The Future of CSR Software: A Buyer’s Guide

The past few years have been a reckoning. The COVID-19 pandemic and renewed calls for racial justice reminded us all how interconnected we are. The most dynamic corporate leaders used this opportunity to shift the paradigm for how their team makes business decisions using stakeholder capitalism. 

Stakeholder capitalism is the idea that corporations should serve the interests of all stakeholders, including their employees and their local community, not just those who have a financial stake in the company. Though the idea of stakeholder capitalism isn’t new, there has been a tidal shift as more and more businesses reorient their strategy to incorporate this holistic world view. Profit isn’t the only measure of success anymore. 

In a recent open letter, Blackrock CEO Larry Fink called on corporate leaders to adopt a stakeholder approach. “It is through effective stakeholder capitalism that capital is efficiently allocated, companies achieve durable profitability, and value is created and sustained over the long-term,” he says. 

It turns out, what’s good for the environment and the community is also good for businesses’ long-term success. And so leaders are working to incorporate this understanding of interdependence into their company practices. These efforts touch every part of the business and reshape how decisions are made at every level. 

In practice, embracing stakeholder capitalism is multifaceted. It can take shape as strategic supply chain management, sustainability goals, employee engagement efforts, community investment programs, ESG commitments, or DEI initiatives. The key to implementing stakeholder capitalism is to find the ways your business can naturally be a force for good, and then fold that vision into your core mission.

Over the past couple of years there have been a whole lot of stories of corporate leaders making pledges around social impact. As heartening as it is to see, this isn’t the whole story. A big part of what has motivated companies to take real tangible action is the upward pressure from employees. Across industries, employees are taking a grassroots approach and using their voices to call for change both internally and externally. 

According to a recent report, four in ten employees in the US have “spoken up to support or criticize their employer’s actions over a controversial issue.” Empowered by a new understanding of social media and public transparency, employees at all levels understand that they can be effective advocates for change. 

Source: Weber Shandwick

For many corporate leaders, this internal pressure is not necessarily new, but it’s stronger, more consistent, and more public than it’s been in the past. Rather than shielding themselves from it, leaders must embrace and support employee advocacy. In fact, to give employees a formal channel to express their opinions, many companies are creating dedicated spaces for employees to connect with one another and organize their advocacy efforts. 

Employee resource groups (ERGs) are often a big part of the effort to amplify employee voices. ERGs are voluntary, employee-led groups that bring together employees who share a common identity or interest. As of 2021, 40% of companies have ERGs, a 9% increase from the previous year. Through ERGs, companies can start to provide the infrastructure and support for these employee-led communities. 

The benefits of ERGs go both ways. ERGs give employees a venue to connect with other like-minded colleagues and organize their advocacy efforts. And employers get access to the insights and feedback from a group of engaged, forward-thinking employees. 

To build effective CSR programs, corporate leaders must harness the power of employee activism. Democratization is key. Jen Carter, global head of technology and volunteering at Google.org, explains her team’s approach:

“We try to partner really closely with employees, and especially with ERGs. A philosophy that we use with the nonprofits that we work with is that we build with, not for. And I would say the same thing about our CSR programs overall, and the way that we try to engage with ERGs and other employee groups.”

Jen Carter

 When it comes to setting CSR priorities, employees need a clear, strong voice in the process. Technology plays a big role here. It’s the connective tissue. With good CSR software, employees will feel empowered to get involved and put their values into action.

Many social impact leaders are starting to understand the power of strong community partnerships. Rather than taking a transactional approach to CSR by writing a check and moving on, businesses are forming long-term relationships with community organizations. 

Many CSR leaders have worked to shift away from old dynamics in which funders had all the power and dictated expectations to the grantees. Now expectations and communication move both ways. Nonprofits are empowered to ask for what they need, and CSR teams work to be responsive. 

At the heart of an effective corporate-nonprofit partnership is trust. Often before corporate partners show up, nonprofits are out in communities doing essential work. They have deep insight into what the community needs. Any CSR efforts must recognize this. Business leaders need to trust the nonprofit’s priorities and processes rather than trying to impose their own. 

Strong community partnerships help corporations be more responsive to crises. For instance, when the COVID-19 pandemic struck, businesses with strong community partnerships were able to mobilize quickly to deliver aid to those in need. On the other hand, businesses that hadn’t built relationships didn’t have a direct line to understand what communities needed and found themselves trying to do that relationship building in the midst of a disaster, when nonprofit staff were overloaded and exhausted. 

Embracing strong partnerships often means providing sustained support. Rather than pivoting to a new cause each year, some businesses choose to commit to multiple years of unrestricted funding. This kind of support gives nonprofits the ability to plan for the long term. They can launch programs knowing that they have ongoing funding to keep them alive. Plus, sustained funding means nonprofits can do work with a longer change horizon. Often, the most transformative work takes time to show results. If a nonprofit has to secure new funding every year, they will feel pressure to show immediate returns on investments and miss opportunities to make long-term change. 

During the Impact Studio Conference, Patricia Toothman, social impact manager at Splunk, explained that she and her team build a pipeline of organizations tackling big problems. They offer multi-year funding, and one of the questions they ask over and over is “How can we expand that partnership and do more?” Support should go beyond the check. Businesses can mobilize in many ways to sustain a nonprofit—through volunteering efforts, in-kind donations, employee giving campaigns, networking, and more.

CSR is having a big moment right now. For many companies, CSR is quickly becoming an essential pillar of business strategy. That’s great. But the problem is that too often, budget and headcount don’t match the intention. 

Expectations for CSR programs are high. A report from the Association of Corporate Citizen Professionals (ACCP) found that 80% of CSR professionals say their leadership has increased demand on CSR teams to expand programming and show results. But in that same report only 25% of CSR professionals believe they have sufficient budget and 20% believe they have sufficient staff. 

Source: Association of Corporate Citizen Professionals

The problem is that corporate leaders often take a “prove it first” approach to CSR. They know social impact is important, but before properly resourcing their CSR teams, they want those teams to prove their effectiveness. 

Angela Parker, CEO and co-founder of Realized Worth, sums up the current state of the sector: 

“Practitioners are being asked to do so much. To go above and beyond what's reasonable now that the job is more important. And they're being looked at by senior leaders with a degree of respect, finally, that has not been received in the past. But they're also being told, make a significant, measurable, transformative difference. And do it soon without budget until you prove that you've done it. And without additional headcount until you show me that it's worth it. And people are exhausted.”

Angela Parker

Technology can alleviate this friction. CSR professionals need intuitive software that helps them  mobilize employees all across their company to get involved. When employees are empowered, CSR programs become self-sustaining. And the practitioners responsible for those programs can shift from daily logistics management to long-term strategic planning and relationship building.