Community Partners President & CEO Paul Vandeventer recently talked with a now-retired, long-time corporate philanthropy chief who spent decades in the energy industry operating from company headquarters in Los Angeles. The conversation surfaced a series of significant thoughts, ideas and lessons both useful and instructive to any corporate executive or manager implementing a company giving or wider public affairs program.
It seems that caring about the community throughout the company will perfectly mirror leadership’s example at the top. Beyond your own strong experience and the good team that surrounded you in corporate philanthropy, where and to whom did you look for direction and vision?
We relied on the sustained support of the CEO. That's a key point to understand. Corporate responsibility and corporate contributions must have a champion at the top who "gets it." Our top executives believed in a strong public affairs program. It was that commitment, and the sound advice and guidance of philanthropy expert Waldemar Nielson, author of The Big Foundations (Columbia University Press, 1972) that ensured philanthropy became institutionalized in the company. Top leadership expected their direct reports and others throughout the company to engage in corporate responsibility, and they spent significant money determining how to go about practicing it well. The commitment was top-down from the start. It was essential to our corporate identity.
The company did a great job of integrating people, practices, profitability and philanthropy for genuine and sustained impact at the community level. How did you pull all of this together in a way that kept everyone and everything the company did focused and consistent?
Once every year we organized a company-wide "emerging issues" seminar and invited the best consultants and nonprofit organization leaders we could find in each of our five philanthropy focus areas to join us and talk about what they saw over the horizon line in those areas. It helped that I represented the company on several national philanthropy boards including the Conference Board Contributions Council, Independent Sector, the Council on Foundations, and so on. I got to know who the real content and thought leaders were to invite to our seminars. And Wally Nielson was a consultant directly to our CEO and knew everyone. Over time, as the reputation for the quality of our seminar grew, even the company’s corporate strategic planning staff asked to attend.
We had a number of vice presidents of the foundation who were the up-and-comers in key positions from our various operating companies around the country. They each had three-year appointments to the foundation. They were expected to participate in the annual emerging issues discussions so they could understand better what we were trying to do to connect our community focus to the company’s operating interests. We also included the community affairs staffs from the various operating companies to participate and present their local viewpoints because they acted as the foundation’s eyes and ears in their cities, and served as staff to the vice presidents on community issues in those cities where our operating companies were located.
All of the up-and-comer vice presidents were encouraged to serve on local nonprofit boards, as long as the nonprofit worked in a field consistent with the foundation's areas of focus. Part of the agenda for the annual emerging issues seminars included presentations by the vice presidents and their local community affairs staffs to discuss issues in their operating company locations that might deserve foundation support. My foundation team listened closely to what was said. Conclusions coming out of those seminars frequently resulted in calibration of what we were doing though our foundation grantmaking company-wide. Seminar results were summarized and distributed to the company’s top leadership, many of whom were our foundation board members, so they would be aware of the "why" of our grantmaking relative to the company’s long-term interests. This high level of participation in community affairs was integral to the professional development experience for the up-and-comers. Our HR chief believed it made those folks better future executives if they saw how the company was connected to its communities, and the practice proved essential to institutionalizing the foundation’s philanthropy in the broader corporate structure.
Beyond their operating responsibilities the up-and-comers were expected to acquaint themselves with and know the education, community, arts and environmental groups in their city, because those were our key areas of philanthropic interest.
You emphasize a continual effort to localize charitable giving and maintain key community relationships. You had a lot of territory to cover and a small team. How did you make it work?
Our small Los Angeles-based foundation staff frequently spent time on the ground in those key company cities to meet with the local community affairs staff, the up-and-comer foundation vice presidents in the operating unit, and with local nonprofit leaders.
The up-and-comer foundation vice-presidents participated in regularly scheduled – ten times a year! – grant proposal review meetings, and we frequently held those meetings in one of the key cities. Almost every one of them agreed it stretched them and took time away from their regular duties, but they recognized the value of the experience. By the time their three-year terms in the foundation vice president role were up, they invariably agreed it had been one of the best experiences of their careers to that point. Nearly every one of the former foundation VPs was promoted to a position of executive responsibility in our corporate headquarters.
