Making Giving Work: How to Get the Most From Charitable Donations

Most companies want to support charitable and civic organizations and causes. At the same time, the stream of donation requests can be overwhelming, particularly because no one likes saying no.

Plus, the pressure comes from all sides – customers, politicians, employees, friends and associates. Everyone seems to have a favorite charity. And businesses are the most visible targets for support.

Like any other aspect of a business, when charitable giving isn’t managed, it goes out of control. To avoid this, here are five ideas to make in-kind and cash charitable contributions work for both worthy projects and organizations and your company.

1. The value of strategic giving.

Making random donations is a recipe for disaster. With this type of giving, your company is “lost in the crowd,” one of often hundreds of donors. Although most businesses are concerned about the number of checks they write and the total amount of annual donations, they don’t assess the value of making random donations, often considering it a business necessity.

While making a number of smaller donations may be necessary, there’s a more effective way to benefit from charitable support, and that’s by treating it as you would any other business investment – doing it strategically.

One way to start is by forming a small group of employees that has an interest in the company’s community support, starting by sharing with them the company’s current amount of cash and in-kind charitable support. You can point out that you want to be sure the company uses its resources wisely when it comes to contributions, just as it does with all its funds.

One of the most effective ways to accomplish this is by aligning your business with a primary charitable partner that reflects your company’s values and resonates with your customers.

There’s an important step to take before making a commitment, and that’s vetting the potential nonprofit recipient to make sure it’s a responsible organization and a good fit.

Having found a good match, you may want to become its primary sponsor so that when someone thinks of “The Great Kids Club,” they think of you. When this occurs, the charity becomes more involved with your company and you become more engaged with it.

Your employee committee can help with this task by talking to and researching various organizations and then evaluating the findings. In the process, these employees become “ambassadors” by communicating their interest to others in the company.

The committee may narrow the search to perhaps three possibilities and then meet with the employees, share their findings, and then have everyone vote on which one would be most deserving of the company’s support.

The organizations that are being considered will undoubtedly want to win your support and will make an effort to put their best foot forward by indicating what they would do to help make the company’s support as worthwhile as possible. Because these groups know the value of publicity, they will let you know how they can use public relations to carry your company’s message to their members and the public.

2. Establish a written charitable giving policy.

Because management is responsible for every aspect of the business, that includes your donations. It’s up to you to put a process in place that lets you manage the company’s gifts effectively.

Your charitable giving policy might include a statement about your commitment to the community, the types of projects and organizations you support, when and how you go about making decisions, what you expect from those who are requesting a donation, and the amounts of typical gifts. It’s helpful to have this posted on your website so inquiries can be directed to it.

In addition to cash contributions, think about how you can leverage in-kind services utilizing your company’s resources, which can include giving your employees the opportunity to take part in charitable projects and events, such as road races, serving on charitable boards, tutoring school kids, helping to prepare and serve meals for those in need, transporting senior citizens and others to events, along with dozens of other possibilities in the community. Make sure you provide participants with career wear-type clothing that identifies your business.

Because tax deductibility is one of the benefits of making charitable donations, you want to be sure that your gifts qualify. This means a nonprofit organization must have been granted 501c3 status by the IRS. Otherwise, your contributions will not be tax-deductible. The laws are complex and benefits vary by corporate structure, so be sure to consult with your accountant before proceeding with a major commitment.

3. Make your giving process known.

Sharing how you go about making donations indicates that you take charitable and community support seriously. Always ask for written proposals so you’re totally clear about each request. The employee committee can review requests and make recommendations. Thank everyone making requests immediately, letting them know your process or telling them that the request is outside your charitable focus.

Then, prepare a plan for making known your giving policy to employees, customers and the community through your marketing and sales efforts. Don’t be shy about it. You want charitable organizations to make their needs known.

4. Build a relationship with your giving partners.

Sending a check can be meaningful, but taking a sustained interest in a charitable organization is even more valuable and sends a clear message that your company really cares.

By “getting involved,” you and your employees will find ways, other than giving money, to be of help, such as providing management advice, bringing a new voice to agency issues and plans, etc. – in other words, by becoming a valuable resource. Today, the talk is about “partnering.” Many times, it’s just meaningless corporate jargon. However, you can give genuine meaning to “partner” by making it your goal to act like one.

5. Create your own non-profit.

At some point you may want to take yet another step in community support by setting up your own nonprofit. This requires going through the process of obtaining 501c3 status from the IRS. In this way, you can make requests for support that are tax-deductible for those causes you feel best represent your business values.

By managing the growth of your corporate responsibility programs, your business can play an even more effective role in helping to meeting community needs.

Needless to say, this view of charitable giving won’t make much sense to those who believe that a company’s donations are a matter that rests in the hands of those who run the business and who literally “hand out the checks.”

However, in a time of ever increasing transparency, more and more customers want to be confident that the companies they do business with have a genuine sense of community responsibility. To put it bluntly, customers see through pompous, self-serving business behavior. They want to believe that companies they do business with are motivated to make charitable donations out of a genuine commitment to the quality of life in the communities they serve.