INSEAD business school recently conducted a detailed study of 25 humanitarian organisations. The field managers surveyed ranked cash as the most helpful type of contribution from business. Money gives humanitarians the liquidity and flexibility that they need to respond quickly to the requirements on the ground. And often the value of cash is greater than the same value of goods. For example, a European company offered to provide nylon tents, at cost, for use in Pakistan. The cost price of one of those tents, if it had been sent as cash, would have bought a house in the same area.
The advantage of cash from the corporate point of view is that it makes it easy to track the cost. The return on investment can also be more evident: a fundraising activity organised by employees (and inspired by a corporate promise to match the money raised) can work more effectively than many so-called team-building activities. The downside is that handing over cash requires a certain amount of due diligence on the company's part. It needs to be sure that the chosen agency has both the capability (a track record and local knowledge) and the accountability (a history of providing reliable data about how it manages its funds).
Despite the strong case for cash, there are some good examples of alternative contributions. For example, Ericsson provided satellite and heavy-duty waterproof phones for relief workers in south-east Asia after the tsunami in 2004, while Danone had donated two million bottles of mineral water to the region by February 2005.
Yet some companies still fail to recognise that donations should be based on demand, rather than what they can supply. This mistake can cause bottlenecks or, worse, needless expenditure. Unwanted donations received during Eritrea's 1989 war, including seven truckloads of expired aspirin, took six months to burn. The key for a business is to work closely with aid agencies, local embassies or maybe one of the company's supply chain partners in the region concerned, rather than launching its own 'mini-NGO'. The same warning applies to companies that allow employees to volunteer to help aid agencies. Technical skills and noble intentions alone are not enough - they also need to be familiar with the local context and have experience of emergency situations.
Companies and aid agencies can find themselves competing for airtime, so it is very important that the business does not try to get all the publicity for itself, and co-ordinates its communications strategy with the NGO. Companies should also bear in mind that their involvement in a high-profile campaign might mean that their competitors will choose not to support the same charity, thereby hurting the cause. Of course, businesses can follow the CNN trail, but they should keep their messages educational. Above all, they should respect the protocols of the NGO and consult its press experts at all stages.
The role of the corporate sector in disaster management is still being defined. For now, the main message is: stay humble. The role of a business is to support humanitarians saving lives, not to save lives itself.
World Food Programme: www.wfp.org
Save the Children: www.savethechildren.org
Medecins Sans Frontieres: www.msf.org
Coke in Kerala: Case A, 705-033-1, T Halbert, Temple University, 2005
Tata Steel: a century of corporate social responsibilities, 704-069-1, J Manzoni, V Tibrewala, K Hughes, J Barsoux, INSEAD, 2004
The Co-operative Group: fairtrade chocolate, 704-056-1, S Robertson, A Clarke, J Brennan, London Business School, 2004
Moving the world: the TPG-WFP partnership, looking for a partner, 704-041-1, L van Wassenhove, R Tomasini, INSEAD, 2004
All cases are available on www.ecch.com.