Listen to Lead: How Community Expertise Can Improve Corporate Philanthropy

The COVID-19 pandemic and the nationwide uprising in response to the death of George Floyd have increased pressure on companies to do more to address social problems. A new report by The Conference Board outlines how companies can make informed decisions on addressing such issues. Furthermore, a roundtable held in June with over 60 corporate citizenship executives made clear that companies are committed to making truly durable change in addressing issues such as the causes and consequences of racism.

Bringing about lasting social change, however, requires a conscious shift in the way that many companies have worked in the past with nonprofit grantees in addressing social issues. As set forth in our report, companies should embark on a new era of partnership with communities, with a deeper mutual understanding of their needs; greater bonds of trust to foster a truly candid ongoing dialogue; and a long-term commitment, with accountability and flexibility to adjust based on learnings along the way, that will match the nature of the social problems to be addressed.

While corporate philanthropic efforts have had positive impacts on many communities, both companies and grantees have sometimes been hampered by companies’ top-down approach to grantmaking, grantees’ reluctance to fully disclose their needs out of concern that doing so will jeopardize their chances for company support, and a lack of clear agreement on the nature of the social problem to be addressed, the goals to be accomplished, and how to measure progress.

Companies can improve both the efficiency and effectiveness of their citizenship efforts by allowing community organizations to lead the discussion regarding both the nature of social problems—as they are living them—and optimal approaches to addressing them. Leading by listening, coupled with a clear understanding of how the company’s business intersects with the social issues at hand, can maximize the chance for lasting success.

The pitfalls of traditional corporate philanthropy

In corporate philanthropy, a traditional top-down approach makes it easier to design, fund and achieve scale in programs that address social issues. The risk is that this approach can lead to an incomplete understanding of social problems being addressed, which can lead to missed opportunities, mistrust and sub-optimal outcomes.

The challenge in communicating with nonprofit organizations can be compounded by the inherent imbalance in financial power between companies and their grantees, as well as the challenges in bridging the sometimes quite different perspectives and life experiences stakeholders bring to the discussions. But companies that are able to tap into this diversity of views of grantees can avoid resource-draining errors and foster needed creativity and innovative solutions.

Another challenge that companies have faced is balancing their quite legitimate interest in enhancing their business goals (such as enhancing the company’s brand) and receiving appropriate credit for their work, versus focusing on the beneficiaries of social programs. Companies should be upfront about their goals with nonprofit grantees, as that helps to ensure authenticity in the relationship, which can avoid community stakeholders’ distrust of companies and damage to their brand.

The value in listening

Making the transition to “leading by listening” in a dialogue with community organizations involves more than a shift in approach. It also sometimes requires companies to hear messages they may not like and to work with people who may harbor a distrust of companies or whose perspectives may be very different from those of company representatives.

This process can be uncomfortable, but it can yield tremendous benefits. Companies will learn firsthand about the problems they are seeking to address from those living them. Companies will also learn about the challenges and opportunities facing the organizations they are considering supporting, thus informing conversations about each other’s capabilities, needs and expectations, as well as achievable goals.

Indeed, according to Cheryl Goodman, head of corporate communications/CSR at Sony, and former leader of a nonprofit with both 501(c)(3) and 501(c)(6) designations, “[N]onprofit partners truly know the best way to approach initiatives and to reach their communities. Because they’re on the ground daily, they know things corporate partners simply don’t. Companies should trust their nonprofit partners and seek to understand them—and only then should they build a win-win plan alongside them.”

The mutual trust that can develop between companies and their nonprofit partners when companies are willing to recognize their expertise also fosters a working relationship that encourages a feedback loop conducive to continuous improvement of the program. These lessons can be applied across companies’ grantee portfolios and corporate philanthropy in general.

There are caveats to taking this approach. First, it’s important for companies to have conversations with multiple governmental and community organizations to understand social issues. Second, careful vetting of organizations is required through both an examination of their governance, track record and ability to work well with other institutions. Third, this “listening” approach can initially take more time and resources, and so companies will need to set expectations with both internal and external stakeholders. Specifically, companies will likely have to explain to some potential grantees why they are not getting the attention others are.

Finally, and perhaps most importantly, even as companies listen, they need to be clear about what they can and cannot effectively deliver. Companies should not lose sight of their own limitations and should focus on those areas that are germane to their business and where they can bring broader capabilities—beyond just writing a check—to bear.

Putting listening into practice

While soliciting and processing honest feedback can be challenging, it can help optimize the efficiency and impact of companies’ social programs.

A good way for companies to begin to understand which issues to address is to conduct an anonymous survey of their nonprofit partners. Some questions that companies may want to ask their grantees include:

How well do we (the company) understand the field in which you work?
How well do we understand the local community in which you work?
To what degree have our programs had an enduring positive change in the communities targeted?
How well do we understand your organization's strategy and goals?
To what degree has your organization benefited from working with us?
How responsive is our staff to your inquiries?
How well do we understand the challenges facing your organization?
How comfortable are you in approaching us if a problem arises?
To what degree do you feel we consider your input and/or suggestions?
To what degree do you feel we have a mutually trusting relationship?

To maximize the benefits of the survey responses, companies may consider:

Sharing the survey results internally beyond the corporate citizenship function;
Using the survey results and staff feedback as the basis for having open, honest conversations with grantees, then setting improvement goals based on those conversations; and
Making this kind of open dialogue part of the company’s corporate citizenship story, including highlighting learnings and benefits from the approach.

To quote Stephen M.R. Covey: “Change moves at the speed of trust.” A willingness by companies to be led in a dialogue with community organizations, while also being candid about their own goals, can help build the kind of enduring trust that will enable companies to make a lasting difference in communities.

Robert Schwarz is a senior researcher at The Conference Board ESG Center.

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