Last month, Cornerstone Capital board member and regular Harvard Business Review contributor Andrew Macleod published an interesting article on what factors are causing a shift in how business and nonprofits approach community development. He specifically focused on the convergence of three trends:
1. Nonprofits are shifting their focus towards outcomes rather than process;
2. The private sector is recognizing the business value of community progress;
3. There is a growing expectation by professionals that their work have a positive social impact.
While I agree with Macleod’s identification and thoughtful analysis of each trend, there are several additional factors that I feel are worth noting as we enter 2014.
Firstly, according to Macleod, NGOs are starting to take a business approach to measuring their ROI by moving away from measuring process (the number of schools opened) towards program outcomes (a decrease in the high school dropout rate for minorities in a community), as is common in the for-profit sector. Yet according to the Edelman brandshare Survey, 90% of people globally want brands to share and 10% of people think brands actually do it well.
So, despite Macleod’s assertions, the for-profit sector isn’t necessarily effectively communicating, either. There is an opportunity in 2014 for nonprofits and brands alike to better define and report outcome metrics. Closing this perception gap can also mean benefits for a company’s bottom line, as the article discusses.
As for the second trend, Macleod noted that business leaders are already seeing a return on investments in effective community programs, ranging from increasing consumer bases to stabilizing supply chains. Similar to a positive earnings report, there is a lot of potential benefit in sharing programs with consumers.
Our research substantiates this. According to the 2012 Edelman goodpurpose survey, 50 percent of consumers globally believe companies should donate a portion of profits or products/services to address societal issues and in our 2013 Brand Share survey, we saw 4 in 10 people indicate they want brands to give back to the community. Demonstrating effective community development programs is a key part of building trust with consumers and, as the third trend indicates, employees.
Lastly, Macleod accurately notes that today’s professionals, especially Millennials, want their work to have a positive social impact, but counters that he has observed this trend abroad and not in the U.S. I believe that this trend is just as strong in here at home. A 2012 study by Net Impact showed 67 percent of employees in the U.S. want to work for an organization that shares their values; this number jumps to 74 percent for current students. The latest edition of the Edelman 8095 exchange study, which surveys 4,000 Millennials in 11 countries, also found that roughly 80 percent of Millennials want to have a job with a purpose that matches their personal passions. In other words, young professionals worldwide are looking at a company’s shared value, and the private sector should be ready to deliver.
Overall these three trends are definitely something nonprofits, employers and brands should pay attention to in the coming year. Research shows that employees and consumers alike reward brands and organizations for consistent transparency and social focus. Before developing any programs to address or work with these trends, however, companies need to understand how to measure and communicate their actions effectively so their hard work is made relevant to their target audiences.
Rebecca Andreassen is a Senior Account Executive on the Business + Social Purpose team in Edelman’s San Francisco office. You can follow her @thisbeccalynn.