June 15, 2009

By Charles Waltner

When it comes to corporate philanthropy, Cisco Systems sticks to what it does best.

By relying on the same sensibilities that have made it one of the most successful corporations of its generation, Cisco combines its knowledge of networking technologies with its organizational acumen to help "raise the capacity" of promising non-profit organizations. Paramount to all efforts, Cisco and its non-profit peers focus on mutual respect and open, active communications (see Part I).

But from that critical foundation, Cisco carries out its philanthropic partnerships program like any other aspect of its business. "The Cisco Way" is defined by thorough assessment, meticulous management methods, disciplined execution of a consistent strategy, and, of course, benchmark measurements.

Cisco prefers to work with non-profits that show great potential, helping them "incubate" their ideas until they take flight. The company not only invests money but also its technology and its people to assist non-profit partners as best as possible.

"We could just write checks, but what's the point?" says Alex Belous, a manager in Cisco's philanthropy operations. "A lot of companies already do that."

Certainly, Cisco believes it knows a thing or two about how to use technology to help organizations work better. And so as part of its philanthropic strategy – what it likes to call "social investment" – Cisco seeks partners that could most benefit from its unique expertise and resources.

Investing in Ideas

There's more than an echo of venture capitalism in the way Cisco, a Silicon Valley stalwart, approaches partnerships with non-profit "start-ups." "We're looking to invest in great ideas," says Mike Yutrzenka, executive director of the Cisco Foundation. "We want innovative partners."

Specifically, Cisco looks for non-profits that focus on one or more of its philanthropic priorities: promoting educational and economic development, meeting basic human needs, and providing crisis relief.

To find such partners Cisco methodically assesses potential or ganizations for the right fit. Anyone can call on Cisco, but the company aims to have fewer but deeper relationships with a handful of non-profits, typically working intensively with them for three to five years.

Some of the stars of its current portfolio of partners include One Economy, MIND Research Institute, Teachers Without Borders, and Community Voice Mail.

Cisco uses a core set of criteria to evaluate potential non-profit partners. Above all, Internet-based technologies should play an important role in the organization's operations, says Peter Tavernise, a senior manager in Cisco's corporate affairs group.

Also, the operational model for any non-profit must be scalable, so the organization can grow to help as many people as possible. And it must be replicable, so its social services can be copied by others and used in other countries or situations. Finally, a non-profit's operations must be sustainable. Cisco is looking for long-term concepts that can thrive well after the company has made its last donation.

"We're not interested in great one-off projects," Tavernise says. "Eventually they've got to run under their own power."

Making the Match

Tavernise notes that it does require a certain kind of non-profit to work with a large, global corporation such as Cisco. Certainly, corporate ways can be strange and frustrating to outsiders. The culture match is key, he says. "A good partner for us also has to appreciate what we bring to the table."

When Cisco is reviewing a non-profit candidate, a group of six to eight employees – usually a mix of philanthropy staff and topical experts within Cisco – score and assess the non-profit's fit with Cisco's criteria. "Like any relationship, it's all about asking the right questions up front," Tavernise says.

This extensive process can last a couple of months and is the precursor to a four-stage development cycle. The first stage encompasses the incubation time when Cisco and its partners put together the plans, the strategies, the tactics, and the benchmark metrics that will define their cooperative campaign.

During this period, Cisco and its partner set up a series of "smart objectives." These outline what Cisco and the non-profit want to accomplish together. With such clear goals, both parties can prioritize projects and have a shared touchstone to gauge the effectiveness of their collaborative effort, Belous says.

But recognizing the limits of business performance metrics on social investments, Cisco looks for a mix of both data and anecdotal evidence. Despite the challenges of measuring good intentions, Cisco nevertheless expects non-profits to somehow quantify their effectiveness, Belous says. As part of its agreement with its partners, Cisco works with them on how to measure and report development of their programs.

After the preparation stage, the two parties move to an initial implementation stage, where Cisco and a non-profit pilot the program and adjust operations as necessary.

Once both are satisfied with how the partnership is working, they then move to stage three: full-scale deployment of the program. Cisco will team up with non-profits at any of these first three stages, depending on the maturity of the non-profit's program.

As a successful partnership gains its footing and the non-profit builds organizational fortitude, the partnership enters the final stage when Cisco provides an exit grant and other assistance to help a non-profit carry on under its own power. "That's the toughest test of all," Belous says, noting that not all of its philanthropic partnerships make it to this final stage.

The Case for Strategic Philanthropy

Philanthropy has been an important part of Cisco's operations since its early days when employees "adopted" an elementary school neighboring its first headquarters in East Palo Alto, Calif. But during the past seven years, Cisco's social investment efforts have increased significantly in their scope and geographic reach – now spanning the globe (see chart).

Much of that growth – which matches the company's rapid expansion during the decade – is thanks to the success of Cisco's strategic relationships with non-profit organizations.

With the help of its philanthropic partnerships, Cisco is now undertaking much more ambitious efforts, such as its 21st Century Schools initiative. The $80 million, three-year program focuses on bringing modern networking technologies to dozens of schools in Louisiana and Mississippi that are rebuilding after the devastation of Hurricane Katrina.

Cisco is also recruiting its strategic partners to assist in pioneering social efforts around the world. The company, for example, called on Teachers Without Borders to offer insights on how to help China's schools in the aftermath of the Sichuan province earthquake.

The networking giant is also tapping its non-profit partners to assist with major, long-term international programs, such as The Partnership for Lebanon, the Clinton Global Initiative in sub-Saharan Africa, and the Digital Cities project to improve relations between Israel's Jewish and Arab citizens.

Mark Kramer, the managing director of FSG Social Impact Advisors and a senior fellow at Harvard University's John F. Kennedy School of Government, says a strategic approach to philanthropy like the one practiced by Cisco can provide a host of advantages not only for society but for businesses as well.

Cisco's close partnerships with non-profits, for example, are helping the company gain a better understanding of various markets and industries, while providing valuable hands-on management experience for promising employees who participate in the company's Leadership Fellows program.

To develop a strategic approach to philanthropy, Kramer advises corporations to look for the major intersections where a company's interests and society's needs meet. In Cisco's case, it wants to cultivate healthy markets. By helping improve access to such basics as food, shelter, healthcare, education, and employment, the company hopes to create stable communities in which it can thrive as a business and as an employer.

Kramer says such a strategic approach sets up the classic win-win that holds benefits for everyone involved. Certainly, that's how Dr. Fred Mednick, founder and president of Teachers Without Borders, views his company's partnership with Cisco.

For a year, Sima Yazdani, a highly regarded 14-year veteran of Cisco, worked as a Leadership Fellow at Teachers Without Borders. Cisco paid her salary while she helped the non-profit develop strategic initiatives and Web-based knowledge tools. 

In return, Cisco's Yazdani received invaluable management training through a "hard knocks MBA." "It's amazing what I learned just in the first month," she says. "The unique demands of the job helped me discover hidden talents."

Mednick says it was great to watch Yazdani grow professionally and personally. At the same time, his organization received much needed management and technology assistance. "What ended up happening is that we both got stronger," he says.

Charles Waltner is a freelance writer in Piedmont, Calif.