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Applied Research in Qualityof LifeThe Official Journal of theInternational Society forQuality-of-Life Studies ISSN 1871-2584Volume 5Number 4 Applied Research Quality Life(2010) 5:309-324DOI 10.1007/s11482-010-9112-8

Toward Developing a Frameworkfor Measuring the Business Value ofCorporate Community Involvement

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Toward Developing a Framework for Measuringthe Business Value of Corporate Community Involvement

Vesela Veleva

Received: 9 November 2009 /Accepted: 4 June 2010 /Published online: 16 June 2010# Springer Science+Business Media B.V./The International Society for Quality-of-Life Studies (ISQOLS) 2010

Abstract Business today is a key player in addressing social and environmentalchallenges. Every year companies contribute significant resources—cash, in-kinddonations and employee volunteers—to non-profit organizations and communitysupport initiatives. This support is critical for community development. Yet manycompanies have a limited understanding of the value their initiatives add to thecommunity or to their business. In most cases they measure inputs and outputs butnot actual impacts. Measuring and communicating the business value of community-focused programs, however, is critical to maintaining funding for such programs indownturns such as the recession of 2007–2009. This article provides critical analysisof existing efforts to measure the business value of corporate communityinvolvement programs and offers guidance for developing indicators of businessimpact. Building on lessons learned, it identifies key criteria and makesrecommendations for the development of an effective measurement framework andindicators. The article concludes with a discussion on how such a framework canlead to social change.

Keywords Corporate community involvement . Indicators . Business impact .

Social impact . Framework . Benchmarking

Introduction

Business today is a key player in addressing major social and environmentalchallenges. It has both the resources and the responsibility to do so and a growing

Applied Research Quality Life (2010) 5:309–324DOI 10.1007/s11482-010-9112-8

V. Veleva (*)Boston College Center for Corporate Citizenship, Boston College, 55 Lee Rd.,Chestnut Hill, MA, USAe-mail: velevav@bc.eduURL: www.bccorporatecitizenship.com

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number of executives recognize the value of such involvement to their company orbrand reputation, license to operate and ability to attract and retain talent. Inaddition, no company can succeed in isolation from the communities where itoperates.

Every year companies contribute significant resources—cash, in-kind donationsand employee volunteers—to non-profit organizations and community supportinitiatives. But many companies have a limited understanding of the value theircommunity involvement initiatives add to the community or to their business. Thisarticle focuses only on measuring the business value of corporate communityinvolvement programs as a critical tool for increasing business involvement insolving social problems. For the purposes of this research, corporate communityinvolvement (CCI) is defined as all initiatives and programs that a company has inplace to support the communities where it operates or has an impact—fromdonations and employee volunteerism, to strategic philanthropy and communitypartnerships. It is viewed as a subset of corporate citizenship which includes fourmain domains: responsible operations, products and services, company governanceand community involvement (Pinney 2009). CCI focuses primarily on how abusiness impacts the communities where it operates and engages in addressing socialissues beyond its facilities’ boundaries.

Measuring the business value of corporate community involvement initiativeshelps companies demonstrate the business case for community involvementinternally and allows them to better align their community involvement strategywith the core business strategy. For environmental initiatives such measures aremore common. A growing number of companies measure savings from improvedenergy efficiency, reduced packaging or increased revenue from new “green”products. But for CCI efforts such as employee volunteering, signature programs1

or emergency response initiatives, there are rarely good indicators of businessimpact. Most research in the area of sustainability and social responsibilitymeasurement has focused on company-level impacts and less on project orprogram-level impacts (Veleva et al. 2001; Veleva and Ellenbecker 2000). Beingable to measure and evaluate individual programs and projects, however, is criticalfor better decision-making and integration of community involvement in thebusiness strategy.

Research has also shown that most companies are measuring inputs and outputs(e.g., number of volunteer hours, donation as percentage of pre-tax net income)versus the actual impacts of their CCI programs (Veleva 2009a). Measuring impactsis still to a large extent underdeveloped. Most research is anecdotal and there is nocommonly accepted framework and indicators to measure business impacts of CCI.A small but growing number of leading companies, however, have begun to developmeasures to track such impacts (e.g., Starbucks, Green Mountain Coffee Roasters,IBM and Allstate).

