The Benefits of Philanthropy: Why Companies Should Donate to Charity

‘Tis the season for giving, and that goes for businesses, as well. There are many reasons why companies should donate to charity, ranging from the large morale boost for employees to the potential tax breaks, and for franchisees, who represent a localized facet of a larger company, those benefits can be even greater.

In this article, we’ll be discussing why companies should donate to charity, including practical and community-building reasons, and how to donate to be sure your charitable contributions have the greatest impact.

Why Companies Should Donate to Charity

Companies should donate to charity for a multitude of reasons, but one of the simplest is that it’s a great way to improve your community. Local businesses, including franchises, have the unique ability to connect with their communities on a personal level. You know your surroundings, your customers know you—if your business is profitable, why not spread your good fortune and hard work around to improve the lives of your customers as best you can?

You don’t have to give a lot to make a difference. Small businesses tend to donate around six percent of their profits to charity, and companies that make under $1 million per year tend to give the most. That can make a huge difference!

Beyond improving your community, there are a few other reasons to donate to charity, too.

Donating to Charity is Good PR

When you donate to charity, you build a partnership between you and a positive force for good in your community. That partnership tells customers that you care about something beyond profit; you care about using your resources to improve your local community and the world. 

Charities that you work with may share your business’ information on their social media channels, giving you an extra boost in visibility. Donating to charity gives your marketing team the opportunity to share content about your donations, especially if you do volunteer work or donate in-kind. Not only are donations of time and items hugely beneficial for charities, but they also make wonderful photo opportunities that can be shared with supporters and customers. 

Donating to Charity Can Attract Customers

According to research by Omnicom Group’s Cone Communications, 70 percent of millennials say they are more likely to spend money with a company that publicly supports a cause, with 87 percent of people overall saying that they will purchase from a company that has advocated for something they care about.

Those are strong numbers, and worth considering as we get closer to Thanksgiving and the holiday season. Though there is a chance that consumers may be put off by an organization you’ve chosen to partner with, doing some research and choosing charities that align with your brand and mission can have a positive effect on your relationship with customers.

How to Choose a Charity to Donate To

Don’t just partner with the first charitable organization to come to mind. Take some time to find a charity that matches your business’ goals and industry to better align with your customers’ needs, interests, and desires. For Transblue franchisees, that may mean partnering with a local cleanup group for a city park, working with a sustainability organization, or simply donating snow plow services to local charities and nonprofits. Considering your target market and your own ideals as a business will make this choice easier. 

For example, if your company makes veggie burgers, your customers may not approve of an all-beef barbecue to fundraise for a local baseball team, but may strongly approve of swapping the beef for veggie patties. Be mindful of your customer base’s needs and expectations and use those to craft the perfect charity partnership for your business. 

Also be sure that the charities you choose are reputable. You can use websites like GuideStar and Charity Navigator to help you find charities who have demonstrated that they donate the money and services they receive ethically.

 

How to Benefit From Charitable Donations as a Business

To benefit from tax deductions and similar donation incentives, you need to fulfill a few criteria.

Donations must be made to 501(c)(3) organizations to qualify for deductions. These donations can include cash, gifts like property or equipment, or even travel expenses under certain conditions. 

Tax deductions became more complicated under the Tax Cuts and Jobs Act of 2017. There are restrictions on how much you can donate—typically 50 percent of your annual gross income, though some organizations are limited to 30 percent—and the increase in the standard deduction means that it’s harder to receive tax breaks for donating. If donations are a big benefit to your company, considering “bunching,” or donating a larger sum every two years rather than a smaller sum every year.

These changes don’t mean that charitable donations aren’t worth it—as mentioned, customers prefer businesses that participate in charitable giving, and it strengthens bonds between businesses and their local communities. But if you expect donations to result in large deductions, coordinate with your business’ financial department to ensure you get the most bang for your donated buck. 

If your business isn’t financially able to donate money, you can still benefit from donating time. Though not deductible for taxes, donating your time to help your community improves employee morale, forms strong bonds between you and your community, and improves your local community. Tax breaks aside, that’s a pretty wonderful thing.

Local businesses, including franchises, have the unique ability to connect with their communities on a personal level.

70 percent of millennials say they are more likely to spend money with a company that publicly supports a cause.

Considering your target market and your own ideals as a business will make choosing a charity to partner with easier.

1 thought on “The Benefits of Philanthropy: Why Companies Should Donate to Charity”

  1. I like that you said that donating to charities can be an opportunity to share donations on social media. My uncle is trying to find a charity that his business can do some philanthropy work for the new year. I’ll be sure to pass this along to him so he can see more benefits of doing charity work.

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