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Six Best Practices For Small Businesses To Give Charitably

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Donating to a worthy cause can benefit your business.

In 2017, about 75% of small businesses donated to charity. Small businesses should not forgo their opportunity to be charitable just because they’re small. In fact, despite the new tax laws put into place this year, donating to a worthy cause can actually help your business.

Why should small businesses give to charity?

There are several reasons why small businesses should give to charity. First of all, charitable giving creates a positive relationship with the community, which is the very thing that sets them apart from larger corporations. Small businesses thrive on community involvement, and giving to a worthy cause is a great way to stay on the radar. Millennials, in particular, are attracted to companies that donate toward making the world a better place. Giving also provides an easy way to connect with customers or other organizations for potential future partnerships.

The obvious reason for charitable giving is to genuinely want to make a difference to a particular issue or cause that is meaningful to the business owner(s). Internally, donating to charity is a great way to engage employees and help build a positive organizational culture, both of which are critical for employee retention in this economy.

Best practices for giving to charity

Giving for small businesses may seem like a challenge, compared to large corporations that give hundreds of thousands – or even millions – of dollars to various causes. But while it may take some extra thought and research, intentional giving by small businesses can still have a huge impact.

Here are six best practices for small businesses to give charitably:

1. Pick a cause that is truly meaningful to the company. This could be a cause or organization that is personally important to the owner or employees. There is no shortage of need or nonprofits to support, and people are more likely to give generously when they feel a connection to the issue.

2. Align the mission of the charity with the mission of the company. It certainly makes a lot more sense for a pet store to donate (both money and product) to an animal shelter than to, for example, early childhood education or the symphony, even though both are important.

3. Do your homework. Just because an organization is well known doesn’t mean it’s well run. There are many websites that provide a tremendous amount of information about nonprofits, such as GuidestarCharity Navigator and the Better Business Bureau Wise Giving Alliance. You can also pick up the phone, call the organization and ask to speak to the executive director. Nonprofit leaders should be happy to talk with potential donors about their organization and their impact and should be especially interested in building relationships with local businesses.

4. Develop an ongoing relationship with the charities you support. Don’t limit giving to the end of the year. Talk to the nonprofit about ways you could help year-round, such as volunteering, sponsoring events and inviting the charity’s CEO to speak to your local business associations. And remember, this is a two-way relationship. Ask the charity if there are easy ways they could publicize your support, such as in their donor newsletters.

5. Engage your employees. You can involve your employees in many ways — helping you identify potential issues to support, helping you select which charities to give to, volunteering and making their own contributions through a matching gifts program.

6. Anticipate challenges. I was quoted in a Wall Street Journal article where I made the point that small businesses should try to anticipate what might not go as planned. For example, some employees may not want to volunteer or might disagree with your cause. It’s your business and your philanthropy, but you can allow for flexibility.

How much should small businesses give to charity?

There are no set rules for how much to give. What’s most important is that the donations are aligned with the company’s mission and values. While financial giving is important, there are other ways to give charitably as well (such as donating goods and services). The size of the donation is not the only factor to consider. Every dollar counts when given to a worthy, well-run cause or nonprofit organization.

In previous years, certain tax breaks were a major consideration when deciding how much to give. With the new tax laws, there may be fear that giving will decrease, but the fact remains that giving is the right thing to do. The benefits are abundant for givers, from the largest corporation to the smallest business.

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