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By Will Sturgeon, 24 August 2006 12:25

COMMENT

Since the tail end of the caring 90s it's been the done thing for companies to implement schemes and initiatives to 'give something back' to the community.

But is it just a tax-friendly way to distance big business from an image of unabated greed or is it because these companies realise they have the power to effect genuine change for people far less fortunate than their highly paid execs?

In the UK one of the major problems being addressed through corporate social responsibility (CSR) work in the tech industry currently is the digital divide. Almost half (40 per cent) of the UK population is still classed as being 'digitally excluded' and this is a major problem that IT and telecoms companies recognise they are well positioned to address.

Charlotte Drain, community investment manager at Microsoft, says the company uses its considerable knowledge and technology resources to tackle the issues - a strategy that has replaced a less focused policy of corporate philanthropy during the 80s and 90s.

While Microsoft has no shortage of cash, simply doling out money is hardly a strategic solution and lacks any business case.

As such the company plays to its other strengths with a number of initiatives aimed at tutoring and encouraging groups to get online and start learning what IT skills can do for them, from opening up new career paths for the young and people out of work, to putting digitally excluded people in touch with online services – particularly of use to the elderly who can shop or interact with government services without leaving home. To that end the company also works closely with Age Concern.

Drain says: "This is what we're good at. We are an IT company so this absolutely ties back in with our core business."

At BT, which runs its 'Everybody Online' campaign, the message is very similar.

Mike Hughes, head of digital inclusion at BT, told silicon.com: "As a communications company we felt we had some work to do to address some of the problems of the digital divide. A digital divide is a comms-related problem and that's what we know best.

"We are dedicated to working in local communities and with people in local communities to get them to engage with modern technology."

As well as being hands-on in the community BT is also providing hardware and critical IT infrastructure.

Over the last three years BT has provided 3,400 PCs through its Community Connections initiative at a cost of £2m.

BT is just one member of The Percent Club - a group of organisations that donates one per cent of their pre-tax profits to charity through staff time, donations and in-kind giving. In BT's case it donates half a per cent towards its CSR efforts and half a per cent in kind - for example by donating phones.

US business software vendor CA also goes to lengths to work with local communities around its Ditton Park European headquarters, believing firmly that such initiatives must start on its own doorstep. The company runs a Digital Schoolhouse on its premises, providing classroom space, computers and software as well as funding - to the tune of £100,000 this year - for groups of schoolchildren aged 10 and 11 to come in and use facilities far in advance of those provided by their schools.

Helen Judson, who manages the Digital Schoolhouse project, says: "We provide a state-of-the-art classroom with 30 PCs so every child in the room gets one-to-one with the computer."

Since late 2004 more than 7,700 children have passed through the Digital Schoolhouse.

So what's in it for the companies? Cynics may suggest Microsoft's CSR work, for example, enables it to put more Microsoft software into the hands of future users.

Microsoft's Drain says: "We obviously focus on our own software which we believe is absolutely the right thing to do. When people enter the workplace they will come up against Microsoft software."

But while Drain states "there has to be a business case" behind any CSR work, the benefits to Microsoft, she claims, are actually far more carefully thought through than empowering potential customers.

Microsoft staff receive three extra days of holiday in return for helping out with CSR projects and the effect on staff - including retention - is considerable, says Drain: "Employee volunteering has a great role in motivating staff and helping them feel proud to be part of our company."

Other cynics may suggest the bonus here is the companies enjoy all the benefits of running such projects, and bask in the reflected glory, while ensuring favourable tax-breaks mitigate the cost of running the schemes.

But this isn't the case, according to Patrick Stevens, a senior tax partner at Ernst & Young. "It would be unfair to say that people do CSR work because of tax breaks," says Stevens.

He adds: "By and large for many of the things a company does, for the money they spend, they will get a tax deduction. This includes everything they spend in order to make their profit, such as the wages they pay their staff."

And while it may be argued that CSR work does not directly contribute towards profits, the costs can still be deducted from pre-tax profits, says Stevens. So a donation of £100,000 - whether in cash or non-cash consideration such as staff time - would result in a £100,000 tax deduction, saving tax of £30,000, for example. However, Stevens says it is absolutely the case that these companies are still "giving away lumps of their money" – in that example still £70,000 net.

So it is staff motivation that appears to be the greatest internal benefit of running or encouraging such projects.

Salesforce.com encourages staff to get involved in projects in the community and gives all employees six days to spend on projects close to their heart, rather than joining in with a company-chosen cause or charity. Steve Garnett, European president at the on-demand CRM company, says he's used his time to support a scheme called Teach First which took him into classrooms in North London inner-city schools. And the company, in common with many others, also provides its products and support free of charge to non-profit organisations.

Another tech giant involved in bridging what many may see as a controversial digital divide is Cisco, which is working in UK prisons to provide educational tools to inmates.

In the past five years more than 1,000 prisoners have passed through the Prisons ICT Academy Program, gaining IT skills which it is hoped will enable them to land jobs in the outside world and discourage a return to crime.

Some inmates have even gone on to study for IT-related degrees after ending their stay at Her Majesty's pleasure. Currently Cisco operates academies in 20 UK prisons.

Another organisation aiming to target individuals who for whatever reason haven't had the best start in life is Nokia, which runs a 'Life Routes' initiative in numerous disadvantaged areas of the UK.

Mark Squires, director of communications at Nokia, said his company has had major successes in engaging youths "who have had a fairly rough life".

One of the aspects of the project has seen Nokia unite young and old, with the youths spending time with the elderly, which Squires says is very much in line with Nokia's raison d'être - getting people talking.

Squires says Nokia employees are also encouraged to help out and technical staff will often run projects such as teaching the youths to build websites.

He says: "We've encouraged our staff to go down that route," adding they also receive days off in lieu for helping out. "Our staff can see that not only are we doing something but they too can make a real difference."

And through the process of researching this article silicon.com encountered dozens of companies involved in CSR projects. All were equally worthy, from huge organisations to small software shops doing their bit. And for all the cynicism raised in reaction to companies doing something for charity - and being prepared to talk about it - there is a realisation that many in a predominantly young, predominantly very advantaged industry realise it is incumbent upon themselves to give something back.