Make Giving Part of Your Business Strategy

Use charitable giving to increase sales, lift employee morale—and help out your favorite cause

By Amy S. Choi

SPECIAL REPORT

Corporate Philanthropy

• Make Giving Part of Your Business Strategy
• Pro Bono Work for Entrepreneurs
• Partnering with a Cause
• Book Shelf: Good for Them, Good for You
• Quark Founder Tim Gill On Giving
• Slide Show: Why Leading Entrepreneurs Give
• Video: Small Business Volunteering

A client's melanoma diagnosis insipired Linkow RAY NG

Turpin gives you local nonprofits that support the arts COLBE LYSNE

Conti donates monthly to New York's Partnership for the Homeless JORDAN HOLLENDER

Story Tools

• post a comment
• e-mail this story
• print this story
• order a reprint
• suggest a story
• digg this
• save to del.icio.us

Watch the Video…

Talk about great philanthropists, and the names of celebrated entrepreneurs—think Carnegie, Ford, and Rockefeller—are sure to come up. Those who've amassed fortunes but haven't forgotten their hardscrabble beginnings have long formed the backbone of philanthropic giving in the U.S. In more recent years, a new generation of success stories, from Bill Gates and Oprah Winfrey to younger moguls such as Google's Larry Paige and Sergey Brin, have joined the ranks of givers.

Most business owners, of course, haven't quite reached the point where they need to worry about dying rich. But many are continuing the entrepreneurial tradition of giving back. Some 90% of small businesses already donate to charity, according to a 2001 Better Business Bureau Wise Giving Alliance survey, with some 35% giving more than $5,000.

That doesn't mean all those businesses gave cash—many entrepreneurs donate products, services, or even real estate. It adds up: In 2004, small businesses collectively gave some $40 billion to nonprofit organizations, according to the National Federation of Independent Business. "Small companies cover a wide spectrum in the kinds of donations they give," says Dwight Burlingame, associate executive director at the Center on Philanthropy at Indiana University. "They are primarily focused on local and community needs."

While you may consider it just good citizenship, corporate giving is part of your business and should be operated as such. Like any business effort, it should be organized to maximize return, which can take the form of increased sales, better employee retention, or higher visibility in your community. Done properly, giving is good business.

If sales are slowing, it could be tempting to curtail your philanthropy. But a little creativity will allow you to adjust your efforts rather than cut them. If you've set up your giving well, you should still get maximum impact out of it, even in a rough economy. And that, of course, is when your beneficiary—and your business—need it most.

Figuring out how and what to give, however, can be tricky. There are a host of factors to consider, all of them intertwined. You'll need to decide what cause to support and how, and if you want your employees to be involved. Whether you donate cash, discounted services, or products, you'll want to track your giving and stick to a budget. Then think about the business benefits you hope to get from your activity and decide how to publicize your good works.

CHOOSE YOUR CAUSE

Since you can't contribute to every worthy cause, those you do support should be deeply connected to your business. Try to resist "checkbook charity," or the practice of haphazardly writing checks to whoever asks for support, says Stacey Wedding, a principal at Henderson (Nev.) consultants Professionals in Philanthropy. "It's important to transition from reactive giving to strategic giving."

To do that, start by choosing one cause that reflects your business and resonates with your customers. Deb Turpin, founder of Kansas City (Mo.) River City Studio, a $1.3 million, 16-employee design and branding company, had given on and off for years. But after working with a consultant who pressed her to express her core values and her company's reason for being, she incorporated "giving back" into her mission statement in 1995. That's when she decided to focus her efforts, providing a 10% discount on design work for local nonprofits. The majority of those she supports foster the arts in Kansas City, and therefore reflect River City Studio's creative bent. Turpin had originally wanted to offer pro bono work across the board—and she does some—but, she says, "If you give it all away, then people don't value your work." She estimates she donates about $100,000 in services per year.