1 A signature program is typically a major investment by a company in a social program and its externalcommunication with the goal to generate branding and recognition. One example of such programincludes the Dove Campaign for Real Beauty by Unilever.

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Research Background and Methodology

The findings in this article are based on a research project at the Boston College Centerfor Corporate Citizenship2 which began in early 2009 with the support of nine membercompanies—Aetna, Altria, Amway, BestBuy, Hewlett Packard, Intel, LockheedMartin, Merck & Co. and Underwriter Laboratories. The main goal of the projectwas to develop a simple and practical framework and indicators for measuring thebusiness value of corporate community involvement programs. It was launched inresponse to increasing demand by corporate community involvement professionals3

for such tools to assist business decision-making. Supporting companies did not haveto be advanced in impact measurement in order to participate in the study. Theresearch involved identifying leading companies and examples of best practices inimpact measurement and using these as the basis for designing a new framework andindicators to be piloted by participants before making these publicly available.

As a first step the research included interviews with community involvementpractitioners from participating companies to better understand why they wereinterested in impact measurement4, why they were not implementing such measuresand what was the current state of measurement in their organizations. The next stepinvolved conducting a literature review to understand what the state of impactmeasurement was, who the leading companies were and how to build on existingbest models to advance the field of impact measurement. This article outlinesfindings from these first two steps and proposes some criteria and recommendationsfor the development of the framework. Next steps will include development of theframework and indicators for measuring the business impact of CCI programs andpiloting these with participating companies to test their value and applicability at awide range of business enterprises with a global reach.

The target audience for the research includes community involvement practi-tioners and other company staff who are designing and evaluating CCI programs andneed to demonstrate their business value internally. The audience also includesexternal stakeholders such as researchers, students and others interested inindicators. A key assumption of the research was that a CCI program would nothave any business value unless it generates social value.

Do CCI Programs Generate Business Value?

An important first question to explore is: Do corporate community involvementprograms indeed generate business value? What research has been done to date toexamine this issue?

2 The Boston College Center for Corporate Citizenship is a membership-based research organizationassociated with the Carroll School of Management. As of May 2010 it had 346 corporate members, themajority from Fortune 1,000 companies.3 Common job titles for community involvement practitioners include: Manager Philanthropy, CharitablePrograms Manager, Community Affairs Manager, Community Investment Manager, Community RelationsManager, Director Community Grants and Investments, Volunteer Program Coordinator.4 In this article impact measurement refers to measuring the business impacts and not the social impacts,unless explicitly noted.

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An initial literature review identified a small number of studies at a macro level thatfocused on evaluating the intangible assets or corporate social responsibility practices(including community involvement) and linking these to bottom line benefits.

A 2009 study by the Boston College Center and McKinsey & Company foundthat two-thirds of CFOs agree environmental, social and governance activities docreate measurable value for their shareholders (Boston College Center for CorporateCitizenship 2009a; Bonini et al. 2009).

At a macro level, researchers analyzed whether or not a company’s inclusion in asocial index as an indicator of CSR practices, affects corporate performancecontrolling for size, industry, business cycle and time (Becchetti et al. 2008). Anumber of other studies have linked better social performance to improved financialperformance (Edmans 2009; PriceWaterHouseCoopers 2003; Orlitzky et al. 2004).

Volunteering by employees has been linked to greater retention, job satisfactionand team building (Boccalandro 2009). In addition, volunteering has beendemonstrated to help build various skills and competencies such as communicationskills, teamwork, adaptability and leadership (City of London 2010; Tuffrey 1998).

A 2008 Gallup Consulting study on employee engagement5 showed that “engagedorganizations have 2.6 times the earnings per share growth rate compared toorganizations with lower engagement in the same industry.” (Gallup Consulting 2008)

Valentine and Fleischman (2008) collected the perceived corporate responsibilityinformation from employees and analyzed its relationship to individual workattitudes, namely job satisfaction. Tuffrey (2003) provided a seven-step model tomeasure the impact of CCI and good corporate citizenship on HR managementpriorities such as pride in company, awareness, advocacy, satisfaction and retention.

