Ioannis Ioannou, assistant professor of strategy and entrepreneurship at London Business School, suggests how corporations can best engage with charities
Why is it that engaging with charities has always been such a challenge for corporations? First and foremost, charities are quite a distinct stakeholder and one that corporations have the least experience in dealing with.
There is also a lack of mutual trust that raises suspicion and doubt regarding their respective goals and objectives. Some charities may perceive corporate engagement as a diversionary tactic used by corporations to deflect attention away from actions and behaviours that could cause them reputational damage.
Corporates tend to engage with charities through one-off direct corporate giving rather than considered campaigns. They provide a short-term boost rather than long-term support. Some people even argue that direct cash donations are a bad idea. They say that charities would benefit much more from the transfer of corporate expertise. This would include sharing knowledge and training in management, administration, growing an organisation, gathering resources and developing capabilities towards a clear objective.
Against this background then, how can corporations really engage with charities in a mutually beneficial, long-term oriented and effective way that is based on trust and co-operation? Here are some common pitfalls that I have encountered to date, together with suggestions on how best to avoid them.
SPEAK THE SAME LANGUAGE
Corporate language is significantly different from the language that charities and other non-governmental organizations use. Co-ordination and honest discussion become a key challenge. Corporates would be better off forgetting idiosyncratic corporate language, fancy financial acronyms and complicated accounting ratios, particularly at the early stages of the process. Instead, they should invest the time and effort towards establishing direct and honest communication channels with their potential partners, making sure that everyone around the table speaks and understands the same language.
It is critical for both charities and corporations to be explicit and forthcoming about the goals and objectives of the collaboration
Without a doubt, charities and corporations have substantively different objectives, and often enough both parties fail to be explicit about them right at the beginning of any collaboration. A corporation’s goal might be improved employee engagement, whereas a charity wants to maximise societal impact. These are not necessarily mutually exclusive, but a lack of clarity around the goals may typically generate significant co-ordination costs, slow implementation or even suspicion between the parties down the road. Consequently, it is critical for both charities and corporations to be explicit and forthcoming about the goals and objectives of the collaboration. Open and in-depth discussion can align everybody and so achieve maximum impact, and arrive at win-win outcomes.
INVEST TIME TO ENGAGE
Size isn’t everything. The effectiveness of corporate giving does not merely depend on the donation; instead it critically depends on the depth of the overall engagement. Often, corporations undertake desk research, locate the charities that exist in their close vicinity and then send cheques to a selection of them. They do not invest the necessary time and effort to understand the real needs of their potential collaborators. They don’t ask themselves: is a cash donation the best way to meaningfully engage? In addition to establishing a common language, and aligning goals and objectives, it is very important for corporations to invest in face-to-face relationship building with the charities they wish to collaborate with. Only this way will they establish common ground, start building trustful relationships, and profoundly understand their needs and the best ways to address them.
ESTABLISH INTERNAL STRUCTURE
Last but not least, establishing an internal corporate structure is very important. Time and again, collaborations with charities are forgotten internally because there is little accountability and fickle assumptions of responsibility. Corporations with a solid commitment towards developing such partnerships should establish relevant positions, processes and procedures. They must provide incentives and put in place controls to ensure the continuity and effectiveness of such initiatives in the long run. In doing so, they would also signal to their charity partners that their commitment is sincere, long-term oriented and an integral part of the corporation’s structure.