Small Business Philanthropy: How Giving Back Can Improve Your Business

Small Business Philanthropy: How Giving Back Can Improve Your Business

Last year, Alt Creative embarked on a journey to give back and operate in a socially responsible manner. You may have heard this concept described as “business philanthropy”, “cause marketing”, “social responsibility”, or “for-benefit business”. There are seriously a dozen other names for it, but it basically all means the same thing. Our business is actively trying to make a difference in our community and the world by giving to charitable causes and taking steps to minimize our effect on the environment. Despite our size, the impact of our new business model has affected more than just our community. It’s had a huge impact on our employees and the business itself. In this post, I’d like to give you some ideas on how your small business can give back and the benefits of doing so…

Why be Socially Responsible and/or Philanthropic?

1) The warm and fuzzies: The most obvious answer to the question of giving back is that it feels good to do it. Sure, sometimes writing the check or spending the time is hard, but the feeling of reward is always there. For most people, that feeling makes them happy and happy business owners tend to lead successful companies.

2) Tax Deductions: Whether you are a sole proprietor, LLC, or corporation, making charitable contributions decreases your tax liability. While I am certainly not a tax expert, I’ve yet to talk to a philanthropic small business who does not receive a 100% tax deduction on charitable contributions.

3) Differentiate your business: According to Edelman’s GoodPurpose study, 86% of consumers reported that companies should place at least equal emphasis on their social interests as on their business interests. This means that as consumers are looking for products and services they are also paying attention to those companies who are working to better society. Imagine you have a potential client who is in the market for your services but you are competing for them with two other companies. If you are marketing yourself and your values as being philanthropic or socially responsible, it could be the thing that sets you apart. In that same study, Edelman concluded that in many instances, when quality and price are equal, the most important factor influencing brand choice is Purpose. This outpaces design and innovation, and brand loyalty.

4) Better clients and better employees: Much like consumers, employees are paying attention to companies who give back as well. In a survey by the nonprofit Net Impact, 53% of workers said that “a job where I can make an impact” was important to their happiness, and 72% of students about to enter the workforce agreed. Most would even take a pay cut to achieve that goal. When you give your company a purpose to give back or act responsibly, you set give an additional incentive for employees. This incentive helps recruit and retain high-quality employees because now they are working for something bigger than a paycheck. Your company’s success is now even more important to your team.

It also affects the type of clients that are attracted to your company. These clients tend to be better educated and are willing to spend more money if they feel that it is going back to a good cause.

5) Positive publicity and reputation: Reputation is everything in business. It affects everything from sales to human resources. Having a purpose and commitment to doing good can create a good reputation for you or help you recover from a bad one. Also, just as a philanthropic or socially responsible stance can help differentiate your business to clients, it can also do so in the media. As you grow and attract publicity, this one factor can increase your visibility.

How Can My Small Business Give Back?

A lot of business owners think that they have to wait until their businesses reaches a certain size before they can give back. There is no reason to wait! Here are some ways you can start making an impact with your small business:

1) Give money: This one seems pretty obvious and maybe also somewhat expensive, but there are ways to give money to charity without going into the red. Look at some of the products or services you offer that have low overhead and a higher profit margin. These tend to be bestsellers anyway and are usually the best products to use to offer a percentage of proceeds to charity. You can also work a contributions into your overhead for each product/service and as long as you can stay competitive (not necessarily the lowest price) you can usually continue getting the same amount of sales if not more.

In addition to giving money based on products or services, you can also give money as part of performance reviews for employees. If an employee is in good standing with your company, offer to pay or match a percentage of their salary to the charity of their choice. It will give them greater incentive to work and it will build a connection between that good employee and your company which will serve to retain the employee longer.

2) Hold community events: People love parties and events. Throwing a party or event where the admission is a charitable donation is a good way to align you company with a compatible cause. It also helps your company get to know that cause better and can lead to a better understanding of their needs and how your business can help.

3) Volunteer and promote volunteerism: Volunteering your time and expertise to community projects can make a major impact. Take it a step further and you can organize employee volunteer days or give extra days off to employees who volunteer.

4) Partner with other socially responsibly or philanthropic companies: Why not spread the good? If you already work with vendors, partners, and associations, choosing to work with ones that are already doing good can help you increase your impact. In addition, it’s a wonderful way to learn about how other companies have gone about making a difference.

5) Offer collections and round-ups: Give your customers the chance to get in on the giving. If you own a brick-and-mortar business, you can add a collection plate near the register so customers can donate their change. If you own an online business, you can offer to allow the customer to round-up their payment and the difference will go to charity. Make sure you specify who the charitable beneficiary is so that you can make a connection with your clients.

6) Donate Products/Services: Your most valuable asset is usually a product, service, or simply your expertise. It’s so easy to donate these things to a good cause. For example, Alt Creative donates quite a bit of web design services to community projects.

How has Social Responsibility affected Alt Creative?

We’re blessed to have been inspired to take on this new business model. We give 10% of every major web project to charitable causes and in the past year we have given more than $5600 to charity and we’ve been responsible for 113 trees being planted. The philanthropic side of this business model has given us a purpose and new motivation for success. We’ve worked with some fabulous clients and non-profits since we began this journey.

We’ve also been fortunate to meet a group of other small businesses who are running on this “for-benefit” model. We have formed a group here in Austin called Change My Town to educate and inspire other business owners on how to make the jump to operate a philanthropic company.

We hope to inspire other small businesses to take this step with us so we can all make a greater difference in our communities.