When you start out as a bootstrapping entrepreneur, you might be grasping for every dollar of revenue that you can muster up in those critical first few months. Though at your heart you’re a generous person, in the beginning, you need every little profit percentage point for yourself – to pay your bills as you work towards replacing the income of your former day job with a satisfying check from your own new business. It’s not easy to siphon cash from the business and give it to your favorite charity right away – or is it?
Why Companies Donate to Charities
Why do companies give money to charity? For some, it’s a branding play – the company execs want their name out there where the public can see it, and sponsorships of non-profit organizations and events are meant to spin corporations in a positive light. Many companies do have charitable intent at the heart of their mission, and it’s part of what makes them so successful, because it’s what keeps customers coming back to buy. More and more, we as consumers want to support businesses that care about community and environmental causes. We want to know that our dollars make a difference to people and the planet and that we aren’t just lining the pockets of the richest 1%. We like it when businesses put some of their profits towards worthy causes…it’s sharing the wealth. Businesses know that, and more and more of them are happy to oblige.
The Business of Giving
But back to you, and YOUR business. How do you know when you can afford to start supporting non-profits and charities through your business?
1. Think about your long term Vision and Mission.
Some people start companies with the sole purpose of giving back. For instance, Newman’s Own, the food company started by the late actor Paul Newman, has always given 100% of profits to charitable causes. Other companies wait until they reach a certain level of profitability. Some businesses, like Sseko Designs (who were recently featured on Shark Tank), support causes in different ways, by employing disadvantaged people or groups and making that support part of their day-to-day operations. If giving back is part of the reason you started your company in the first place, you should probably set a precedent right from the start, and decide which causes you’ll support and how you’ll support them.
2. Consider tax implications.
Giving to non-profits can be a good way to reduce your tax bill at the end of the year, depending on how much you give. Talk to your accountant about whether charitable donations could actually improve your bottom line directly.
3. Build it into your budget.
As a for-profit business, there’s absolutely nothing wrong with NOT donating to charities, but if it’s something you want to do, simply make a budget for it every year, and follow through. Renegade Planner donates a few hundred dollars a year to the BC Lung Association, and I participate in their events to raise funds personally as well.
4. Find a charity that’s close to your heart.
Don’t give because you think you should; charity born out of obligation doesn’t create much of anything positive on either side. If you’re not sure what organization you’d like your business to support, maybe it’s not time to start giving just yet. If organizations ask you for money, you don’t have to feel obligated to give if you think it doesn’t make sense for your business right now.
Before you decide to support any organization, do a little due diligence to make sure your money’s going to the right place.
Does your company support any non-profits or charities? Give them a shoutout in the comments below!
Photo credit: Don DeBold