Jones et al. (2010) conducted an experimental study on how CCI andenvironmental practices affect recruitment. The study found positive correlationbetween greater communication of CSR activities and increased interest in workingfor the company.

While such macro-level studies are valuable in demonstrating that CCI programs doindeed generate business value, they are difficult for community involvementpractitioners to use to justify funding for various community involvement programs.For such purposes, company-level and program-level studies and indicators are neededto allow for evaluation and benchmarking of individual programs and initiatives.

The field of measuring business value of community involvement at a programlevel, however, is still highly underdeveloped and often based on anecdotalinformation. A growing number of companies, however, have begun to developand implement more sophisticated indicators.

For example, Aetna added a question to the company’s standard employee moralesurvey about employees’ participation in a volunteer program and analyzed it againstrating Aetna as “a good place to work” and other wellbeing measures, controlling forother variables. The Gap collected data showing that its T-shirt created for the Redcause-marketing campaign (established by Bono to support AIDS eradication inAfrica) is the best-selling T-shirt ever. Verizon launched a new product to meet theneeds of the elderly and people with physical disabilities and as a result increased

5 Gallup defines “engaged employee” as one who is fully involved in, and enthusiastic about, his or herwork and thus will act in a way that furthers their organization’s interests.

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sales and added 100,000 new customers. Green Mountain Coffee Roasters had anacademic analyze the relationship between participation and awareness of a time-off-for-volunteering policy and employee pride, loyalty and identification with theorganization (Jones et al. 2009). ABN-AMRO measured effects of volunteering onparticipants’ and non-participants’ attitudes and behavior such as attitude towardwork, intention to leave company, identification with company and organizationalcitizenship behavior (Gilder et al. 2005). Sears developed a model to measure theemployee-customer-profit chain connection and found that a 5-point improvement inemployee attitudes drives a 1.3-point improvement in customer satisfaction which inturn drives a 0.5% improvement in revenue growth (Rucci et al. 1998).

Obtaining information about the specific indicators and methodologies for datacollection, however, has proven particularly challenging as the information is oftenproprietary or companies are not willing to share it publicly. No commonly acceptedand publicly available framework and indicators exist presently for measuring thebusiness impacts of CCI programs and initiatives similar to the Global ReportingInitiative framework for sustainability reporting. There is a need to build on existingefforts and develop such a framework that would lead to greater use of commonindicators, and respectively, benchmarking and transparency.

Why Measure the Business Value of CCI Programs?

As with any corporate initiative, measurement is critical in strategic planning andmaking decisions about the future of CCI programs. In times such as the deeprecession of 2007–2009 such measures became even more important as budgetswere slashed and companies cut everything that was not contributing to their bottomline (MIT Sloan Management Review 2009). While “green” initiatives continued toexpand during the recession of 2007–2009, community involvement programsexperienced cuts such as reduced giving, staff layoffs and reduced volunteeringopportunities for employees. For example, 38% of American companies reducedtheir philanthropy and giving in 2009 compared to a year earlier (Boston CollegeCenter for Corporate Citizenship 2009b).

Initial research from project participants revealed that companies are generally atdifferent levels of measuring the business impact of CCI initiatives. Some are stillvery new to measurement and focus primarily on inputs and outputs (e.g., dollarsdonated, hours of volunteer work), while others are more advanced and have usedconsultants and various indicators to measure some business impacts (e.g.,reputation, ROI, employee engagement). But community involvement practitionersfrom all participating companies admitted they were not sure which frameworks andtools are valid and credible and therefore they did not know what to measure and,often, how to measure it (Source: Veleva 2009b).

