Page 2: Shared interests
Not so long ago, businesses in this country had a tendency to be inward looking, measuring their performance purely in terms of internal targets and neglecting the impact of the business on the wider community. The business effectively drew a boundary between its own activities and the outside world.
Today, fortunately, this approach has been discredited. Modern organisations recognise that there is no such boundary and that the wider community is, in fact, an important stakeholder in the business. And, of course, the business is itself an important stakeholder in the community. This case study examines how Abbey National has developed effective community partnerships.
Targeting community activities
Although organisations are stakeholders in the community, it does not mean that they can or should become involved in every community project which is available. Of course, this would not be possible as organisations only have limited resources. It is therefore important to use the available resources in the ‘best’ possible way. In the same way that individuals are selective about which ‘good causes’ to give time, efforts and money to, organisations too need to be selective about their community activities.
In deciding how to target resources, organisations should consider the needs and requirements of their stakeholders - shareholders, employees, customers and the wider community. The organisation has a responsibility to all of these groups. Balancing these responsibilities is difficult but far from impossible. In fact, companies now realise that a synergy exists between the approaches needed to satisfy purely commercial responsibilities and those needed to satisfy charitable or voluntary responsibilities.
Modern organisations like Abbey National need to consider how they can make a key contribution to the community whilst making a profit. Profit is essential if organisations are to modernise and improve, invest in new technologies and move into new product ranges. Moreover, the organisation must be able to justify its community projects to its owners – the individuals or institutions who own shares and need to make a healthy return on their own investment.
Abbey National Charitable Trust
As with any business activity, Abbey National’s community involvement strategy has evolved over time. A major platform for recent community involvement was the creation of the Abbey National Charitable Trust in 1990. The Trust was set up to serve as the organisation’s liaison with the voluntary sector and to assist in the support of a range of community projects and charities.
Initially funding was obtained through cash donations from Abbey National plc. In 1993, four years after converting from a building society to a bank listed on the Stock Exchange, Abbey
National sold unclaimed shares and endowed the Trust with £5 million which was invested to provide a permanent income. By 1998, the endowment fund was worth £9 million. The Trust’s investment income is supplemented by additional annual contributions from Abbey National. The Trustees, comprising members of the Abbey National Board, meet regularly to discuss requests for support. Trustees initially gave priority to:
- organisations working with homeless people and special housing needs groups
- projects intended to promote or provide equal opportunities - principally for disabled people, to enable them to live more independently or to participate equally in education, community life or employment
- organisations working to support families and family life.