The Question about “Doing Good”:
Is It Worth It to Business?

It is a conundrum of somewhat recent vintage, thanks to the accelerated development of corporate social responsibility over the past five decades: How should we quantify the qualitative? Is "doing good" worthwhile in and of itself? Or can its impact—its value to society—be quantified in terms that justify its efforts and, in doing so, prove its financial worth to the enterprise and to society?

Last year we accepted a challenge from Infoxchange, a not-for-profit organization working to bridge Australia's digital divide. Even before the global financial crisis, individuals and communities around the globe were suffering economic hardship. Whether the cause is a stagnant national economy, long-term unemployment, refugee flight, family dysfunction or any one of countless other causes, the result is the same: A layer of society is left behind. It is incumbent upon us not to forget these people, and there are positive signs that as a society and a business community we are not doing so.

Indeed, the notion of corporate social responsibility (CSR)—that business should support the community and communities in which it operates—has become more widely accepted in recent years. Many charitable foundations provide funding for good causes, and not-for-profit organizations frequently play a major role in addressing social problems through activism, awareness-raising and community organizing.

These organizations often work closely with governments that play a role in funding and facilitating good works. As recent economic events and resulting stimulus packages have squeezed the public purse, however, the pool of funds has been stretched and stretched again —just as the need for them has increased dramatically. In this context, choosing which causes to fund can be a complex task. Infoxchange launched its Digital Inclusion Initiative (DII), which is an effort to boost social inclusion through access to technology.

We initially made contact with Infoxchange through the Committee for Melbourne. Our timing was fortuitous, as we were looking for a pro bono project, and Infoxchange was seeking external validation of its groundbreaking project prior to rolling it out nationally. The unexpected relationship turned out to be remarkably rewarding for those involved, both personally and professionally. We found our personal reward came from being a part of a project that is making a difference in people's lives. As a team, we went beyond just developing the economic model, with several staff members volunteering to train residents in basic computer skills. The sidebar at the end of this article discusses one team member's experience.

The professional reward came from the opportunity to apply a specialist's skills and critical thinking to a non-commercial problem. At the same time, we delivered a solution that not only demonstrated the success of DII, but also provided a model for other organizations—companies or governments—that want or need to assess social investments and quantify the resulting economic benefits.

Using Technology to Overcome Disadvantage

The digital inclusion concept is based on the belief that access to computers and the Internet is crucial to social and economic inclusion. Infoxchange CEO Andrew Mahar says that "having genuinely affordable Internet access for all, especially the socially and economically dis-advantaged in the 21st century, is a fundamental infrastructure requirement of any civil and democratic society espousing equal opportunity" (see sidebar: IT Is Basic Infrastructure).

Research has shown that Australian households with high incomes have twice the Internet connectivity of those with low incomes—representing a genuine digital divide in a country that prides itself on giving everyone "a fair go" (see figure 1).

Figure 1: High-income households have twice the Internet connectivity than those below the poverty line

Infoxchange's response to this digital divide has been a community effort that draws on support from corporate partners and relevant government departments—in particular the Department of Housing. The initiative provides access to computer hardware, software, affordable Internet and user support for residents of public housing.

Since June 2002, 800 properties have been wired, 1,500 residents trained and more than 900 computers installed in the Atherton Gardens Estate in Fitzroy, Victoria. Building on that success, the Collingwood Public Housing Estate in Collingwood, Victoria, became the second site to go digital in August 2008. To date, 880 properties have been wired, 320 residents trained and 270 computers installed.

The social benefits of DII—revealed in both the established Fitzroy site and the new Collingwood site—are substantial, including a greater feeling of empowerment and equity of access to new technologies and increased computer literacy. Our analysis suggests that the Collingwood site could create further economic benefits in the $5.8 million range by 2013.

The Results: Clear and Compelling

The outcomes are not just anecdotal. We can quantify and thereby prove the social benefits and economic dividends, based on primary and secondary research and economic modeling. Using our model, we found that DII has generated $5.9 million in benefits to residents and the broader community in five years.¹ The total economic benefits are found in education and employment, communications and connectivity, transactional efficiencies, and health and well-being (see figure 2).

The following resulted from Infoxchange's "do-good" efforts at Atherton Gardens:

Figure 2: Atherton Gardens: Infoxchange generated $5.9 million in economic benefits to residents and the broader community

• $2.78 million in employment and education. Of the residents, 39 found employment as a direct result of the program. During the five years, these people earned $730,000 on which they paid $180,000 in taxes, while the government saved $1.8 million in unemployment payments and other benefits.

• We calculated a $1.35 million multiplier effect in increased spending, mainly in the local business community.

• Better jobs. The 52 already-employed residents moved to higher-paying jobs as a result of the program. This generated $680,000 in benefits over the five years.

• $1.28 million in greater connectivity through cheaper telephony for international communication, email and phone plans offered by Infoxchange instead of an external provider.

• $200,000 in transactional efficiencies via access to Internet banking and Centrelink online.

• $300,000 in health and well-being benefits due to access to resources, information and opportunities to connect with others in the community.

The ability to provide quantifiable evidence has been a powerful way to differentiate Infoxchange's offering and seek more government and corporate funding. The task is enormous: As the Victorian Housing Minister said when releasing these results, "There are 41 high-rise public housing buildings around Melbourne alone, so there are still another 39 that can be wired up."

