Year-end projections are coming together. Calendar-year budgets and strategic plans are either done or in the works. Have you taken a proactive stance with company charitable contributions or are you waiting for those predictable, end-of-year charitable requests to hit your mailbox to begin writing checks? And have/are you taking steps to align your corporate philanthropy with your organization’s core values, your brand (including your customers) and your overall business objectives?
According to the National Philanthropic Trust, corporate giving increased to $18.46 billion in 2015. But corporate giving came in last among all sectors, with individual giving topping the list at $268.28 billion, followed by foundations at $57.19 billion and bequests at $28.72 billion.
Why is it a good idea to align your charitable giving strategy with your business strategy? Simply enough, it’s good for your business. So, think about your brand and what type of charity makes sense. Have you ever shopped at PetSmart? Every time you check out, you’re asked if you’d like to make a donation to help homeless pets. Maybe you shop at Whole Foods Market. If you bring your own bags, you’re asked if you’d like to make a donation to a local charity. Understanding they have a diverse customer base, the store rotates the charities and provides limited choices, thus building loyalty and favor.
Creating a strategy for giving can also pay dividends in terms of earned media and enhanced public relations for your organization. Its benefits can spill into your human resources, too. Studies show that young people want to work for organizations that “do good” in the community; strategic philanthropy can help with retention and recruitment of valuable human capital.
Like any good plan, before you commit, start with research. BBB’s Wise Giving Alliance (give.org) provides a wealth of information for donors and maintains reports on local and national charities that will help you evaluate their effectiveness, oversight and more. Maryland Nonprofits and Guidestar are other helpful resources.
It’s best to consult your accountant, tax preparer or tax attorney before executing your charitable giving strategy. Not everything qualifies as a deduction, however; for example, you cannot deduct the value of volunteerism contributed by company employees. But you may deduct expenses related to donated services, such as meals or supplies.
The Small Business Administration has a list of tips that can help you get started. They include the following.
- Identify an eligible charity, usually a 501(c)(3), using the IRS Exempt Organizations Select Check.
- Make an eligible donation: cash, expenses related to volunteered services, sponsorship of a charity event or the donation of inventory or services.
- Understand that each category has its own limitations; links to all the related forms and limitation information are available from the IRS (IRS Publication 526).
- Ensure the donation is paid in full by the end of the tax year and reported through Form 1040, Schedule A. Remember that the IRS limits the amount of charitable donations that can be considered tax-deductible to 50% of your adjusted gross income.
- Keep records — you’ll want them in the event of an IRS audit. Generally, an organization should give you a written statement if it receives a contribution from you.
Angie Barnett is president and CEO of the Better Business Bureau of Greater Maryland. She can be reached at 410-347-3990 and firstname.lastname@example.org.