A strong charitable giving program is a good way to help your company build a positive reputation in the community, but when you’re working with a small business budget, there may not seem to be any money left over. How do you give back when you’re low on cash?
You don’t have to be turning a huge profit to develop a charitable giving program; you just need to plan ahead and have modest expectations. Consider these three simple strategies that can help your company give back without breaking the bank.
Balance, Burdens, and Bounty
One reason small businesses struggle to develop charitable giving plans is that they’re overburdened by taxes. Luckily, there are two ways you can put this burden into balance.
First, it’s important to make sure that your company is registered under the most appropriate business structure . Your business structure determines the level of taxes you pay on your business, so an LLC pays especially high taxes as the percentage comes out of your gross receipts, but a multiple member LLC (MMLLC) is taxed under the self-employment structure for each individual partner – typically a much lower tax rate.
What does your business structure have to do with your charitable giving plan? As with household donations, business giving is tax deductible . That means what you give can reduce how much you have to pay back in taxes. Of course, you still have to have those funds on hand, but wouldn’t you rather give money to a deserving organization than pay them as taxes?
Choose a Cause
As noted above, your choice to give back to the community reflects well on your company; in fact, 90 percent of consumers trust brands that contribute to social causes more than those that don’t. That means it benefits your business more to choose a single organization or a few groups linked to a shared cause than to pick unrelated charities, spreading your giving thin and watering down your social stance. So how do you choose?
There are many different approaches to choosing charities to support, from asking amongst employees to learning what causes they support to choosing causes related to your business. One foolproof approach that’s sure to please community members, though, is choosing a charity that supports youth. Whether you opt for your local Boy & Girls Club, a children’s hospital, or a non-profit like Hands In 4 Youth that offers summer camp opportunities to youth from underserved communities, supporting the next generation is universally popular as a giving strategy.
Boost Employee Giving
Social engagement doesn’t hinge exclusively on what you do as a business owner. You should encourage your employees to choose charities to support, and one powerful way to do this is by developing a matching program .
Among Fortune 500 companies, 65 percent of employers have matching programs that pair employee donations with equal giving by the company. In the case of small businesses, a matching program is a good way to encourage a company-wide charitable ethos without overtaxing your budget.
Ultimately, if you’re going to give sustainably as a small business, you need to pay yourself first – cover all your bills, pay your employees, and make sure you’ve got money tucked away for taxes, emergency expenses, and planned expansion or improvements. You have to budget intelligently for maximum impact.
Your small business can develop a charitable giving program that fits the financial means of your company. Plan ahead, balance costs and capacity, and encourage your employees to jump in. Then aim to grow each year. Giving is a simple strategy with a lot to offer all parties.