One of a limo company’s best customers asked the owner if he would do him a favor.
“You’ve heard me talk about my favorite charity,” the customer said. “I’m on the finance committee and you could really help us by making a contribution. Could you do $1,000?”
When the owner takes out his checkbook, what he sees in the ledger is a stream of donations that is quickly becoming a flood. While he is community-minded, he doesn’t know how to contain the damage that so many contributions are doing to his bank account. It doesn’t stop with customers, either.
They actively spread the word: “Yes, I’m a good customer of Ace Limo. Great people. Use them all the time. Sure, ask them for a check for your project with kids. I know they’ll be glad to help—and don’t forget to use my name.”
How do limo companies, as well as so many others, find themselves in such situations that, for many, become out of control? These businesses succeed by emphasizing personal service, fostering close relationships with customers and doing everything possible to satisfy their needs. That’s a limo company’s strength—as well as its vulnerability.
To make matters worse, customers can sometimes develop a proprietary sense of ownership. They see it as their limo company, and they feel free to ask—and expect—that the business will respond to their requests for charitable donations.
This is a big reason why the number of donation requests grows faster than asparagus in the spring. By the end of the year, owners rightly ask themselves questions like, “How much can we do? Is what we give making an impact? Has it benefited the business?” When the answers to these questions aren’t easily had, business owners might be unsure of what they should do.
Businesses want to be helpful and show their appreciation. No one likes to say no to good customers or to the community. However, like any other aspect of a business, when charitable giving isn’t managed, it gets out of control—the stream becomes a flood. This is the dilemma so many find themselves in today. Here’s how to make charitable contributions—both in-kind and cash contributions—work for your company, while helping worthy projects and organizations.
1. Get the Most from Your Giving
Making a series of random-type donations is a recipe for disaster. Whether these are small or large, the list gets longer and expectations climb higher each year. With this type of giving, a company is just one of many—sometimes thousands—of donors, and finds itself lost in the crowd. Rarely do businesses talk about this openly, although most are concerned about the number of checks they write and the total amount of annual donations. On the other hand, no one wants to be known as a scrooge.
While it will always be necessary for your business to make a number of smaller donations, there’s a more effective way for you to benefit from charitable giving: doing it strategically, as you would any other business investment.
Sending a check can be meaningful, but taking a sustained interest in a charitable organization is even more valuable and sends a clear message that your company really cares. By really getting involved, you and your employees will find ways, other than giving money, to be of help, such as providing management advice, or bringing a new voice to agency issues and plans—in other words, by becoming a valuable resource. Today, the talk is all about “partnering,” and many times, it’s just another instance of meaningless corporate jargon. However, businesses can give genuine meaning to “partner” by making it their goal to act like one.
2. Get Your Employees Involved
A good way to start may be with a small group made up of those employees who have an interest in the company’s community support. This becomes your employee committee. You might share with them the amount of money the company is currently donating in cash and in-kind donations; in many cases, some of them may be surprised as to the extent of your charitable efforts.
The employee committee can help by talking to and researching various organizations, and then evaluating their findings. In the process, these employees become ambassadors by communicating their interest to others in the company. The committee may narrow the search to perhaps three possibilities and then meet with the employees, share their findings, and then have everyone vote on which one the company should support.
The organizations that are being considered will undoubtedly want to win the vote, and will make an effort to put their best foot forward by indicating what they would want to do to help make the company’s support as worthwhile as possible. Since these groups know the value of publicity, they will let you know how they can use public relations to carry your company’s message to their members and the public.
In addition to cash contributions, think about how you can leverage in-kind services utilizing your company’s resources, which can include giving your employees the opportunity to take part in charitable projects and events. These might include road races, serving on charitable boards, tutoring school kids, helping to prepare and serve meals for those in need, transporting senior citizens and others to events, and dozens of other possibilities in the community. Make sure you provide participants with clothing that identifies your business.
Of course, there’s one important step to take before making any commitment, and that’s vetting, or checking a potential non-profit recipient to make sure it’s a responsible organization.
3. Choose the Right Charities
One of the most effective ways to accomplish this objective is to align the company with a charitable partner that both reflects the business and resonates with your customers, allowing you to focus the lion’s share of your funds, the participation of your employees, and other resources so that both the company and the charity benefit.
The key is finding the right match and becoming the primary sponsor of a charitable entity that can benefit from the resources you are able to commit, so that when someone thinks of The Great Kids Club, for instance, they will also think of your company. When this occurs, the charity becomes more involved with you over time, and you become more engaged with it. This works with companies of all sizes.
The task involves identifying organizations that are the right fit for your company, with the dual goal of choosing the one for which you can do the most good, and which is the right match for your business objectives. Furthermore, it is important to steer clear of controversial organizations that may alienate some of your customers.
Since tax deductibility is one of the benefits of making charitable donations, you want to be sure that your gifts qualify. This means that a non-profit organization must have been granted 501c3 status by the IRS. Otherwise, your contributions will not be tax deductible. The laws are complex and benefits vary by corporate structure, so be sure to consult your accountant before proceeding with a major commitment. Of course, you may decide to assist a worthy community endeavor that does good work and is worthy of help, but doesn’t have 501c3 status. If you want to help, go ahead and do it. Just remember that the contribution is not tax deductible.
4. Establish a Written Charitable Giving Policy
As a businessperson, you want to control every aspect of your business, including your donations—so, it’s up to you to put a process in place that lets you manage the gifts you give effectively.
Your “charitable giving policy” might include a statement about your commitment to the community, the types of projects and organizations you support, how you go about making decisions and when, what you expect from those who are requesting a donation, and the amounts of typical gifts. It’s helpful to have this posted on your website so inquiries can be directed to it.
Sharing how you go about making donations indicates that you take charitable and community support seriously. Always ask for written proposals so you’re totally clear about each request. Set up an employee committee to review and recommend. Thank everyone making requests immediately, letting them know your process or telling them that the request is outside your charitable focus.
Then, prepare a plan for making your giving policy known to employees, customers and the community through your marketing and sales efforts. Don’t be shy about it. Since you control the process of giving, you need not worry about others finding out about your policy. In fact, you want charitable organizations to make their needs known.
You will only gain support for your giving policy if everyone knows the rules of the game. Without rules, you can easily become a charitable giving victim.
5. Create Your Own Non-Profit
At some point you may want to take yet another step in community support: setting up your own non-profit. This requires going through the process of obtaining 501c3 status from the IRS. In this way, you can make requests for support that are tax deductible for those causes you feel best represent your business values.
By managing the growth of your corporate responsibility programs, your business can play an even more effective role in helping to meet community needs.
Needless to say, this view of charitable giving won’t make much sense to those who believe that a company’s donations are a matter that rests in the hands of the person who runs the place. Certainly this is, more often than not, how it’s thought of in many businesses, particularly by those who derive personal satisfaction from “handing out checks.” However, in a time of ever-increasing “transparency,” more and more customers want to be confident that the companies they do business with have a genuine sense of community responsibility.
To put it bluntly, customers see through pompous, self-serving business behavior. They want to believe that companies they do business with are motivated to make charitable donations out of a genuine commitment to the quality of life in the communities they serve. // LD
John Graham of GrahamComm is a marketing and sales consultant and business writer. He publishes “No Nonsense Marketing & Sales,” a free monthly eBulletin. Contact him at firstname.lastname@example.org, 617-774-9759 or visit www.johnrgraham.com.