According to project participants, the main reasons companies are interested inmeasuring the business impact of their community programs include (see also TextBox 1):

& To gain support and funding for CCI initiatives& To enhance CCI decision-making

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& To facilitate benchmarking to industry peers or other companies& To better integrate CCI strategy with their core business strategy& To show CCI’s contribution to the achievement of strategic business objectives& To increase the power of CCI communications—both internally and externally

Interviews with participants revealed that the key stakeholders interested inmeasuring the business value of CCI initiatives are internal to the company—from theboard of directors, to senior leadership, the HR department, executive committees andshareholders. External stakeholders, such as community organizations, sociallyresponsible investors (SRI), authorities, non-profit organizations, customers and thepublic, appear much more interested in the social impacts than the business impacts.

Text Box 1. Why companies want to measure the business impact of CCIinitiatives

Source: Veleva 2009b.

“We want to demonstrate to board and senior management that there is a positive correlation betweenwell-aligned CI investment and reputation/standing within community, positive name recognition andbrand recognition… To demonstrate correlation with employee satisfaction and ability to attract andretain top quality employees.”

“It will give us a tool we just don’t have. When we are asked to demonstrate ROI there is just no data—only anecdotal.”

“One driver is to internally communicate and generate value to business (the big one!). Second, tobenchmark”.

The initial research revealed a clear need to advance the field by creating acommonly accepted and publicly available framework, which includes a smallnumber of indicators for measuring the business value of CCI initiatives and allowsfor benchmarking among companies. Such a framework should also teachcompanies how to think about measurement and move beyond measuring inputsand outputs to measuring impacts. Indicators of business impacts would providecompanies with a strategic and operational management tool to help them betteralign CCI initiatives with the strategic business priorities and gain greater supportinternally. While indicators for measuring the business impacts of CCI programswould be very different from indicators measuring the social impacts, the process ofdeveloping such measures would be similar and could help companies advance theirsocial measurements as well.

Overview and Analysis of Existing Measurement Frameworks

One barrier to better measurement of business impacts from CCI appears to be thelack of commonly accepted and credible frameworks and indicators. Attempts toadvance triple-bottom-line measurement and accounting have not proved successfulas senior executives pay attention to indicators and metrics that address the financialbottom line (Norman and MacDonald 2003). The Global Reporting Initiative, whichhas become the standardized framework worldwide for measuring and reportingsustainability performance, also does not attempt to measure the business impacts of

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social and environmental initiatives in terms of dollars saved, increased market shareor improved employee productivity (see www.globalreporting.org). Nevertheless, ithas become the most widely accepted and used framework for sustainabilityreporting by large companies worldwide as it allows for benchmarking and wasdeveloped in a participatory process with a large group of stakeholders globally.There is no such equivalent in the area of measuring the business value of CCIactivities. A few frameworks exist but these are often proprietary or do not providesufficient guidance for using in practice.

Another key barrier to impact measurement appears to be the complexity andchallenges in measuring impacts. For example, one project participant pointed outthat measuring brand reputation is not an area of interest to his company because theissue is influenced by so many factors that may not be possible to control even in anexperimental study. Measuring employee morale and retention, the ability to attracttalent and build team skills is also not an easy undertaking. Accomplishing this mayrequire more time and resources than tracking the number of volunteer hours or thetotal company/foundation giving (input indicators). Companies need more guidanceon how to measure business impacts—a more standardized approach to collecting,analyzing and reporting data.

Despite the importance of measuring the business impact of CCI initiatives, thefield is still underdeveloped. Part of the reason is that corporate communityinvolvement began as “doing the right thing” and was not intended to generatebusiness value. As companies’ corporate social responsibility (CSR) activitiesmatured and became more strategic, community involvement initiatives wereincreasingly seen as a powerful tool for improving reputation, license to operate,spurring product and service innovation or increasing employee engagement (Porterand Kramer 2007). CSR branding, for example, has continued to grow as morestudies demonstrate the value of social and environmental initiatives on brands(Holding 2007).