The foundation board met quarterly to consider all major grant requests, and to discuss foundation policy and guidelines. The foundation did not have a direct organizational line to the local community affairs staff in Los Angeles or in the key cities, but we did have a strong dotted-line relationship with them because we were so interdependent in the foundation grantmaking process. Our foundation staff and the local community affairs staff members were in almost daily contact about a local issue or a particular local nonprofit organization.
With so much local presence and visibility, there had to be some downsides. What were they?
Actually, having the up-and-comers involved in their communities and in the foundation helped protect the philanthropy function when CEOs changed and kept our philanthropy from merely being an extension of the current CEO's whims. And, we could protect the top company leadership (or their spouses) who were constantly getting cornered by their external peers seeking a grant from the company for this or that favorite cause. They could always say: "Wow, that's an interesting idea. Why don't you write me a letter, and I'll see if it fits our grantmaking guidelines." The foundation helped get them off the hook and we in the foundation signed the rejection letters. Grant award letters, on the other hand, were signed either by those operating company execs who were serving as foundation VPs, or, for major grants, by our corporate officers, most of whom were foundation board members as well.
Some companies don't have separate foundations, so there's often no apparent division between philanthropy, PR, community relations and government affairs. Any thoughts on that front?
Even though a company doesn’t have a foundation, they can still decide on a handful of strategic community issues and focus their contributions on those issues for impact. Wally Nielsen regularly advised us: "To do anything well, one has to have a vast disinterest in a host of worthwhile activities!" A company that wants be more strategic in their grantmaking should consider defining and sticking to a few critical issues, using that rationale to not have to consider every random request that comes in, regardless of its merits. Strategically concentrating might also help to make the community affairs staff more effective in their community-building efforts and even protect corporate executives from the constant onslaught of requests.
Even without a foundation, a company can have a grantmaking committee, clear areas of philanthropic focus, extensive reach through designated representatives in the company and a transparent process that draws on the best thinking of everyone from the front lines and up through top leadership. We were lucky in being able to separate foundation philanthropy from the constant stream of requests to support fundraising benefit galas and dinners, for example, which came from the community affairs budget within the company itself. That enabled the foundation to maintain an integrity of focus, and enabled us to respond to broader community issues that came along.
We served as “bridge spanners” on the front lines and were expected to validate the credibility of the nonprofit leaders and the programs of their organizations. When we developed confidence in the nonprofit leadership and found a fit with our priorities, that led to a funding relationship over time where long-term outcomes could be achieved. For unusual opportunities, unforeseen opportunities, and national/local campaigns that would serve our public affairs purposes, we budgeted a “miscellaneous” category of funding.
Talk a bit more about the advantages of narrowing the grantmaking focus and maintaining transparency and accountability.
We wanted a clear and defensible rationale and a process for determining what to fund and what to reject. So we focused on very broad categories:
•Higher education, particularly STEM, because that’s where technological innovation important to our industry could come from
•K-12 public school reform
•Community building, including low-income youth development in our key operating geographies, where our division headquarters or major operations were located and where we had a concentration of employees
•Arts and culture
•Public policy and
•Environment
Rapidly changing demographics provided the data and rationale for those categories based on our best assessment of how direct engagement through philanthropy and community engagement would contribute to the company’s long-term survival. Alexis de Toqueville, the French social observer who toured this country in its formative years, observed that giving in the young America was based on "self-interest, rightly understood.” All of the groups we funded had some arms-length, indirect "self-interest" important to the company. Wally Nielsen advised that we had to work as hard to decide what not to do as we did to decide what to do. He coached that if we expected to be effective in our work, we had to become continuously intellectually engaged in those issues. To this day, I'm still a constant reader to know not just the "what" but also the "why" behind it. It helped then, and it has helped ever since. I could not have done my job well from behind a desk in an office. Community affairs staff must be in – and, ideally, of the community, and be known as credible, honest people with the interests of the community at heart.
