Vanguard Tells Investors to Think Long-Term. That’s Also How It Thinks About CSR.

Its relationship with nonprofit Esperanza is a perfect example.

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One of the keys to effective Corporate Social Responsibility — and one of the foundations of the Satell Institute — is thinking long-term. SI members are required to make four-year commitments to nonprofits because, as founder Ed Satell likes to say, “No business can operate on a one-year financial cycle. And neither can nonprofits.”

Taking the long view also fuels financial services leader Vanguard, in both its relationship with its customers and the way it thinks about CSR.

“Vanguard’s investment strategy is long-term, stay-the-course,” says Aldustus (A.J.) Jordan (above, left), Head of Community Stewardship at Vanguard and President of the Vanguard Group Foundation. “And our philanthropic approach very much mirrors that.”

There’s no better example than Vanguard’s robust relationship with Esperanza, the large nonprofit that ministers to Latino and underserved communities in Philadelphia. Vanguard’s commitment to Esperanza has extended for many years, and it goes wide and deep — with Vanguard supplying financial support, volunteers, and expertise.

But it’s not just Esperanza that benefits. It’s a winning investment for Vanguard, too.

Listening and Learning

The relationship between the two organizations goes back more than a decade, and it continues to grow. A big focus has been on meeting early childhood needs in the North Philadelphia neighborhood where Esperanza is based.

That wasn’t Vanguard’s idea, however; it was Esperanza’s. As Jordan explains, “We very much take a listening-and-learning approach to what targeted communities need.”

Specifically, Vanguard has focused on supporting early childhood centers in the neighborhood. It’s funded teacher training, purchased materials, and helped numerous providers attain much-needed certification, helping them grow as entrepreneurs. “There’s an early childhood benefit as well as a neighborhood economic development benefit,” says Jordan. “There’s a multiplier effect.”

Financial support is just one part of Vanguard’s commitment. Its crew members serve as volunteers at Esperanza, and one of its senior attorneys is the secretary of Esperanza’s board, where she helps the nonprofit with complex legal and structural issues and has been instrumental in board training.

Rev. Luis Cortés (above, right), Esperanza’s dynamic leader, says the ability to tap into Vanguard’s expertise has been invaluable. “Our Vanguard relationship is deep. We can call and I can ask any question about how corporations should function, or ask for investment advice, and I’m going to get top people answering. Vanguard is a leading firm giving you free advice.

“That type of relationship should be the relationship,” Cortés continues. “I’ve always said it’s better for corporations to have fewer relationships that are deeper than to have many that mean nothing.”

In a Company’s Self Interest

As much as that deep connection is helping Esperanza and its surrounding community, it also pays big dividends for Vanguard.

Jordan cites any number of ways the relationship supports Vanguard’s broader business goals. “There’s a lot of research that shows employees who are involved in the community, particularly on behalf of their company, feel a closer alignment and kinship to their company,” he says. “There’s a higher sense of pride which leads long-term to higher employee-retention rates.

“It also helps to increase the company’s brand visibility,” he continues, “which can attract talent. And it helps to engender loyalty among clients and customers, who want to invest with and do business with a company that not only will help their own long-term financial well-being, but also the well-being of the communities in which they live and serve.”

The Power of the Satell Institute

All of the above aligns perfectly with the Satell Institute’s philosophy — investing in the community is actually in a company’s self-interest.

That philosophy was a key reason Vanguard wanted to be a Satell Institute member.

“We love the long-term thinking approach and helping more CEOs understand that thinking about the big picture is not just a good thing to do, it’s also helping to support and grow the business,” says Jordan.

From the nonprofit standpoint, Cortés believes that having a connection to SI is like the Good Housekeeping seal of approval.

“It signals you’re legitimate, worthy nonprofit,” he says. “You’ve gone through a process, and you have a long-term relationship with a for-profit company, and that makes it a win for everybody.”