Mitigating Risk with 3 Key CSR Strategies

Jan 10, 2018 - Nita Kirby

You cannot manage what you do not measure. We know the saying but for some reason when it comes to CSR initiatives, we tend to ignore this sage (and TRUE) advice. Perhaps it’s because for some reasons contributions or other acts don’t seem to fall in the same category as revenue and therefore some think it can be tracked, recorded and managed differently.

This couldn’t be further from the truth. In fact, corporate giving is one area where companies forget they are exposed to major risk. When corporate donations and volunteer time are managed improperly or not tracked in accordance with federal and state regulations, well-intentioned CSR initiatives can turn into a nightmare.

5 ways your #CSR strategy can go VERY wrong this 2018:Tweet This!

Here are some ways CSR can go VERY wrong:

  • If CSR initiatives are not aligned with corporate values but one executive’s personal interest, those initiatives can cost the company.
  • A poorly designed system to manage CSR (or no system at all) can result in slow or non-existent profits or gains. In addition, much like CSR initiatives are used to boost employee engagement and participation, a bad experience can turn employees off participating for good.
  • Due to fraud and illegal activities, the regulations surrounding CSR are complex and must be managed from country to country and sometimes even state to state, requiring a level of vigilance many companies cannot afford in-house.
  • When used as a thinly veiled PR shield and later discovered, CSR can further damage a company’s brand and reputation.
  • When CSR initiatives are constructed without professional assistance and expertise, any financial profits gained can be lost to mismanagement.

But it’s not all dire. We’re, collectively, getting better:

“The overall results are promising. We’re observing many companies, across all markets, making crucial year-over-year improvements to CSR performance, and many industries edging toward lower CSR risk.”

“While the progress has been terrific, the criticality of supply chain CSR remains extremely high, and there’s a lot of room for all businesses to grow and improve. Our grading scale and evaluations represent this reality. We’ve seen strong progress in 2016, but there’s still a major gap between today’s scores and peak CSR performance.” - Pierre-Francois Thaler, co-founder and co-CEO of EcoVadis

So what separates those who open their companies up to risk by starting a CSR program and those who build best-in-class corporate philanthropy systems within the enterprise? We have collected some processes and metrics that will help you build your strategy, protect your company from risk and continue to increase employee engagement and create an impact on your communities and the world.

Learn the 3 key strategies behind a winning #CSR strategy for 2018. Is yours in check?Tweet This!

1. They recognize ancillary benefits and plan long-term.

Most of us can name the obvious, near-immediate benefits of implementing a corporate philanthropy program, but companies who are balancing the long-term risks and rewards take it one-step further. For example, given the presence of “brain drain” in certain American cities, some companies are creating programs to educate students in the skills they know they will need. This both impacts the community by giving a path to students who may not have the funding for higher education and begins the process of creating a trained workforce who will live and work where the company is located, thus bolstering the local economy. For these companies, the chance to create a skilled workforce outweighs any risk they might expose themselves to in implementing CSR for their company.

Charitable giving can, for example, improve education and training. DreamWorks SKG, the film production company, recently created a program to train low-income students in Los Angeles in skills needed to work in the entertainment industry. Each of the company’s six divisions is working with the Los Angeles Community College District, local high schools, and after-school programs to create a specialized curriculum that combines classroom instruction with internships and mentoring. The social benefit is an improved educational system and better employment opportunities for low-income residents. The economic benefit is greater availability of specially trained graduates. Even though relatively few of them will join Dream-Works itself, the company also gains by strengthening the entertainment cluster it depends on.

2. They focus on measuring what works.

Spend any time researching CSR, and you will find many detractors. However, companies who want to see an impact will dictate metrics to see how they are improving and measure the impact they’re making in the community. What should you measure? For many, documentation of the current processes must come before measurement, but you can work through the below list however you choose.

How is the program structured? Are there a small handful of “approved” charities? Or are employees allowed to choose their causes and/or favorite organizations? Is financial donation the only possible way to help or does the program offer volunteer opportunities? Have you branded your charitable opportunities? How are these communicated and to whom?

Does your executive team support this? Which employees have expressed excitement or commitment to the program? Are the managers open to helping employees become engaged?

Do our opportunities align with our values? Do they align with the values of our employees? Have we had a conversation about why we have chosen the initiatives we have?

Have we made our goals, processes and intentions clear? Do our employees know what we are aiming for, how to donate and why we’ve chosen the organizations we’ve chosen? Have we given them the information they need to participate effortlessly?

Do we have technology to support our needs? Is it simple to donate money and track volunteer hours? Is matching easy and tracked? Does our system put the matching burden on the employee? Does our system align with our rewards and recognition programs?

What do we want to happen? Have we identified our goals and shared them with our people? Have we set engagement goals as well as monetary goals?

Are we communicating properly? Are there enough opportunities for employees to participate in and enough notice for employees to be part of a volunteer or donation opportunity? Have we built results-sharing into our communications plan?

3. They find a system that manages compliance for them.

While no tool or software can help a company avoid all compliance risks, mismanagement is very hard to do when you’re working with software custom designed for your needs. Corporate philanthropy software also takes care of the (very human) mistakes that can open a company up to risk, such as: double entry, lack of tracking donations, ignorance of organizational tracking guidelines, and changing regulations. CSR software can also serve as a single source of truth for shifting regulations, tax codes, labor laws and state and federal laws and guidelines.

Read up on best practices for selecting the right philanthropy partner for your organization!

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