Question

Discussion Case: Fidelity Investments’ Partnership with Citizen Schools

Roy Fralin stood in front of a roomful of active sixth and seventh graders in an inner-city public school in Roxbury, Massachusetts. The classroom walls were covered with flip chart paper, which were packed with diagrams, numbers, and terms like “savings,” “budget,” and “investment.” A student stood at the front of the classroom. Fralin handed him a baseball cap to illustrate a loan with interest. “OK, when you give it back, you’ll owe me how much?” Another student shouted out the answer. “Great!” exclaimed Fralin. They exchanged high fives. “Now, how much are we putting away for your 401(k)?” The students punched their handheld calculators.

Fralin was not a public school teacher, and teaching personal finance to middle schoolers was not his regular job. He was a vice president and investment advisor at Fidelity Investments, where he worked mostly with high net-worth clients. But here he was, every Wednesday afternoon for 10 weeks, teaching a curriculum that Fidelity employees had developed called “How to Invest Like a Millionaire.” The program was part of a partnership between an innovative nonprofit called Citizen Schools and Fidelity Investments, one of its corporate partners. “I just don’t see any downside,” Fralin later reflected in a clip posted to YouTube about his experience as a citizen teacher. “I think this is going to be a success.”

In June 2015, Fidelity Investments was one of the leading providers of financial services in the world, administering $5.2 trillion in assets for 24 million individual and institutional clients. The company, which was privately owned, offered investment management, retirement planning, portfolio guidance, brokerage, and benefits outsourcing services. It also operated its own family of mutual funds. Fidelity maintained its headquarters in Boston, Page 415but had 10 regional operating centers and about 180 retail locations. In 2015, the firm employed 41,000 associates.

In 2009, Fidelity set about rethinking its approach to community relations. For many years, the firm had been philanthropically active, giving to a wide range of charities in its home community and elsewhere. But the company had come to believe that it could have a greater impact by focusing on partnerships with a small number of what it called “best in class” nonprofit organizations. An issue of particular concern to Fidelity was education, especially the shocking dropout rates in many of the communities it served; nationally, 1.2 million students dropped out of high school every year, many of them as early as ninth grade. In researching various options for making a difference, the company learned that the middle school years were critical in determining whether or not students would go on to graduate from high school.

To focus its resources on this issue, Fidelity chose to partner with Citizen Schools (CS). Social entrepreneur Eric Schwarz had founded CS in 1995 in Boston to operate after-school programs for middle school students, aged 11 to 14, in disadvantaged communities. The nonprofit recruited volunteer professionals—“citizen teachers”—to offer after-school apprenticeships in subjects they were passionate about in schools in the CS network. As a culminating experience, students would present what they had learned to friends, family, and teachers at what CS called “WOW!” events. In 2015, Citizen Schools had active partnerships with 29 schools in low-income communities in seven states, serving more than 4,800 students.

Fidelity had contributed money to Citizen Schools since 1998, but in 2009 it significantly stepped up its commitment and the company went beyond charity, encouraging its employees, like Roy Fralin, to teach in Citizen School programs. By 2015, Fidelity volunteers had taught more than 180 apprenticeships in such wide-ranging topics as robotics, law, and financial literacy in 34 middle schools. More than 1,500 associates had volunteered over 20,000 hours of volunteer service. Several executives served on various advisory boards. The company also donated meeting space and equipment. For example, students who had learned about web design from a Fidelity employee were invited to use the Fidelity Center for Applied Technology for their WOW! event, presenting their work in a state-of-the-art facility.

An external evaluation commissioned by Citizen Schools showed that its programs had “successfully moved a group of low-income, educationally at-risk students toward high school graduation and advancement to college, and [had] set them up for full participation in the civic and economic life of their communities.” Seventy-one percent of Citizen Schools alumni completed high school in four years, compared with 59 percent of matched peers. Sixty-one percent of students who had participated in their 8GA (8th Grade Academy) program five or more years earlier had enrolled in college, compared with 41 percent of low-income students nationally.

Fidelity indicated that in an internal survey, 89 percent of the company’s employees who had participated in the Citizen Schools partnership reported feeling more connected to their colleagues, 78 percent reported improved team-building skills, and over three-quarters reported having improved communication skills. Most importantly though, Heidi Siegal, Fidelity’s vice president for community relations, noted, “Our employees and our company enthusiastically support Citizen Schools because we know that they make a unique and significant impact on the lives of students in need.”

