BOARD PAPER

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Boardpaper

Agenda Item: Incrementof CSR funds

Sponsor: 35050

Draft Resolution Thisis a proposal to increase the funds allocated for the corporatesocial responsibility of the company absorption of therecommendations of this briefing will lead to efficiency of theimplementation of the CSR program. It will also increase thevisibility and the scope of the target customers thereof.

  1. Executive Summary:

This briefing gives a brief summary ofthe CSR issue Identified. The issue is the shortage of fundsallocated to the program which is impediment to its implementation.The briefing also gives recommendations to the stockholders withspecific recommendation of an increment of 30% of the current CSRfunds allocation. It concludes with explaining some of theimplications to the stake holders which include a reduction of thedividend value in the short term.

  1. Background:

Equity Bank started a CSR program thataims at offering an opportunity of education to the less fortunate inthe society1.The CSR program sponsors needy but bright students through elementaryschool all the way to the university. The program initiated threeyears ago has been successful enrolling over one thousand students inthat short duration. Nonetheless, there has been an issue of funds.The CSR department has been overwhelmed by the requests that it hasreceived over time. The program has gained widespread popularity andhence many applications. The Department is therefore concerned thatit may need an increment of funds to accommodate the students. Whileit may be viewed as a cost, CSR increases the visibility of acompany. More people get to know about the company. The visibility inturn ensures that the products of the company are highly consumedsince they many people get to know about the company.

  1. Recommendation:

The board should consider allocating partof the profits to the CSR program. Increasingthe allocation by 30% would not only ensure that the current studentsin the program will get sufficient supply of their learningmaterials, but will also ensure that the program will accommodateadditional students projecting the rate of more students at 10% morethan the preceding year.2That way the company will cater for growth of the CSR program it willalso ensure that the company executes the promise it gave to thepublic of educating needy students who met the set criteria.Fulfilling this promise will build the corporate image of thecompany, and increase the profits.3It will also increase the value of the shareholders. Share value willincrease due to high demand of shares.

  1. Implications of non-action and of the recommendation:

In the instance the company does notadopt the proposed recommendations there is a possibility of theprogram failing since the funds are the driving force. That wouldpaint a bad corporate image for the company.4The implementation will affect the stockholders.5In that if there will be an allocation of more funds to the CSRprogram then, the profits will decrease and consequently thedividends. The profits will decrease in the short term but willincrease in the long run. Therefore, it is in the best interest ofthe company to adopt the recommendations for efficiency of theprogram.

1 http://equitybankgroup.com/blog/2015/01/wings-to-fly-2015

2 Martínez-Ferrero, J, Banerjee, S, &amp García-Sánchez, I 2016, `Corporate Social Responsibility as a Strategic Shield Against Costs of Earnings Management Practices`, Journal Of Business Ethics, 133, 2, pp. 305-324.

3 Gonzálezrodríguez, M, Del Carmen Díazfernández, M, Spers, V, &amp Da Silva Leite, M 2016, `relation between background variables, values and corporate social responsibility`, rae: revista De Administração De Empresas, 56, 1, pp. 8-19

4 Simionescu, Ln 2015, `the relationship between corporate social responsibility (csr) and sustainable development (sd)`, internal auditing &amp risk management, 10, 2, pp 179-190

5 Du, S, Bhattacharya, C, &amp Sen, S 2015, `Corporate Social Responsibility, Multi-faceted Job-Products, and Employee Outcomes`, Journal Of Business Ethics, 131, 2, pp. 319-335

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