Charitable giving is something we’re often asked to do, not only as individuals, but especially as businesses. It’s assumed that if you are in business, you must have deep pockets.
When I was freelancing, I received an envelope in the mail. In it was a sales sheet requesting that my small business purchase advertising space in a local dance school’s annual recital printed program. I chose not to participate. Not because I didn't dance. Not because I didn't like the school. I chose not to participate because the likelihood of garnering business for my marketing and web design company was practically nil. As a business-to-business organization, my corporate giving needed to be directed toward those who were making decisions for other businesses. Although those decision makers may be in attendance at a dance recital, their attention at that time is not on corporate matters. In short, it did not make sense for me to spend money in that kind of publication.
Giving can help or hinder a business. It is all in how you manage it.
Whether you are reaching into your own wallet or the company coffers, giving is a decision. No matter what level of success you have achieved in business, whether you have been in business for 30 years or you have just opened your doors, you will be asked for donations and sponsorships. It does not matter if you are a multi-million dollar company or a solo entrepreneur just making ends meet — people and organizations will ask for your help.
Why does this happen?
- People will assume that you are successful simply because you are in business.
- People equate success with wealth.
- Charitable organizations survive on donations and sponsorships.
So what do you do? How do you choose?
The biggest companies — the ones making millions and even billions of dollars — are really good at saying “no.”
In fact, big companies are more judicious in their charitable giving than most small businesses are. Why? Because they get more requests. They are highly visible, so more people are aware of them and think of them when needing donations and sponsors. Being judicious does not mean that these companies aren’t giving charitably — it just means that they have processes and internal policies to follow.
By establishing a defined process and internal policies for charitable giving, companies remove ambiguity and emotion from the decision-making process, and remove the sting sometimes associated with a denial response.
Some of the ways that that big businesses process donation requests:
- They establish a donation/sponsorship request procedure. These companies require that requests be submitted in a consistent manner. Whether through a form on their website, or requiring a request in writing with specific criteria and questions answered, these companies make sure that all required questions are answered and that there is a paper trail for all requests and responses.
- They complete due diligence. Big companies make sure that the requestor’s organization meets their country's definition of a charitable organization (holds 501(c)3 status in the USA, for example). This will ensure that any donation is a potential tax benefit (i.e., a write-off).
- They create a committee to determine eligibility. Companies who field requests for donations often establish a committee of three to five employees who evaluate each request on a predetermined schedule, and reach consensus on the requestor’s eligibility, amount of donation, and timeline for fulfillment. Having a committee removes the burden of decision from one individual, thus making it a more fair and even process.
- They establish charitable giving budgets. Large companies establish budgets with specific guidelines. Creating a budget establishes boundaries, allowing for the ability to say no when the budget is exhausted. Budget policies may also include setting limits per request fulfilled, making it possible to address the needs of more non-profits. Policies help keep a company’s total charitable expenditures within budget.
- They choose charities that meet specific criteria. A charitable giving policy will also include criteria around the types of organizations they will gift. A policy may include a basis regarding what the charity promotes, how long the charity has been in business, and whether the charity is global versus local. For example, a sporting goods company may choose to prioritize giving to youth sports organizations over musical programs, whereas a company like like a grocery store chain may not have criteria in that regard at all, but instead, may limit their giving to company gift cards in lieu of a cash donation. Larger companies may also choose to give to larger non-profits instead of smaller local organizations, seeking the name recognition associated with giving to a nationally-known organization.
- They’re not afraid to make it known. Obviously, charitable giving is good for the non-profit organization receiving donations, but it is also good for the company choosing to be a donor or sponsor. Charitable giving creates good will, and in turn can help a business gain publicity and increase public relations simply by making clients/customers feel good by shopping at an organization that is charitable. This only works, however, when the information is public and the clientele is aware. Big businesses use multiple media tracks to share their charitable giving decisions.
So how can a small business practice charitable giving like a big business?
- Set your own policies. Create an avenue by which requests must be processed. This will help funnel requests through your process, making it easier for you to make an informed decision. Set up a page on your website that addresses the specific criteria for consideration, and requiring all the appropriate information be submitted.
- Make sure your donation is tax-deductible. Ensure that any organization you give to is a registered charity so that your donation helps you financially, too. Make sure that your tax preparer has all of your charitable giving records, including all receipts from the non-profit organization. (NOTE: in most cases, donation of services does not qualify as a taxable deduction. When in doubt, consult with your tax preparer in advance of donating services.)
- Make sure that your charitable giving doesn’t impede your ability to do business. It’s hard to say no. You want to be nice, and do as much as possible for as many as possible, but giving beyond your means will only inconvenience (or even negate) your ability to do business. Do not impair your cashflow in an attempt to be all things to all people.
- Choose based on your selected criteria. You decide what kinds of organizations you want to support. Maybe education is your go-to, or cancer research organizations, or children’s charities, or animal shelters. Make decisions in advance concerning what types of organizations you will (and those that you will not) support, and then set policies to guide your giving.
- Sing your own praises. Did you make a donation? Did you sponsor an event? Make sure to get the word out. Send out press releases. Put it in your client newsletter. Post it on your social media. Make it known that your business has a heart. Customers are more likely to spend money with a company when they know that their purchase supports others in need.
In my freelancing days I received requests for donations, advertising sponsorships, free consulting and web design from many charitable organizations. As a small business, my budget and time was limited, so I was very judicious in giving away money or time without an apparent expected return on my investment. I also had a narrow group of categories for which I was willing to make a donation, choosing charities that were near to my heart in some way (i.e., women’s organizations and educational institutions).
Above all — be empowered to say yes and to say no. Your job is not to save every charitable organization, no matter how wonderful they are and how hard they tug at your heartstrings. Your job is to fulfill your mission statement.
So go ahead and give, but do it according to the rules you establish for yourself and your business.