Sources: Corporate Voices for Working Families, “Fidelity Investments” (case study), 2012, at http://employmentpathwaysproject.org/wp-content/uploads/2014/04/Fidelity-and-Citizen-Schools-5.9.12.pdf; “Fidelity Investments,” at www.citizenschools.org/investors/current-investors/fidelity-investments; “Teaching Kids to Invest Like Millionaires,” [Roy Fralin], at www.youtube.com; “Guest Blog: At Citizen Schools, Volunteers Make STEM Relevant through Web design,” at www.educationnation.com; and private correspondence with representatives of Fidelity Investments and Citizen Schools. The website of Citizen Schools is at www.citizenschools.org. The website of Fidelity Investments is at www.fidelity.com.

Page 416

Discussion Questions

1. What evidence do you see in this case of the three kinds of corporate philanthropy discussed in this chapter: contributions of cash, in-kind products or services, and employee time?

2. What are the benefits and risks to Fidelity Investments of its partnership with Citizen Schools?

3. Do you consider Fidelity Investment’s partnership with Citizen Schools to be an example of strategic philanthropy, as defined in this chapter? Why or why not?

4. If you were a community relations manager for Fidelity Investments, how would you evaluate the impact of this partnership? What kinds of impacts would you attempt to measure, and why?

Answer 1

1) The three kinds of corporate philanthropic activities i see in this case are :

The lectures at the non profit organisation "Citizen schools program" to the college level students provided by the vice president and investment advisor at the Fidelity services corporation as a result of partnership between them. Every Wednesday afternoon for about 10 weeks teaching a curriculum that fidelity employees developed for that non profit organisation called "how to invest like a millionaire" would count as a philanthropic activity in kind.

Another philanthropic activity of fidelity investments in the form of cash is well reflected by the case mentioning about giving a wide range of charities since many years to its home community and elsewhere.

Now Fidelity investments believe that the company could have a greater impact in contributing to the philanthropic activities through focusing on partnerships with a small nonprofit organizations which will act as a double edged sword on one hand resulting in philanthropic activity and on the other strengthening the position of company.

This served as encouraging the students towards education after realizing the shocking dropout rates in many of the communities it served.

Moreover the major focus of Fidelity Investments Services was to consume its resources on this issue, Fidelity chose to partner with Citizen Schools (CS). Social entrepreneur Eric Schwartz had founded CS in 1995 in Boston to operate after school programs for middle school students, aged 11 to 14. This will also count as an evidence of philanthropic activity.

The company also donated meeting space and equipment. For example, students who had learned about web design from a Fidelity employee were invited to use the Fidelity Center for Applied Technology , this also encouraged students towards attaining higher education.

2) The benefits of partnering of fidelity investment with the citizen schools are:

Preparing future investment experts and analysts by providing the necessary training and deep conceptual learning to students in need, who might work in future for the corporation.

Philanthropic activities will encourage and create goodwill and recognition for the corporation , thus attracting the top talents as well as raising the morale of current employees resukting in employee commitment abd loyalty.

The customer base will increase as a result of good name and good word due to the partnership with non profit organisation which will present a view of being ethically and morally rich and will refkect the corporations focus on social welfare and welkbeing.

Negatives of partnership :

Use of resources like physical space or human staff for contributing towards the welfare of the non profit organization who otherwise would have contributed for corporation and for out maximization.

Consumption of precious time for taking lectures in the citizen school programs which might have been used for decision making or other important activities of corporation.

The risk of interference in decision making , policies and laws or power sharing with the partnered organisation , they might dictate the terms not favourable for the coeporatuon.

Moreover the fidelity investments due to the work overload might not be able to fulfill the agreement made with these non profit associations.

3)Yes i consider the Fidelity Investment’s partnership with Citizen Schools to be an example of strategic philanthropy, as this partnership acted as a double edged sword for the corporation. On one hand it acted as a philanthropic activity and on the other it benefitted the corporation in terms producing goodwill , preparing future analysts, contributing to the higher education as well. This strategy enabled the business to build a reputation , recognition and be known as a brand. Associating with these reputed non profit organization , it created recognition among masses for being known for providing loyal and quality services resukting in wide customer base believing these services to be reliable and in favour of social wellbeing.

4) I would have measured the impact in terms of qualitative terms through analysing and evaluating the impact of fidelity services partnering with non profit organizations on customer base , recognition, good will , employee turnover, employee loyalty, customer satisfaction etc.

Thankyou

Hope i explained well in limited time

Comment for confusions. Good luck