Volunteering and charitable giving has lots of benefits: helping others in need promotes cooperation and social connection, it makes you feel happy, and it’s also good for your health as it has been found to decrease depression and extend life expectancy. Generally speaking, it’s good for the soul. It’s also good for business.
About three-quarters of small businesses in the US donate an average 6% of their profits to nonprofit organizations each year, and if you’re considering adding your business to that statistic, you’ll be pleased to hear that the act of corporate giving not only benefits the receivers but also the givers, too.
1. It attracts top talent
It’s not just about salary anymore, and it goes way beyond catered lunches, ping pong tournaments, and in-house yoga classes: an organization’s culture, work environment, values, and social responsibility are all becoming major driving factors in Generation Y job seekers’ career decisions. In fact, a 2007 Deloitte study found that 62% of workers between the ages of 18 and 26 preferred to work for a company that provided them with volunteering opportunities.
In other words, giving to charity can attract the type of top candidates you want working for you, and it can also boost employee referrals of like-minded people. Moreover, employees who work for a company that actively engages in charity work will likely instill a sense of pride in themselves and their organization, which can lead to increased employee loyalty and retention.
One way to do that is to offer a matching gift program in your company and double an employee’s donation to a specified charity. For example, if an employee donates $100 to the American Red Cross, the company will match their gift and donate a further $100. Some companies even triple employee donations.
2. It results in free publicity
When Facebook COO Sheryl Sandberg donated $31 million worth of her shares in the social media giant to a number of different charities in November last year, the news spread like wildfire when every big – and small – news outlet shared the story with the world. The same thing happened when Facebook’s founder Mark Zuckerberg announced plans in December that he and his wife Priscilla Chan would give away 99% of their fortune in their lifetime. Meanwhile, Microsoft plans to donate $1 billion worth of cloud computing services to nonprofits, charities, and universities by 2019. While these extraordinary gifts will unquestionably help many people around the world, they also double as free publicity for their respective companies.
Even if you’re a small startup and can’t afford such a huge donation (because, let’s face it: only a very lucky few can), just sponsoring a charity event that aligns well with your business could help you promote yourself in your community. Let’s say you’re a bra manufacturer, for example; sponsoring a marathon for breast cancer research has the potential to increase your company’s visibility while at the same time raise awareness for an important cause.
3. You can get tax deductions
Another advantage of giving to charity is that your business can get tax deductions by claiming your volunteer hours and contributions on your income taxes. By working with an eligible charity, usually a 501(c)(3), you’ll be able to write off any time your business spent volunteering or any monetary gifts it donated.
However, while cash donations, volunteered services, the sponsorship of a charity event, or the donation of inventory or services are all tax deductible donations, remember that the IRS limits tax deductions to 50% of your adjusted gross income. For example, if you donated $600,000 to a qualifying nonprofit and your adjusted gross income is $1 million, you will only be able to claim up to $500,000.
It’s especially important to ensure that you’re working with an IRS-approved charity to be eligible for any tax deductions – you can do that by using the Exempt Organizations Select Check tool – and that you also consult the Federal Trade Commission’s checklist for avoiding charity scams.
4. It increases networking opportunities
One thing that professionals and businesses alike are reminded of is the importance of building and maintaining strong professional networks. Simply put, a company’s professional relationships can help determine its future success. And, believe it or not, charitable work can help in that department.
You can encourage other businesses in your community to participate in the event you’re sponsoring and even invite them to make their own donations to a cause you both care about. This will not only raise more awareness for an important cause, but also allow you to form potentially rewarding business relationships.
5. It generates positivity around your brand
In a 2010 study, Cone Communications found that 85% of consumers had a more positive image of a product or company when it supported a cause they cared about. They also found that 94% of millennial respondents and 95% of mothers who participated in the study believed that it was acceptable for a company to involve a cause in its marketing efforts.
In fact, the more you support a local cause, the better it is for business. You’ll be better able to connect with consumers on a deeper level and thus, create more loyal customers and build your business around your corporate values. Moreover, supporting causes and making charitable contributions will give your brand more stories to tell.
Does your company actively support a charity or plan to do so in the future? Can you think of any other reasons why charitable giving is good for business? Share your thoughts with us in the comments section below!