ideology of the company" to "lead the philanthropy". At the end of the day, Google is a company. The founders are very committed to using that company to making a positive difference in the world, and that's terrific. However, at the end of the day, they serve at the pleasure of the shareholders, and for Google.Org to be sustainable - for it to last through the many leadership changes that are sure to come in the future - it has to connect back not just to the "needs of the communities or the planet", but also to the needs of the company.

Furthermore, by taking a "business approach to philanthropy" and by using engineering "to solve the world's problems", Google.Org is utilizing its unique assets. I don't know whether Google thinks that engineering is the one true way to save the world - I think it's a little far-fetched to believe that anyone would think there's just one solution to the world's myriad problems. However, I completely agree that engineering (and the other skills offered by Google employees) are certainly the best way for Google to address social problems. As a result, I'm really glad that the company continues to integrate Google.Org into Google.

Corporate Philanthropy Day Video

Yesterday's Board of Boards conference was closed to the public and the press, but you can get a little taste of it in this video from MSNBC - it's a conversation about corporate philanthropy and the recession, featuring Tom Brokaw, Angela Braly (President, CEO, & Director of WellPoint), and Alan Hassenfeld (Director and former Chairman & CEO of Hasbro), all of whom were expected to participate in the event.

Even more interesting - I got to the video via a post on www.barackchangeobama.com, billed as "The Unofficial Website of Barack Obama: The Change We Need".

Happy Corporate Philanthropy Day

Today, February 23, is International Corporate Philanthropy Day, as promoted by the Committee Encouraging Corporate Philanthropy. Through this day, according to a CECP fact sheet, the organization seeks to celebrate corporate philanthropy while raising awareness of the "benefits of corporate community investment" and encouraging the business community to invest further in philanthropy. The day's events include the annual Board of Boards conference, which brings together CEOs from major companies to discuss corporate philanthropy and an event with the UN on the role of companies in furthering the Millennium Development Goals.

I am particularly interested in today's fourth annual Board of Boards event, which is aimed specifically at CEOs and Chairpersons. This year, Tom Brokaw was scheduled moderate a discussion with Carlos Ghosn, president and CEO of Nissan, and Jeffery Immelt, CEO of GE, and the event was to conclude with lunch with Bill Clinton. Top executives from over 50 companies were expected to participate, including Dan Doctoroff, President of Bloomberg; E. Neville Isdell, Chairman of Coca-Cola; Terry J. Lundgren, Chairman, President &CEO of Macy's; and Ivan G. Seidenberg, Chairman & CEO of Verizon.

I don't know of any similar events that engage CEOs to address not just corporate philanthropy, but CSR more broadly. Is there in fact such an event or initiative? If not, should there be? I tend to think that engaging top leaders in CSR initiatives (including corporate philanthropy) is a critical way to infuse CSR throughout the organization. A mid-level executive charged exclusively with addressing CSR may have a hard time convincing the manufacturing department of the need to reduce its environmental footprint or the purchasing group of the importance of sourcing from ethically responsible suppliers; in such an organization, CSR is too easily corralled into its own little world. When the CEO is engaged, however, he or she has influence over all of these groups and can ensure that CSR goes from "nice to have" to part of how the company does business. In addition, an event like the Board of Boards conference provides an opportunity not just to influence the assembled CEOs, but to use their collective influence and insight to influence the field of CSR.

If you were to design an event or initiative to engage CEOs in CSR, what would it look like? What benefits would such an event bring? (For instance, I imagine that the CECP event helps raise the visibility of corporate philanthropy on the participating CEOs' agendas, creates a bit of peer pressure to keep up with all of the well-known companies that participate, provides an opportunity to demonstrate to these CEOs directly the positive impact that corporate philanthropy can have on a company, and energizes the participants to increase the impact of their own community engagement.) What other ways would you seek to engage CEOs, and how might you use the collective influence of the participating CEOs to further the field of CSR?

News Update: Macy's

Yesterday, I asked for examples of companies that are making changes to their CSR programs in light of the recession. Today, the San Francisco Chronicle's SFGate.com website posted this article about the changes Macy's is making to its community involvement activities in that city. These changes come in the wake of news that it will close its Macy's West division this spring, shrinking from 1,400 to 125 headquarters employees in San Francisco. (Here's an article from SFGate that gives some background on the cuts Macy's is making.)

According to the article, the company expects to maintain its commitment to "several high-profile community events", like the annual Passport fashion show, which raises funds to fight HIV/AIDS; the remaining San Francisco employees will also continue to run cause marketing initiatives. On the other hand, thanks to the steep staff reduction, local nonprofits are likely to see a major decrease in employee giving and volunteer hours.

I find it really interesting that the company isn't explicitly making cuts to its community involvement programs, but that such a decrease will be a byproduct of staffing cuts. I imagine this is true in any community that has seen significant layoffs - and as a result, the communities that are hardest hit by this downturn may also be those with the biggest reduction in capacity to deal with it.