Corporate social investment (CSI) forms part of corporate social responsibility (CSR) and is designed for community upliftment. Using company money, CSI can make it easy to create positive impact on the value of the business. Although that sounds like quite the contradiction, spending money on CSI actually pays off.
In terms of financial value, if CSI programmes are implemented by using company profits, then this means that overall business value decreases.
Effective CSI means developing a strategy based on defined objectives. If management and shareholders agree on a particular strategy, then it should be with considerations of business value in mind, ultimately.
The projects undertaken should ideally be aligned to the ethos and values of the business. This ensures that the business will benefit rather than lose.
Defined CSI projects can enhance business credibility, which may lead to increased sales and profitability. This can translate into tangible value for the business in the long run, as more customers identify with the business and support it more. In addition, potential investors may identify with the business more, leading them to possibly want to align their brands with the business.
Measuring the business value of CSI means that the impact of the programmes must be measured. This is never as simple as black and white, but can be quite complex. There are metrics that can be used, however.
Valuations are also based on forecasts that reflect the financial value of investment. These valuations are based on a number of factors, such as:
If it costs too much money to implement CSI programmes, the business value of CSI may be questioned much more vigorously.
Impact on productivity, sales and client retention
If the implementation of CSI programmes begins to have a negative impact on productivity, then it may be time to reassess the true business value of CSI.
A spike in sales could be as a result of successful CSI, along with client retention. These factors should also be taken into account when measuring business value.