Walking the talk, honestly, openly and directly, proved the best route to our long-term credibility. We published an annual report that stated the rationale for our focused priorities, then listed all grants by priority area, the nonprofits that received the grants, and the amount and purpose of the grant. That was our approach to transparency and accountability. The annual report also included statements about our employee giving programs (both matching gifts and volunteering). We used the report to motivate our employees to support their own communities with their own personal resources and time.
Can philanthropy win a company friends in the political and governmental arena, especially helping insure that our friends will remain friendly even when or if something goes haywire?
There is no way to guarantee that corporate philanthropy will win friends for the company. A wag once said: "When you award a grant, you gain one friend, and a host of enemies." Folks in charge of corporate responsibility must understand this reality. In the energy industry, we came to believe that "perception is truth and people aren't rational." That poses a huge challenge to winning favor or understanding. I think that's probably still the case. You do your best.
We did train intensely to get out front when an emergency happened. We knew that working in a process industry with high pressures and temperatures, emergencies would invariably happen. When they arose, we could not delay speaking with the media. The highest corporate executive available at the onset of any emergency was our designated spokesperson. We did not wait for the media to contact us, but reached out to the media to take the offense, rather than find ourselves on the defensive.
What advice would you give on articulating the "value proposition" of philanthropy to higher ups and other key players throughout the company?
Our strength of direct and enduring relationships with our community partners were our best indication of the value proposition for our philanthropy. We knew we needed a strong, vibrant community to buy our products and we knew we needed highly educated individuals who would come out of our communities prepared to eventually become the community leaders and elected officials with whom we would raise, deliberate and resolve issues. That was the long-term intent. The sharper we were in our priorities, the better top management saw the connection to the community. Companies that do that well, also seem to do well in their marketplaces and in the surrounding political environments. We worked hard to get our employees and management at all levels to understand and value company philanthropy as a source of internal pride. We knew that if we were just tolerated by executive management, and not valued, the situation would change.
To what extent did HR play a role in defining positions, conducting training, and so on? How much should we weight the presence on boards and commissions in the community as a useful place to position our people?
We always encouraged our executives, employees and managers to be engaged in their communities. HR throughout the company was involved in encouraging key managers to participate on important boards, for the benefit of the manager, the company, and the community. Remember, HR has a larger budget than community affairs and a lot of that budget is there to be invested in training and development of employees at all levels, including rising executives. I was frequently asked to meet with operating company managers in our key cities to orient them on nonprofit governance and processes when they found themselves serving on boards. We trained our up-and-comers on what to expect, and the rest was on-the-job learning through interacting with its various communities and with foundation partners. Very early in my career, I was manager of radio and television advertising for Columbia Gas of Ohio in Columbus, and we wanted our employees to be engaged in their local communities throughout our service area so they and the company would be well-known whenever local gas utility rates were being considered.
If a lot of the potential strife facing a company derives from the company’s potential environmental impact, how would you suggest positioning company philanthropy so as not to appear ironic on the one hand, or pandering on the other?
I cannot comment on the new political and public pressure on the fossil fuels industry from those who espouse shifting to alternative energy sources. By all scientific data, fossil fuels will be the central source of our energy needs far beyond our generation. We're not about to run out of fossil fuels for a long, long time. And a part of corporate responsibility is to ensure that our products are as environmentally sensitive as possible. Natural gas gets high marks for that! As I said, environmental programs were one of the foundation's priority areas. Some environmental nonprofits refused to seek our support because they preferred to sue the company. Our environmental grants, however, put us in a relationship with other local and national environmental leaders, and we could have reasonable conversations with them about our mutual interests, and about our points of disagreement, and explore why we had different views. Keeping an open and respectful conversation going was a key part of establishing those grantmaking relationships.