In order to analyze existing frameworks and identify the gap in impactmeasurement, the research team established several criteria. First, a framework mustmeasure the business impacts and not just the social or environmental impacts.Second, in order to advance the field, a framework must be publicly available andapplicable for use by any company. Only a publicly available framework canpromote greater social change and business responsibility as it increases transpar-ency, enables stakeholder involvement and wider use by companies. Third, to trulymove companies toward greater adoption of corporate citizenship practices, aframework must allow for benchmarking. For example, both companies andstakeholders have used published CSR reports based on the GRI framework tobenchmark and identify best and worst performers. Another criterion used in theanalysis is that a framework must be applicable at a project/program level anddesigned for use by businesses. For example, FSG Social Impact Advisors hasdeveloped an excellent system for measuring the social impact of grants. Theframework, however, is applicable mostly to non-profit organizations and founda-tions interested in sharing measurement and expanding their impacts (FSG SocialImpact Advisors 2010). In order to measure business impacts and be able tocommunicate to top management, a framework should include quantitativeindicators and data that could easily be linked to common business goals such as

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an increase in sales, reduction in turnover, improvement in customer service ormarket share.

A critical analysis of existing measurement models6 revealed that just a fewframeworks exist that provide guidance on how to measure the business value ofCCI initiatives at a program or project level but in many cases these are proprietary.Four models stand out in terms of measuring the business value of CCI programs—the London Benchmarking Group Model, the True Impact ROI methodology, theWalker CPI model, and the Corporate Citizenship Company Model (See Table 1).

The London Benchmarking Group model measures both social and businessimpacts and focuses specifically on the impacts of a company’s communityinvolvement programs. The model is a management tool based on input-outputanalysis that consists of a set of standardized accounting principles to place a valueon all investments (cash, time, in-kind, management costs) into communityinvolvement programs. The model can be used for assessing short-term benefits aswell as the longer-term impacts of CCI programs. Benchmarking data is availableonly to participating companies (London Benchmarking Group 2009).

True Impact’s model is based on a return-on-investment approach. Similar to theLondon Benchmarking Group model, it measures both social and business impactsof community involvement programs. Its major guiding principle is that whatultimately matters about any corporate program is how it affects the bottom line, i.e.revenues, costs and social goals. The model is developed as an online tool and itsunderlying methodology is to map and then measure. Mapping includes determiningwho the internal and external stakeholders are, how the community involvementprograms affect them, and finally, how these programs affect the company’s bottomline. The measurement involves placing quantitative values (in terms of US dollars)on the items that are mapped (True Impact 2009).

The Walker Corporate Philanthropy Index (CPI) is a framework for measuringthe business value of corporate philanthropy. The index can be used to determinewhether there is a link between an individual company’s giving initiatives andoutcomes related to its business success. The major guiding principle of the model isthat corporate activities increase shareholder value. Stakeholders who perceive acompany as a responsible corporate citizen will have a favorable attitude toward thecompany and respectively behave in ways that increase the company’s success (i.e.,employees stay with the company longer, customers continue to purchase from thecompany, community leaders view the company as a neighbor of choice). The modelis standardized and based on a survey of a company’s key stakeholder groups(employees, customers, community influentials) (Walker Consulting 2009).

The Corporate Citizenship Company had conducted a series of research studiesaround linking community involvement to improved work force capacity andmeeting strategic HR goals of their organizations. While the model is limited to justemployee impacts such as morale, motivation, commitment and performance, theseven-step approach and related case studies provide practical guidance for HRprofessionals interested in leveraging their community involvement programs for

6 Much of the information about existing frameworks for measuring the business value comes from aninternal paper: Lee 2009.

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Tab

le1

Com

parativ

eanalysisof

impact

measurementfram

eworks

Measuressocial

value

Measuresbu

siness

value

Provides

benchm

ark

Targeted

toward

companies

Focus

onproject/

prog

ram

level

Quantitativ

e(not

justyes/

noor

checklist)

Pub

licly

available

Lon

donBenchmarking

Group

ΔΔ

ΔΔ

ΔΔ

TrueIm

pact

ROI

ΔΔ

ΔΔ

ΔΔ

WalkerCPI

ΔΔ

ΔΔ

MDG

MeasurementFramew

orka

ΔΔ

ΔΔ

ΔCorpo

rate

CitizenshipCo.

