India was the first country to make corporate social responsibility (CSR) mandatory for a certain set of companies. Though small businesses are not covered under the CSR mandate to set aside 2 percent of the net profit for such activities, some medium size companies could be.
It is always better to support social causes that one believes in for the long-term and sustained growth of businesses. Small and medium enterprises (SMEs) need not wait for a mandatory CSR to start building the image of a responsible business. After all, a small business needn’t stay small forever.
Pick the right cause
It is a good idea to partner with non-government organisations to back the right causes, which can be a win-win for all. If the right partner is selected, the result can be added revenue, increased media exposure, a positive image or all three for both sides.
Instead of just donating money to an NGO, identify the causes the business has a natural affinity to. Making roads cleaner will go well with an automotive ancillary business and instilling civic sense to prevent littering will be a natural fit for packaged goods or bottled water business.
These are cause marketing initiatives and are different from philanthropy, which generally involves a specific donation. Cause marketing is more of a strategic marketing decision.
Giving back
Many SME promoters wonder why they should undertake such initiatives. They should want to give back to society is what I tell them.
The other reason could be to build their brand and business while doing social work. Maximising shareholder value has backfired in many developed economies and this had prompted strategy gurus to advocate maximising stakeholder value—society, suppliers, employees and others linked to the business.
Long-term benefits can only come from developing areas in the business locality. Tata Steel’s work in Jamshedpur is a good example.
Cause marketing is the best PR for an SME. Some companies take up CSR work to make business. This is a flawed approach—top-line or bottom-line gains may not be apparent in the short term. Done right, long-term benefits can be tremendous.
Cause with a difference
How do you choose the right cause? Most companies go by what the CEO says. When selecting a cause, SMEs should check for strategic links. You cannot fund every good cause. Just as your strategy is to offer differentiated products or services, so should your CSR initiatives.
Look for NGO partners that share your mission, and your values. Anything to drive quality of life is what most companies should look for. It could be civic sense, better healthcare, uplift of women or cleaner cities. Some companies look at higher education when they hire college students. Wipro is one such example.
Once the cause and the partner are identified, SMEs should work towards building a strong partnership. Here are a few guidelines:
1 Don’t just give money to the NGO partner and the cause. Get Involved. Hold joint meetings, conduct regular review meetings, develop success metrics, and make suggestions to bring in a more professional approach to drive the cause. The NGO may not have the kind of managerial expertise your business may have but do not impose your thinking. Nurture the relationship, which should be collaborative, for the success of the cause. The keyword is “co-creation”.
2 Build clear goals and expectations around which all stakeholders can be aligned. This leaves little room for mistrust and non-execution. It is best to thrash out these details before inking the partnership. Always set the expectation up front, just as you do for any project funding.
3 Inform the NGO about your business needs. They must know that companies are sincere about the cause but have business needs too. Unless these are met, the long-term sustenance of the cause marketing will be in doubt. Nothing wrong in seeking branding in their activities but this can be a sore issue, something a good discussion can easily resolve.
4 To build and sustain a successful partnership, the company, as well as the NGO, should keep communication channels open. If you are a substantial contributor, you may ask for a board seat in the NGO. If not, you should seek a steering committee membership.
5 Remember that the NGO and you speak different languages. If this is not understood, there can be confusion and anguish. For instance, many NGOs do not have a mechanism to track progress and many don’t use appropriate metrics. They are also publicity shy. For them, it is important to do good work and they do not understand how good PR can help them build and expand their cause. This is where businesses can help.
6 Put a governance mechanism in place. Both partners should know how well the mission is getting accomplished and how the milestones are being achieved. Set two types of metrics. One to measure the impact of the cause and the other to check the end-user awareness level.
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