Companies around the world engage in community investment as a way to manage their risks and socio-economic impacts, and to promote local development to benefit stakeholders. For the private sector, community investment—a subset of overall social performance and socio-economic management—is a tool for collaboration and partnership to better manage the long-term risks and impacts from operations that the company cannot manage alone. Strategic approaches to community investment seek to maximize the development impact of benefit sharing between the company and local stakeholders.

Building partnerships with government, civil society and community groups is a fundamental tool for implementing a company’s community investment approach. Companies need to be careful not to overstep their role by taking on programs and services that are the responsibility of government and communities. Effective partnerships are expected to add value to what each partner could achieve alone. Strategic partnerships can help define local priorities for social investment, assign responsibilities, apportion costs, mitigate risks, establish accountabilities, improve productivity and resolve conflicts. Ideally, partnership avoids duplication of effort, capitalizes on each actor’s expertise and pools resources to tackle the most challenging and complex social and business problems. Partnership is nonetheless challenging, requiring significant communication and commitment from all parties.

Another tool to support local development is community-level foundations to channel and oversee funds. Community foundations collect donations into a coordinated investment and grant-making facility committed to the social and economic development of a particular place or region.