EmployeesMod

elΔ

ΔΔ

ΔΔ

ΔOxfam

:Footprint

Analysisb

ΔΔ

ΔΔ

New

Econo

micsFound

ation:

SROc I

ΔΔ

ΔΔ

BostonCollege

CenterStand

ards

ofExcellenced

ΔΔ

WBCSD

Impact

Indicatorse

ΔΔ

ΔΔ

Δ

Sou

rce:

Lee

2009

aFor

moreinform

ationseehttp://www.ncdo.nl/docs/uploads/Onderzoek06.pdf,accessed

on4/3/2010

bFor

moreinform

ationseeUnilever’scase

stud

yat

http://www.wbcsd.org/DocRoot/G

WvoMxfGkK

wPqT

rw4P

2t/unilever_saf_im

pact.pdf,accessed

on4/30

/201

0cFor

moreinform

ationseehttp://www.new

econom

ics.org/social-return-investment,accessed

on4/30

/201

0dFor

moreinform

ationseehttp://bccorporatecitizenship.org/index.cfm?fuseaction=

page.viewPage&

pageID

=2096&nodeID

=1,

accessed

on4/30

/201

0eFor

moreinform

ationseewww.wbcsd.org,accessed

on4/30

/201

0

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achieving strategic business goals related to employees (Tuffrey 2003; Tuffrey1998).

Other measurement frameworks and models identified include the MillenniumDevelopment Goals framework, WBCSD impact indicators and the GlobalReporting Initiative. These frameworks and models, however, only focus onmeasuring the social/environmental impacts of CCI initiatives and not the businessimpacts.

Several key findings emerged from the research on existing frameworks formeasuring business impacts of CCI.

Currently there are very few models that help measure the business impact ofcommunity involvement initiatives. Most of the models focus on measuring thesocial impacts. Some models look at the impact of the company as a whole and donot measure the impact of a particular CCI program or initiative to allow forbenchmarking different programs.

Some business impacts are easier to measure than others. For example, it is mucheasier to measure the monetary value of a product sold at a volunteering event thanto quantify the value of improved reputation (and respectively, sales) from acompany logo being displayed at a charity event.

Some approaches to impact measurement are more effective than others. Forexample, when the measurement system is built into the community involvementinitiative from the very beginning, indicators can be used “before” and “after” theprogram begins to allow for comparisons and better measurement of generatedbusiness value.

When measuring impacts, it is better to measure both social and businessimpacts instead of one or the other. Business impacts often affect social impactsand vice-versa. In some cases, the business impact cannot be separated from thesocial impact. Since each company is part of the communities where it operates,activities that benefit the community can also benefit, directly or indirectly, thecompany.

In order to allow for benchmarking among companies and the impacts of theirprograms, it is important to use a common approach and methodology. If companiesare not using the same approach and methodology to measure impacts, truecomparisons cannot be made.

Most of the existing frameworks to measure business impacts are based onproprietary methodologies developed by private companies and/or consultancies.When companies have their own methodology for measuring business impacts ofCCI initiatives, often they are not willing to openly share it. Many companiesbelieve they should only publicize the social impacts of their communityinvolvement initiatives to avoid being accused of trying to benefit from communitysupport activities.

Recommendations for Developing a Framework for Measuring Business Valueof CCI

Based on the interviews with participating companies and the key findings from theliterature review, the research team established a set of criteria for developing the

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new framework for measuring business impacts of CCI initiatives, the frameworkshould:

& Raise awareness and help community involvement managers and other staff tomove from measuring inputs and outputs to measuring impacts of communityinvolvement programs

& Focus on unmet need: providing a publicly available framework, guidance andindicators for measuring business impacts by building on best efforts to date

& Provide a comprehensive, disciplined approach to measurement& Include sample indicators with detailed guidance on how to implement these in

practice& Allow for benchmarking among companies and/or among various CCI programs

within a company& Be applicable for a specific CCI program or an entire CCI initiative globally& Although not explicitly focused on measuring social impacts, the framework’s

overall approach should be easy to adapt for measuring social value.

