Sustainable returns: Why checkbook philanthropy isn't always the best approach to community problem-solving

Wed, 2015-02-11 06:00 -- Kevin Ebi

We typically think that we’re helping out good causes when we reach for our checkbooks. But Council Associate Partner UST Global says – and research backs up – that we may help our communities more if we keep our checkbooks in our pockets.

UST Global moderated a panel in Bangalore, India recently about the role that company executives play in creating sustainable communities. Its general manager of UST Bangalore argued that companies need to move away from checkbook philanthropy and get more involved directly in their communities, a view that was supported by other executives on the panel.

For smart cities, there is valuable insight in the comments from these executives. The lesson is that a true solution for a pressing issue in the community may not be an overnight fix, but there are a lot of people who are willing to help. It’s all about engagement.

Building support by getting involved
UST Global urges companies to get over the reflex of writing a check and then moving on. Companies do it because they feel like they’re providing instant help. In reality, their money may not be helping much.

“It is widely observed that money spent on development projects get wasted very quickly,” said Sudhansu Panigrahi, general manager and center head of UST Bangalore. “Corporate social responsibility programs should focus on effective use of funds both in short term as well as sustainable benefit for the future generations.”

It means actually getting involved with the organization you want to help. The CEO of Unitus Capital, who also spoke on the panel, said that if a particular cause is worth 2% of a company’s money, it should also be worthy of 2% of a CEO’s time.

That makes the donation more of an investment, and it also sets a great example for the company’s employees, delivering even greater dividends. Adds the president of Target India, who also served on the panel, any type of giving, be it money or time, needs to be backed by a concrete vision for it to have any chance of providing sustainable returns.

Time is (more) money
Of course, charities still need money, but research shows that donating time is a solid gateway into donating cash. In fact, a strong volunteer program is better than most fundraisers.

A study conducted by the Stanford Business School found that people who are asked to donate their time give twice as much money as people who are asked only for their cash. Further, they also volunteered more.

Study authors hypothesized that guilt was at work – if you don’t have time to volunteer, you feel bad and give more money. But the experiments found that people who are asked to donate time connected more to the mission of the charity. They learned more about the charity and the need for its work and responded by donating more money and more time.

Conversely, people who were asked for money seemed to be put off. They were the least likely to donate money or time. Even people who weren’t asked for anything were more likely to donate.

As cities look for help to solve tough community problems, the real answer may lie in building true engagement. It may take longer to develop, but its impact is dramatically larger.

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Kevin Ebi is a staff writer and social media coordinator for the Council. Follow @smartccouncil on Twitter.

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