April 4, 2002 | Read Time: 2 minutes
A new report offers companies that support community-development projects a way to evaluate whether their involvement makes business sense.
The report, published by the Conference Board, a nonprofit research group in New York that is financed by businesses, explains a method for calculating what it calls the true opportunity cost for companies that put time and money into projects to improve the areas where they are located or do business.
The formula takes into account what a project receives from the company, such as the grant money and staff time a company may dedicate; the project’s results, such as the new jobs it creates; and its impact, such as the project’s effect on neighborhood morale.
The report applies the formula in case studies of four companies — John Deere, the farm-equipment manufacturer in Moline, Ill.; the food maker General Mills, in Minneapolis; the plastics manufacturer Cascade Engineering, in Grand Rapids, Mich.; and JPMorganChase, a bank in New York.
Each of the companies put a mix of investments, loans, and charitable contributions into local development projects and provided other types of support, such as job-training programs. And, according to the report, each company saw a positive return from its community involvement.
John Deere, for example, donated land and invested money in a project called Renew Moline, because the company wanted to improve its ability to recruit employees to replace the large share of its work force that was facing retirement.
Among other benefits, the report says, the improvements to the area that resulted from the Renew Moline project made the city a more attractive place to live and work.
The report also offers lessons to other companies that want to support development projects. Businesses, it says, must try to master the cultural differences between corporate executives and community activists and reach out not just to local leaders, but also to people at the grass-roots level.
Copies of the report, “Corporate Community Development: Meeting the Measurement Challenge,” can be obtained by contacting the Conference Board’s customer-service department by phone at (212) 339-0345; by fax at (212) 836-9740; or by e-mail at orders@conference-board.org. The report costs $25 for Conference Board members, $100 for nonmembers, and $20 for academic or other researchers.
