Q: I operate a gay-owned business and want to make charitable giving part of my business planning. Can you talk about how business owners can support local communities?
A: First, I want to thank you for your commitment to business philanthropy. Many local organizations, including LGBT organizations, benefit greatly from this type of support. And your business can benefit at the same time.
Small business is a potent but often overlooked supporter of charity. Virtually all U.S. businesses with one-249 employees contribute to charitable organizations in some fashion. Small businesses are also passionate in their support of local community causes and place humanitarian concerns above all else when deciding which charities to support.
These and other findings are from a study commissioned by the National Federation of Independent Business. The National Small Business Poll provides a comprehensive look at the current philanthropic practices of small businesses and may help to inspire your own giving strategy. Below is a closer look at some of the study’s highlights.
Giving takes many forms
Small-business owners universally give money. For example, 70 percent of those who participated in the survey said they had donated cash — with the average donation hovering around $3,600. But charitable activity among small businesses was by no means limited to check writing. More than two-thirds (70 percent) said their company supported charities through in-kind contributions of products and services. Seventy-four percent indicated they had participated in a variety of fundraising events — from purchasing advertisements in charity event publications and sponsoring youth sports teams to attending benefit dinners, walkathons and charity auctions.
A focus on the bottom line
Small-business owners generally have great expectations with regard to how charities manage the contributions they receive. For example, factors that might influence giving decisions include knowing how a charity spends its money (including how truthful and accurate a charity is in its fundraising appeals), how successful a charity’s programs are in achieving its stated mission and how willing a charity is to disclose information about its operations. In addition, many small businesses expect the bulk of a charity’s total expenditures to go to its programs as opposed to fundraising activities.
Top charitable sectors supported by small business: Education/schools — 73 percent Civic organizations — 64 percent Religious organizations — 64 percent Athletics/sports groups — 58 percent Environmental groups — 18 percent
Source: National Federation of Independent Business, National Small Business Poll Values-based giving
Small-business owners are motivated to give by personal satisfaction as well as the desire to improve their communities. More than one-third of those polled (36 percent) said helping the community become a better place to live is very important to their giving decisions, compared to 41 percent who cited personal satisfaction. A values-based approach to giving can enhance a company’s reputation with customers. In fact, consumer-spending data show that, when all else is equal, people prefer to buy from a company associated with a good cause.
Good works are their own reward
Happily, it is not difficult (or expensive) to align your charitable activities to benefit your community, your employees and your business. Following are some guidelines for your consideration:
Start small. When establishing a charitable-giving strategy, select organizations where smaller contributions and limited resources can have a substantial impact. You’ll generate interest in a lesser-known cause and see firsthand how your efforts can make a difference.
Lead with your heart. Select an organization or cause you are truly passionate about and whose mission complements your company’s goals. The more you care about the cause, the richer and longer lasting your contributions may be.
Work with your head. Your charitable involvement should reflect your business’s core competencies — services, products and areas of expertise — and resonate with your customers. For instance, if you run a restaurant, support an anti-hunger campaign. If you own a bookstore, support the public library or a local literacy program.
Inspire employees. Committing to a charitable-giving program demonstrates to your employees that your company doesn’t exist solely to turn a profit. By investing in the community, you improve employee morale, build a stronger focus on teamwork and may even inspire employees to get involved in charitable initiatives.
It’s clear that small businesses support charities in a wide range of conventional and unconventional ways. Whatever approaches your company embraces, work to create a long-term partnership with the organizations you support. Such a relationship will heighten community awareness for the cause while creating goodwill — and potentially increasing profits — for your business.
Jeremy Gussick is a financial advisor with LPL Financial, the nation’s leading independent broker-dealer.* Jeremy specializes in the financial planning needs of the LGBT community and was recently named a 2010 Five Star Wealth Manager by Philadelphia Magazine.** He is active with Delaware Valley Legacy Fund, the Greater Philadelphia Professional Network and the Independence Business Alliance. OutMoney appears monthly. If you have a question for Jeremy, you can contact him at [email protected].
This article was prepared with the assistance of McGraw-Hill Financial Communications and is not intended to provide specific investment advice or recommendations for any individual. Consult your financial advisor or Jeremy Gussick if you have any questions. LPL Financial, Member FINRA/SIPC. *Based on total revenues, as reported in Financial Planning Magazine, June 1996-2010. **Details on the award can be found at www.fivestarprofessional.com.