Effects Of Corporate Social Responsibility On Organisations' Profitability Of The Banks Listed On Nairobi Securities Exchange

ABSTRACT

The concept of corporate social responsibility has prevailed since time immemorial

and has for a long time paved way for organizations' to have moral, ethical, and

philanthropic responsibilities in addition to their responsibilities to earn a fair return

for investors and comply with the law. For a long time, corporate social

responsibility has raised issues on who actually benefits from the CSR initiatives.

Business analysts have documented that CSR benefits the organization by pushing

the business to the next level while at the same time benefiting the society. CSR has

been associated with financial performance for organizations but this area has not

been well researched. The main objective of this study was to assess the effects of

corporate social responsibility programs on organizations' financial performance in

Kenya. The study will help both private and public companies to realize the need of

establishing CSR for achievement of the competitive advantage and improved

performance. The study was carried out at Kenyan commercial banks listed in NSE.

The research instrument was an interview guide and data was collected through a

drop and pick later method of the questionnaire. The data was then be analyzed and

the findings recorded by use of tables and figures. The process involved tallying up

responses, computing percentages of variations in response as well as describing and

interpreting the data in line with the study objectives through use of SPSS. Data

analysis was based on the findings on amounts spent on health, education,

environment and sports for six years compared to the profits realized by the banks

over the period. The results are based on a response rate of 100% (n=l1).The

dependent variableswere found to have a positive correlation with profitability.

Sports CSR having P (value=0.97) was the most significant variable impacting CSR,

followed by environmentandeducation with P (value=0.87) and P (value=0.54)

respectively. However health with P (value=0.17) was the least impacting variable.

The study concludes that CSR has a positive impact on an organizations financial

performance and recommends that the banks should have a well-planned and

effective CSR approaches in order to enhance brand and company reputation as well