Appeals to corporate America to invest more in their communities should depend less on altruism and more on economic reality, according to Stanley G. Karson, director of the Washington-based Center for Corporate Public Involvement.
"It's always been a self-interest message," Karson said in a Los Angeles interview last week while exploring that idea with some Southern California firms. "We don't do it on any altruistic basis."
Writing in the current issue of Response, the center's magazine, Karson wrote: "The knowledge that inadequate housing, inferior education, unemployment and racial tensions leave their mark on businesses and their bottom lines has proved to move many a hard-nosed corporation to meet community challenges."
Business benefits from attractive, healthy communities make it easier to attract and retain good employees, explained John E. Pearson, chairman of Minneapolis-based Northwestern National Life Insurance Co. and of the center's directing committee. And a company that prospers in a community has "an obligation to put something back," Pearson added.
But to tap the full potential of the business world, stronger national leadership is needed, Karson said. While many community-service programs funded by federal, state and local governments have been trimmed or eliminated in the wake of the last recession, community needs nevertheless remain, he pointed out.
No Corporate 'Tidal Wave'
In President Reagan's State of the Union address, he promised to speak out more forcefully on the need for businesses and employees to get involved in their communities, Karson said. Yet, while corporate involvement has increased in the 1980s, "it's not been a tidal wave by any means." While Reagan may have emphasized the "great potential of the private sector" more than his predecessors, he said, "the message could benefit from a greater emphasis on the self-interest, interdependence rationale for involvement, as well as the more altruistic motivations."
Karson's involvement in what has come to be called "private-sector initiatives" dates back to the inner-city turmoil--such as the 1965 Watts riots--that occurred the mid-1960s. In 1967, he said, a group of 160 insurance companies earmarked $2 billion to invest in housing for low- and moderate-income households and to improve living conditions in the nation's decaying urban core. By 1972, that program had run its course, and a group of 100 chief executives of insurance companies met to decide "where we go from here," Karson said.
The result was the forerunner of the Center for Corporate Public Involvement, sponsored by the American Council of Life Insurance and the Health Insurance Assn. of America, two trade associations. In 1982, its approach was broadened to embrace business generally.
The center exists, Karson said, to stimulate and coordinate "community-involvement projects" within the business community, to convey "an understanding that the continued strength and profitability of the companies are inextricably tied to the social and economic well-being of the communities in which they are located."
Some recent examples, cited by the center:
- Lutheran Mutual, based in the small town of Waverly, Iowa, (population 8,000) donated more than $700,000 to a local liberal arts college suffering from declining enrollment and rising costs. It also invested in a local YMCA, a substance-abuse center and a preschool. "As a major presence in our community," explained I. R. Burling, Lutheran Mutual's president, "we feel it is our responsibility to take a leadership role and lend the expertise of our home-office staff to the needs of our community. The current political, economic and social climate makes corporate social responsibility a more immediate and relevant facet of business operations than ever before."
- In San Francisco, Wells Fargo Bank lends its own personnel to work for up to six months at deserving community agencies. Under this program, Steve Ikard, a systems programmer, computerized the operation of the Marin County Suicide Prevention Bureau in San Anselmo, and Patricia Kennedy, a senior control clerk, worked with La Casa de las Madres, a San Francisco shelter for battered women, to develop a program to recruit and train volunteers to supplement a staff made skeletal by government funding cutbacks.
These examples indicate, Pearson said, that contributions can take other forms than financial. "A lack of management talent is chronic" among community organizations, he said.
Moreover, financial aid need not be a grant but can be an investment--perhaps loans made at below-market rates, as has been done in one Minneapolis-St. Paul project to make development funds available to minority businesses, he said. Such an effort is useful, Karson said, in the Neighbor Housing Services program, a local version of which is being organized in Los Angeles, to make money available to rehabilitate declining neighborhoods.
At the outset of the Reagan Administration, there were many appeals to the private sector "to fill the gap" created by non-defense spending cuts, but business's potential was considerably overstated, Karson said. Private enterprise is not equipped to play a role more properly filled by government, any more than the reverse, he explained.
"But there's a gray area in which the private and public sectors overlap," he said, and it is there that stronger corporate efforts should be made.
Karson said he expects the Reagan Administration to increase its efforts to get the business world more involved in community welfare. "They want to do something before they leave office," he said.