02 May 2013

Profiting from Corporate Social Responsibility

The link between corporate citizenship and a sustainable business

There has been a lot written about corporate social responsibility (CSR), sometimes referred to as corporate citizenship, and what its effects are on corporations and societies. As society becomes increasingly critical of business activities, corporations realize that they need to aim to improve the responsibility of their actions, and ensure that they have a positive impact on the environment and civil society through their activities. In general, most managers and executives believe that engaging in CSR renders positive results for their business, but few are aware of the research that has been conducted on this topic and what the exact effects actually are. One of the reasons why the effects of CSR tend to remain in a somewhat grey area is that they are rather indirect, intangible and therefore hard to measure. Regardless of this uncertainty, a positive effect of CSR that has been increasingly agreed upon within the business world is profit increase.

So how does the connection between CSR and profit work? It is important to realize that CSR is in itself an effect of societal pressures. That is to say, it is the public that demands a corporation start contributing to the common good through its business activities instead of aiming solely for personal gain. Thus, if a corporation starts to engage in CSR, it will receive positive responses from society. Over time, these positive responses render more respect for a particular corporation and simultaneously boosts its public image. In turn, this can generate increased customer loyalty, which benefits company sales and revenues. A strong image and a high rate of customer loyalty can therefore positively affect a corporation’s profitability and sustainability. Hence, although in the short run the effects may be hard to measure, CSR will eventually have a clear positive impact in the long run, as well as in terms of profit.

NPOs can pick up on the fact that corporations are becoming increasingly aware of the multiple benefits of engaging in CSR activities, and pursue a mutual cooperative framework between the for-profit and the not-for-profit sector. Engaging in such cooperation will result in benefits for both parties. That is to say, corporations improve their corporate image and public respect, while simultaneously increasing their profit in the long-term. As for the NPOs, they can acquire more and larger funds, which results in the fact that more money goes to the existing projects and that more new projects can be set up. The corporations are thus sponsoring the NPOs, and acquire a social return on their investment in the long-term.

This is where a donation platform like i-kifu can come into play. Many corporations will look for ways they can contribute to the social good, but in doing so will confront a vast number of options. Choosing the right activities can therefore be both a difficult and time-consuming process. As i-kifu already constitutes an interactive platform with various clearly presented projects, corporations can easily partner up with i-kifu and start their CSR activities. In the process of linking corporations to i-kifu, it is important to highlight that engaging in CSR does not only generate positive societal responses, but also indirectly contributes to the profitability of a corporation in the long run.

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