As community investment becomes more strategic, companies want to know what impact their activities are having on society

Companies surveyed for this report all agree that measuring the impact of community investment on their business is a huge challenge.

Employee turnover, for example, will be determined by a host of factors including benefits, the quality of management and career development. Community investment activity may make an important difference, in terms of the working culture and employee motivation, but isolating this impact is difficult.

Nonetheless, all companies in this study say they realise the importance of being able to measure the business benefits of community investment. Vodafone UK Foundation head Sarah Shillito explains: “It’s corporate money, shareholder money and you need to be accountable for where it’s going.”

Measurement of the impact of any spending is crucial to building up a business case for community investment. Several of the companies surveyed say being able to present this case internally is particularly important in the current economic climate, where community investment budgets may be vulnerable.

There are standard ways of measuring business benefit and these are practised widely. Most companies we surveyed conduct regular reviews of employee awareness of community investment. Vodafone UK conducts a poll every eight weeks that features questions on employee attitudes to community investment. The poll has shown Vodafone that employees who have heard about the foundation’s work are more likely to feel positive about working for the company – giving evidence of the foundation’s value to the company.

The public relations value of community investment can also be measured accurately. Royal Bank of Scotland head of community investment Stephen Moir says the bank has many tools for tracking brand performance. These can be used to measure the impact of community investment on perceptions in exactly the same way as they would measure the impact of a mortgage campaign.

Measuring social benefits

Companies are able to measure the scale of their activity relatively easily. For example, P&G measures the number of children who benefit from its Live, Learn and Thrive children’s programmes each year. Microsoft tracks how many people have been trained through its programmes and the number of people it has reached with technology, through community centres and various educational programmes.

It is more difficult to define and measure the social impact of this activity – how have the people who have been helped actually benefited, and to what extent? BP corporate responsibility director Sheldon Daniel says community investment professionals need to be moving towards a clearer understanding of social impact. “I think we miss a big trick if we are not analytically robust in our approach to social investment – we should be clear from the onset on the variables we want to impact and on the framework for measuring success,” he says.

This kind of analysis usually requires specialist research skills and many companies are bringing on board external parties to help them with their measurement. P&G has hired researchers at Boston University to help measure the social impact of its programmes. Microsoft has supported the University of Washington’s independent research on the impact of NGO programmes working on employability in eastern Europe as a contribution to ICT research and knowledge. IBM has used external research partners to study the impact of its technology programmes on teachers.

All companies stress the importance of independent assessment. P&G, RBS and BP all make use of external auditors to verify their reporting of community investment. There are different levels of assurance employed but generally this involves checking that there is a trail of evidence to support whatever claims are being made about community investment. For large projects, more comprehensive independent assessment and monitoring may be appropriate. For example, in 2002 BP established the Tangguh Independent Advisory Panel, chaired by former US senator George Mitchell. For the past five years it has produced detailed reports on BP’s Tangguh project in Indonesia, recommending improvements to which BP publicly responds.

While there are some cases of extremely good evaluation, in most companies this tends to be restricted to a few flagship programmes. Companies are not yet at the stage of being able to evaluate all of their activity in such a robust way.

This is partly because such research is very expensive. Both RBS and Microsoft refer to a reluctance to invest huge sums in researching social impact where there was no clear action plan as a result. “If you’re not going to use what you measure, don’t measure” is the principle employed at Microsoft. Measurement is recognised as valuable only when it will be used to inform future activity.

While companies acknowledge the challenges associated with measuring their social impact in a meaningful way, there is a definite consensus that this is an area that will continue to grow in importance as companies become more focused in their objectives for community investment.

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