Yet Infoxchange has its sights set even higher, with plans to set up in several other Australian states. We have also demonstrated the concept in the United Kingdom, and we believe the model could be adopted in many other countries.

Evidence-Based Philanthropy: Can't keep Throwing Money Away

In the wake of the global financial crisis, many organizations have reexamined discretionary spending on philanthropy, while governments have been forced to allocate spending to an ever-widening spectrum of public projects, even while handing out stimulus packages.

Figure 3: Cumulative benefits of the Digital Inclusion Initiative

Against this background, measuring the benefits of social investment is crucial to ensuring resources go where they are needed, and where they can work most effectively. Recognizing this trend toward "evidence-based" funding, Infoxchange set out to provide a compelling case for investment in its digital inclusion project. We were asked to create a fact-based model to analyze the economic benefits of existing DII sites and to lay the foundation for ongoing analysis and measurement of future benefits.

We approached this pro-bono project as we would any project, applying critical thinking to a complex problem. The methodology looked at the four areas of economic benefits shown in figure 3, applying a model of analysis to each one.

Education and employment. According to the analysis, education and employment by far delivered the greatest return. Improved education and skills (such as language and computer skills) and more efficient job-search techniques led to employed residents finding higher-paid jobs, and to unemployed residents finding jobs, earning a wage and moving away from social assistance benefits. In terms of measurement, we were able to assess the impact of higher take-home earnings, reduced need for benefits and increased income-tax revenue.

The model then applied a multiplier effect to gauge the impact on the rest of the economy. The multiplier of 2.4 is based on an estimate of the marginal propensity to consume, then applied to incremental, after-tax employment earnings.

Connectivity and communication. The impact on connectivity and communication was measured by the reduced costs of phone and Internet services. Infoxchange acts as an Internet service provider for residents, at a price of $15 per month (compared to around $50 per month for mainstream providers). At the peak of adoption in the established site, 75 percent of households were using discounted Internet access as opposed to commercial suppliers.

With Internet comes Voice-over-IP (VoIP) telephony, email and instant messaging. Almost 50 percent of respondents reported saving money on phone calls through these channels, with the average reported savings of $29 on local calls and $28 on international calls, resulting in a total monthly savings of $57.

Transactional efficiencies. Residents performed all transactions online through government and financial services websites. This increased access saved time, improved the quality of service interactions and allowed residents to redirect time and energy toward more productive activities, such as job search and community involvement. The financial benefits applied to government, corporate service providers and residents and were measured accordingly for each group.

Health and well-being. The impact on health and well-being was examined and, although more difficult to quantify, these areas directly address the high cost of chronic disease and anti-social behavior. These costs can be significant: Obesity, and drug and alcohol abuse combined, for example, cost Australia $34.5 billion annually.

The direct influence on health is through access to information, which allows people to make informed choices and find information to prevent future health incidents. Studies of disadvantaged communities in Australia have also established a relationship between social exclusion, education, and income and health outcomes; DII has an indirect benefit in this area by addressing and improving these causes of poor health.

In terms of well-being, research shows Internet access can have a positive impact on teenagers by supporting social connections, improving creative endeavors and fostering educational and community involvement. These are major factors in engaging at-risk teenagers and avoiding delinquent behavior.

Although the economic model used to measure these dimensions was developed exclusively for the DII project, its fundamentals can be used to measure a wide range of social investments from the public purse. It provides accountability and helps ensure money is spent where it is most effective, making it possible to get real metrics and plan community investments on more than just a feel-good factor.

Getting the Relationships Right

Among the most interesting findings in our work with Infoxchange was to understand that success is never won singlehandedly. The interactions among the three stakeholder groups—government, Infoxchange and corporations—turned out to be the most essential ingredient.

Corporate donors provided in-kind contributions, in the form of computers to be reconditioned and wires for installation, and support from employees, who trained residents. Led by Richard Wynne, Victoria's Minister for Housing, the state government provided funding and access to the public housing estates.

This poses an interesting model for governments planning to develop efficient, self-sustaining projects to connect communities over the long term. In fact, the initiatives studied will pay for themselves in three to five years. In addition, it's a sustainable model; the training and skills development allows members of the community to operate the project in the future.

For corporations, the model works well for several reasons. First, the company has some flexibility around the level and type of support it can contribute—cash, time or the expertise of employees. Then there is the scope for employees to continue to be involved in training residents for as long as the training is needed. This way it's neither forgotten quickly nor seen skeptically as a token effort. Finally, all of this contributes to employee engagement: People want to work for a company that does good things and welcome the opportunity to do good things themselves.

We believe this winning model can be expanded. We are currently sharing it with senior-level government members to build a case for national expansion. There is no reason why it cannot work in other countries where a digital divide exists.

From the feedback received to date, the other key lesson is the value of measuring and analyzing the results. As competition for funding increases and governments need an ever-stronger business case before rolling out social policies, they could take a lesson from this initiative and apply the same level of rigor in proving the return on investment for existing or pilot projects.

Ultimately, it's a win on all fronts. Corporations are able to fulfill their social responsibilities, employees find an outlet for their desire to contribute to the community, residents of public housing become more connected and empowered, and governments benefit from a modest investment that pays big economic and social returns. So, to our original question: Is "doing good" worthwhile in and of itself? The answer is yes—especially if you can quantify the worth.

Consulting Author

Phil Harkness is a partner in the operations practice. Based in the Melbourne office, he can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Copyright 2010, A.T. Kearney, Inc. All rights reserved.