Ford Foundation Report Highlights Trend: Low-Income Communities a Resource for Corporate Growth
New York, N.Y., May 8, 2001 — In an audio conference with some of the country's top corporate CEOs, the Ford Foundation announced today the release of a report that documents a significant business trend – companies creating competitive advantages through community investment. Participants included, among others, Henry McKinnell (Pfizer)and J.W. Marriott Jr. (Marriott International), and business expert Michael Porter (Harvard Business School).
The findings, presented in Win-Win: Competitive Advantage Through Community Investment, highlight successful community investment strategies of top companies including Enron, Dell, DreamWorks SKG, Pfizer, IBM, Chevron, Sears, Bank of America, MetLife, Xerox, and Salomon Smith Barney.
"Distressed rural areas and hardscrabble inner cities are transforming themselves into some of America's most competitive places to do business," explains Susan V. Berresford, president of the Ford Foundation. "Many companies are already reaping the benefits of investing in low-income communities and their residents in order to expand their customer base, stabilize their workforce, locate top suppliers, invest corporate assets and build community relations."
The trend is not confined to one or two industries. It involves the automotive, energy, entertainment, insurance, pharmaceutical, retail, financial services, high-tech, and other sectors. The strategy helps companies address a host of business needs, among them market expansion, recruitment and retention of a qualified workforce, workforce diversity, new product development, reliable materials procurement, retail site selection, and improved brand recognition.
"We want the communities where we do business to thrive and our employees who live in those communities to enjoy a high quality of life," says Michael S. Dell, Chief Executive Officer, Dell Computer Corporation, and one of the executives quoted in Win-Win.
Among the trends identified in Win-Win:
- Large corporations across all industries are beginning to make investments in partnership with community-oriented venture capital partners, breaking new ground by investing in promising inner city and minority-owned businesses.
"We're not doing this because it feels good. We're doing this because it makes business sense," says Jeffrey Skilling, CEO of Enron.
- Manufacturers are diversifying their supplier networks at dramatic rates, contracting with more and more minority- and women-owned businesses for services, equipment and components. These suppliers provide quality, efficiency and innovation at competitive costs and sometimes facilitate manufacturers' entry into new markets at home and abroad.
"Our efforts at supplier development pay off in multiple ways; we gain access to new customers and investors, and the earnings of our vendors spreads capital through communities," says Michael J. Critelli, Chairman and CEO of Pitney Bowes.
"Minority-owned firms are surpassing the growth of all U.S. business, growing at a rate of 17 percent per year, six times the growth rate of all firms," explains Glenn Yago, Director of Capital Studies at the Milken Institute, one of the many resources available to businesses interested in pursuing win-win strategies. "Minority firms' sales are growing at 34 percent per year, three times the rate of all firms."
- Companies across all industry sectors are turning increasingly to local and national economic development organizations for help with workforce and procurement needs. They are forging partnerships that help them recruit and train unemployed or underemployed people, and partner with minority businesses to procure goods and services.
"By being involved in local job training programs, business owners can solve one of their biggest problems – how to find qualified workers," said Thomas Donohue, President and CEO of the United States Chamber of Commerce. "The idea is to make training demand-driven, so that job training is tailored to the needs of business. Local chambers of commerce and their members - working with training organizations - can develop more effective workforce solutions."
- Banks and insurance companies are now substantially and profitably increasing their investments in inner city and rural enterprises and housing, providing a broad range of financial services in partnership with community oriented institutions that specialize in screening and counseling borrowers.
"This is not a social partnership. It's a business alliance," says Vicky Tassan, a Senior Vice President at Bank of America.
- Retailers have been trailblazers in the quest for new markets, establishing stores and franchises in underserved communities in recent years. Now, more retailers are establishing profitable operations in neglected communities and some are developing merchandising and marketing strategies to attract even more minority consumers.
"Households in America's inner cities possess more than $85 billion in annual retail spending power. That amounts to nearly 7% of total U.S. retail spending, far more than Mexico's entire formal retail market," explains Michael Porter, Chairman, CEO and Founder, Initiative for a Competitive Inner City, "Because of the density of demand, many inner-city retailers outperform their suburban counterparts, generating sales per square foot up to 40% higher than the regional average."
"There was a time when America's corporate leaders viewed low-income communities and the people who live in them primarily as beneficiaries of philanthropy," Berresford writes in the foreword of Win-Win. But now, she notes, there is a move "to invest in opportunities emerging in overlooked markets."
The Win-Win report is a product of the Ford Foundation Corporate Involvement Initiative, a $30 million effort to leverage private sector resources for low-income people in the United States. The report spotlights models of successful, wealth creating partnerships between corporate and community interests.
Launched in 1996, the Corporate Involvement Initiative supports Win-Win Partners, a network of resources for business executives interested in pursuing win-win strategies – providing research, consulting services, networking opportunities, training and data. Specific organizations and the services they provide are detailed in the Win-Win report. A new Expert Media Resource Guide to more than 30 experts, supporting data and other useful information is now also available.
Click here to listen to the May 8th audio conference.
The Ford Foundation is an independent, nonprofit grant-making organization. For more than half a century it has worked with courageous people on the frontlines of social change worldwide, guided by its mission to strengthen democratic values, reduce poverty and injustice, promote international cooperation, and advance human achievement. With headquarters in New York, the foundation has offices in Latin America, Africa, the Middle East, and Asia.