In order to lead to program improvement and social change, the developedframework needs to focus both on the final product (indicators) and the process forselecting programs, impact indicators and evaluating results. Below are includedsome recommendations for the development of the new framework.

A critical first step in measuring the business value of CCI initiatives is tounderstand what are the key business impacts pursued by the company. For example,a consumer-oriented company may be focused on selling more products or serviceswhile a business-to-business organization may be more concerned with recruitmentand retention of employees or its license to operate.

Unless a community involvement practitioner has a particular program in mind tomeasure, she or he needs to select among often numerous programs or initiatives.Measurement is a costly exercise and it is important to target a program that is mostlikely to show business benefits. A good framework would provide detailedguidance on selecting a program to measure, such as whether it is clearly definedand operationally strong, whether it is integrated into the business and feasible tomeasure and whether it is known to be effective and successful in providing publicbenefits.

To advance the field, the new framework needs to be both flexible (to reflectdifferences between industries and business models) and standardized (to allow forbenchmarking). A flexible framework would provide guidance on how a companycan develop its value-creation model (to understand how CCI is likely to add valueto business) but not offer one model for all companies. Such a value creation modelcould involve linking inputs, activities, key stakeholders involved and the resultingattitudinal and behavioral business impacts. Developing a value-creation modelallows for better decisions about what to measure.

Identifying indicators for measuring the business impact of interest is a key partof the proposed framework. While there are some indicators that will be common forcompanies across industries (e.g., work force capacity measures such as retention,loyalty and productivity), others will differ from company to company. In order toadvance the field and allow for benchmarking, it is crucial to identify a small numberof widely applicable indicators and develop detailed guidance on how to use them in

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practice. Additional guidance on how to develop company-specific or program-specific indicators should be included. For example, it is always best to build onindicators already measured by the company (e.g., add a question on employeevolunteering in a company-wide job satisfaction survey or a question on acommunity support initiative in a consumer marketing survey).

Table 2 provides examples of potential indicators for key business impacts andgoals within three main categories:

& Growth/return on capital& External relations/reputation& Work force capacity building

Each of these categories includes different business impacts that are linked tocorporate goals and can be measured with specific indicators. Table 2 also includesexamples of companies that have developed and/or implemented such indicators.

In many cases, a major challenge in measuring impacts is the complexity of themethodology for data collection. Often indicators that are easy to measure have lowvalidity. Obtaining high validity results, however, is expensive as it takes more timeand resources (e.g., to hire external experts in designing and conducting anexperimental study). As a general rule, it is often better to first implement a low-validity measure, such as self-reporting, which can help to quickly check for positivecorrelation between a CCI program and a specific business impact. Having suchinformation at hand can be either sufficient to demonstrate value to management, orhelp build the case for more rigorous (and expensive) measurement such astriangulation or experimental design.

Data collection will be easier in some cases than others but in all cases it will requiredeveloping a data collection protocol. Such a protocol can include data from sales ormarketing (e.g., number of new customers, sales of a particular product) or developing asurvey. New Balance, for example, tracks sales of shoes at each Susan KomenWalk forBreast Cancer event. If each sale of a pair of shoes brings $30 profit, each try-on isestimated to be worth $3, and each impression $0.01, the business value of this socialmarketing initiative can easily be calculated. In another case, Eli Lilly asked the question“To what extent was the Day of Service a meaningful team-building event for you?” inits post-project survey. This allowed it to track and evaluate the value of thisvolunteering program for improving employee job satisfaction.

Evaluation is a critical component of any effective program management.Involvement of a greater number of stakeholders—both internal and external—indiscussion of the measurement findings would help identify weaknesses in theprogram or the measurement as well as the most effective ways to address them. Itremains to be seen, however, how willing companies will be to share measurementfindings externally.

Discussion and Conclusion

While the proposed framework will focus only on measuring the business impacts ofCCI initiatives, it is critical to link it to other frameworks that measure socialimpacts, or develop an integrated framework in the future that helps measure both.

