Benefits of Giving to Charity
It feels good to give. But what other benefits do you, as a small-business owner, receive from charitable giving? Highlighting what your company is dedicated to, including giving to charity and participating in community philanthropic events, can provide prospective employees and customers with an understanding of your company values. Did you know that 85 percent of consumers have a more positive image of a company that supports a cause they care about?2
The Positive Effect on Employees
As for employees, those who react favorably to their employer’s charitable activities are five times more likely to remain with their company.3 And, when employees can volunteer with their colleagues in workplace-supported programs, they report stronger relationships with co-workers.4
Looking for the Right Fit
When considering a year-end donation, the charity you choose should be a good fit for your company. That could mean supporting a cause related to your business and customer base. A gourmet market, for example, might donate to a food bank.
Act Local
To boost local brand awareness and customer relationships, consider choosing a charity based in your community, rather than a large, national one. In addition, ask employees for suggestions, even putting the choice up for a vote. This can boost morale and demonstrate how much your team’s opinions are valued.
Ways to Be Philanthropic
While donating revenue to charity is impactful, there are other, more creative ways to be philanthropic. Consider gifting a certain percent of the bonus pool to a charity. Or commit to donating a portion of revenues based on a set period or on the sale of a specific product. You might also match monetary gifts made by your employees.
Startup Philanthropy
To make charitable giving part of your company’s DNA, early-stage startups can work with such nonprofits as Pledge 1%. This organization encourages companies to give 1 percent of their product, revenue and/or corporate time to charitable causes. Additional alternatives include sponsoring a special event, like a 5K race, donating products for a silent auction or volunteering at charities alongside your employees.
Best Practices for Deductions
When it comes to taking tax deductions for your donations, an accountant’s advice is necessary because contributions qualify only under certain conditions. To deduct a donation, you must contribute to eligible charities, which generally are registered as 501(c)(3)s with the Internal Revenue Service. Typical IRS-sanctioned donations include cash, volunteered services, sponsorship of a charity event or the donation of inventory or services, but each category has limitations. For example, while you’re not allowed to deduct the value of your volunteered service, you can deduct supplies and other expenses incurred.5 And keep records, ideally for seven years, in case of an audit, including a written statement from any organization to which the company has donated.6
