Sometimes holiday gifts just won’t fit into the budget.
Just ask Anne Desiderio about the families she works with as executive director of the nonprofit agency New Mexico Parent and Child Resources.
“Almost 95 percent of our families are under the poverty level,” Desiderio says. Nice gifts for them, she says, are an extravagance.
Her organization can’t pay for them – not in its budget, either.
So when businesses donate to her organization – as Intel is doing with its Adopt-a-Family Program – it can make an important difference for the people she serves.
“Those families would not be able to provide the kind of gifts that Intel does for their kids,” she says. “It just makes Christmas just wonderful for the kids.”
Come the holidays, giving grips the nation, and businesses are no exception. In New Mexico, many donate money and launch food, toy and clothing drives.
Company representatives say charitable activities around the year are one way to take care of the community that has taken care of them. Organizations receiving the largesse say it makes a critical difference in program funding.
Beyond the bottom line
It also makes good business sense, says John Ackerman, Rust Professor of Business Ethics at the University of New Mexico Anderson Schools of Management. Ackerman is a former chairman, CEO and president of the Public Service Company of New Mexico.
“The community is a very important stakeholder,” he says. “Having the trust and confidence of your stakeholders is incredibly important to be a successful organization.”
You can’t gain that unless you’ve established some sort of a relationship with those stakeholders, he says. “I think what we’re talking about here (donations) is part of that relationship-building.”
It’s an approach closely tied to a business philosophy – called the stakeholder theory of management – that values more than just the bottom line, Ackerman says.
The theory holds that many entities – such as governments, community members and the environment – have a stake and say in a business’ decisions because they will be affected by them.
For example, a chemical company considering a new product would, under this theory, evaluate how its work affects the environment and people in the area before moving ahead.
“A lot of companies practice this,” Ackerman says. “It has evolved through the last century.”
Stakeholder management came about as companies saw the effects of their actions, he said. It contrasts with the ownership theory of management, where profitability holds most of the sway in a business’ decisions.
“Over the last three decades, there’s been a pretty steady transition toward stakeholder management, but by no means do I see everybody doing it,” Ackerman says.
But a business is still a business: No matter how much good it might want to do, he points out, money has to be made first for it to do anything at all.
Hard to measure
Eight in 10 executives from large companies believe corporate citizenship “makes a tangible contribution to business’s bottom line,” according to a 2005 report from the Center for Corporate Citizenship at Boston College. Six in 10 executives from small and medium-sized companies believe the same, it found.
“Many of them anecdotally feel and know it’s making a difference, but they can’t quantify it,” says Sapna Shah, research project manager at the center and an author of the report, which defines corporate citizenship as a company contributing to societal and economic well-being, as well as other actions.
However, companies are improving at making the connections between corporate citizenship and their bottom line, she says.
They’re seeing how being a positive, well-connected force in the community can help profits, cut costs, prevent problems, improve employee morale and inspire better ways of doing business.
Shah recounts a bank that offered free financial education programs to communities where the residents were using payday loan services that offer quick access to cash. Around the time of the programs, the bank opened more branches in the targeted communities. ATM use climbed.
Shah says the increase in business came about because of the free financial education efforts.
“Those are the kinds of things you start to notice,” she says. “It’s sometimes harder to quantify, but they’re (companies) getting there.”