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Tab

le2

Examples

ofindicators

formeasuring

business

impactsof

CCIprograms

Categoryof

business

value

Impact

Potentialindicators

Com

pany

1.Growth/return

oncapital

New

markets

•Num

berandvalueof

new

marketsentered

NovoNordisk

•$revenues

generated

Innovatio

n/new

products/services

•Num

berandvalueof

new

prod

uctsdevelopedandsold

The

Gap

•Num

berandmarketvalueof

new

patentsdeveloped

New

consum

ers/custom

erretention

•Num

berandvalue($

sales)

ofnew

custom

ers

Verizon,New

Balance

•Num

beror

%of

custom

ersretained

asresultof

CCI

2.Externalrelatio

ns/

reputatio

nCorpo

rate

reputatio

n•Changein

reputatio

nranking/stakeholderopinion

Intel,BritishGas

•Dollarsalesto

topcustom

erswith

philanthrop

ictie

Aetna

•Amou

ntof

positiv

emedia

coverage

Differentiatio

n/custom

erloyalty

•Customer

loyalty

(percentageof

consum

erscitin

gCIprog

ram

askeyto

loyalty

)JC

Penny,Allstate,UGIUtilities

•Visibility

index

License

toop

erate

•Reductio

nin

time/$forob

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To truly foster social change, social impact indicators need to be measured togetherwith business impact indicators and communicated to stakeholders. While thisresearch did not include a comprehensive literature review on social impactmeasurement, studies have demonstrated that companies “generally remainuninterested in measuring the impact of their social initiatives” (Arli and Zappala2009). Measurements are focused primarily on inputs and outputs, not on the socialimpacts of CCI initiatives. The main barriers to social impact measurement seem tobe the lack of time and resources to measure such impacts, the lack of interest insuch measures, and the lack of standardized frameworks and measures.

To foster business or social change one needs to look at the entire system and engage awide array of stakeholders in the process (Foster-Fishman and Behrens 2007). Whilebusiness implementation of the proposed framework remains to be seen, legitimatequestions from community stakeholders include: How do businesses select theprograms to support? Are they going to disclose the indicators and are they consideringsome unintended consequences of measuring business impact? For example, a programmay demonstrate the lack of significant business impact but it could be helping toaddress a critical social issue. Would that mean that a company needs to discontinue itssupport for it? Is strategic philanthropy always a good idea? Some NGOs andcommunity-based stakeholders have questioned strategic philanthropy7. While theproposed framework is based on the assumption that there could be no business valuewithout creating social value first, more research is needed to explore this assumption.

Developing standardized indicators is one of the key drivers for companiesinterested in impact measurement. Such indicators allow for benchmarking whichcan be a powerful driving force for business change and respectively, social change.Developing such standardized indicators, however, is challenging as it involvessome trade-offs (Veleva and Ellenbecker 2000; Kreger et al. 2007). One commontrade-off is between simplicity and comprehensiveness—if the framework is to beeasy to use it needs to be simple and based on a small number of steps andindicators. If it is to be comprehensive and follow a disciplined approach toidentifying all possible business impacts from CCI, it would be more complex andbased on a larger number of indicators. Finding the right balance is always achallenge but it is critical for successful implementation.

Finally, business impact indicators are only tools and they alone cannot lead tosocial change. Top management support, stakeholder involvement and greatertransparency are among the key factors that can foster wider use of such indicatorsand ultimately lead to business change and social change. What such indicators cando, however, is raise awareness, inform decision-making and promote accountabilityand continuous improvement.

Acknowledgments The author would like to thank the following organizations for funding the research:Aetna Foundation, Altria Client Services, Amway, Best Buy Co., Hewlett Packard Co., Intel Corp.,Lockheed Martin Corp., Merck & Co. and Underwriter Laboratories. In addition, the author would like tothank Bea Boccalandro, Allison Lee, Chris Pinney, Phil Mirvis, Jane Coen and Maureen Hart for theirwork on the project.

7 Based on discussion in the conference breakout session: Veleva et al. 2009.

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