Supporting charitable causes makes good business sense

The United States is a giving nation.
  
In 2006, according to the Giving U.S.A. Foundation, individuals and businesses donated nearly $300 billion to charity, more than the gross domestic product of all but 33 countries.
  
Eight in 10 American consumers say that support of charitable causes helps earn their loyalty to a store or a brand. This is particularly true among younger consumers, ages 18-25, who say they routinely research a company’s charitable giving and citizenship before deciding to buy.
  
Simply put, giving is good business. Ninety-one percent of all U.S. businesses make charitable contributions. Companies with four to 99 employees almost exclusively restrict their giving to local organizations. Research indicates that every charitable dollar invested returns $2 to $3 to the company’s bottom line.
  
Companies struggling to maintain competitive advantage and brand awareness through traditional promotion channels should take heed. Instead of spending thousands on advertising, it may be smarter to donate and reap the rewards of supporting good causes.
  
In addition to attracting customers, being a good business citizen can also bring qualified, skilled and conscientious employees to your door. People want to work for ethical, caring and compassionate organizations. Allowing employees to participate in giving adds a sense of meaning to their work and wins you loyalty and commitment.
  
In addition to the promotional value of giving, there are also financial reasons to donate to charities. In many cases, contributions your business makes to charitable causes can be tax deductible. Not every kind of gift is deductible, however, so do your research before you make your gift. Generally, donations of merchandise, property and other assets can be deducted in the amount of their fair market value.
  
And if monetary giving is hard for you, give your time and talents to a worthwhile organization, and empower employees to do the same through volunteering. Out-of-pocket expenses associated with the volunteer activity can be deducted.
  
When selecting a charity with which you can participate, do so strategically. In other words, choose one that will give you exposure to your target market. Publicize your giving to the local media. Include a mention of your giving campaign in your marketing materials. Display letters of appreciation in your place of business. Place information about your chosen charity where your customers will see it and pick it up.
  
Other tactics include direct marketing to groups associated with the charity, advertisements in the charity’s newsletters or on its Web site, discounts for people associated with the charitable organization and a preferred customer program for those who give to the same organization.
  
Businesses can be inundated with requests for charitable gifts. Most companies find it helpful to designate one staff member to handle all of the “asks.” This saves time and reduces the possibility of duplicating gifts.
  
While small-business owners are particularly generous, studies of their giving habits conducted by the U.S. Better Business Bureau indicate they are especially vigilant about ensuring that charities make good use of their donations. Sixty-five percent of giving entrepreneurs expect at least 80 percent of their gifts to go toward programs—not administrative of fund-raising costs; 92 percent of small-business owners rank helping the community and society at large as a very important consideration when deciding which causes to support; 72 percent believe that customers’ recommendations regarding charitable causes are a very important factor in the decision; and 83 percent report they also consider the clarity of the program descriptions in the organization’s appeals.
  
We know that on a percentage basis, small companies give far more each year to charitable causes than their large corporate counterparts do. It’s just another reason we need to continue to cultivate small business in our communities. Entrepreneurs are blessed with a tremendous capacity to give back to the towns and regions that helped them achieve success. After all, they have chosen their locations for specific reasons, and they are committed to making them good places to live and work.
  
There are tax and promotional reasons to give; that’s true. But the greater motivation these business owners share is to help their friends and neighbors enjoy a quality of life of which they can all be proud.
  
This time of year, particularly, it’s important to patronize our local entrepreneurs. Our dollars, returned to the community, go further when they are spent close to home. 
  
Mary Paulsell is director of operations for the University Center for Innovation and Entrepreneurship. She can be reached at 882-7096 or [email protected]