Commerce, Community & Charitable Giving

For many local businesses, the desire to better their community and the lives of the people within it leads to very tangible actions. Small local businesses are a major driver of local charitable giving. Varied studies have determined that small businesses donate 250% more than larger businesses to local charities, and 75% of small businesses donate an average of 6% of their pre-tax profits to charity.

This article will focus on why small businesses give and list some of the practical ways that they can make a charitable impact in their community.

What Motivates a Local Business to Give?

Doing good can be good business. A variety of factors go into why charitable giving can play an important role for a local small business:

• The Value of Community: For many small business owners, a desire to improve  the community they live in, where their business operates, and where their customers live is a straightforward and sincere desire. It allows the business to be regarded as a community asset, not just a vendor looking to make a sale.

• Business Advantage: Giving to charity can lead to enjoying a positive public image. In turn, that can lead to customer loyalty and increased sales. Customers may exhibit a preference to companies that they know give back to better the community. This also allows a business to build better relationships with other like-minded local businesses.

• Employee Team Building: Having employees engage in volunteer efforts during a workday  can build camaraderie and can make employees feel satisfied, loyal and productive.

• Financial/Tax Advantages: Similar to individuals, businesses can claim tax deductions for their charitable giving.

The “How”: Practical Ways for Local Business Giving

Businesses can support local giving in a variety of ways:

-Direct Financial Contributions: Cash gifts, be they lump sums or recurring, are a prevalent way to give. Another aspect of this is corporate sponsorship, in which a business gives to a specific cause or event with the expectation that they will receive a specific brand exposure / name mention. Charity galas, 5K races, youth sports teams, and community festivals are all prevalent examples of sponsorship.

-Customer-Facing Campaigns: This tactic involves attempting to increase sales by tying to charity. Examples include “round up” campaigns that encourage a customer to round their purchase up to the next dollar for charity or offering a percentage of sales on a specific product or day as a donation to a cause.

-In-Kind Giving: In this example, a business can donate goods/products from their business to a cause. Skills based giving, such as the donations of service/expertise is another route.

-Employee-Focused Programs: Employees can be a source of charitable generosity. A previously mentioned, company-wide volunteer efforts ( such as helping at a food pantry or at a park clean-up) are a means to give back and build employee morale.

Additional programs include:

-Donation Matching: the employer matches gifts that employees make to charity

-Volunteer Grants: a company will donate a set amount of dollars to a charity based on the number of hours an employee has volunteered

-Giving Committee: This is an employee-led committee that is responsible for corporate giving decisions. Its function includes vetting potential charities and determining the specific gift amounts and recipients. Often, the selection process requires employees to submit formal grant applications, which determines the non-profits considered for a donation.

Conclusion

Regardless of the motive or method, local business giving has established itself as a powerful force for community improvement. At Generosity Nexus, we have the experience to help guide a business on what type of giving may make the most sense for the community they serve. In turn, we also help local causes prospect better on how to gain value and support from their local business community.

Feel free to contact us and see how we can help.