Business owners are inundated with requests to contribute to local charities, civic organizations and other community groups. The higher your profile, the more likely you’ll find yourself on the receiving end of their requests.          

Some people have trouble saying “no” to any such plea. Others hardly ever say “yes” — not out of principle, but simply because they’re just so overwhelmed.

How — and how much — you contribute from your business toward the common good, whether to charity, in public service or through in-kind donations, is a personal decision.

You could punt and make a token donation to every organization that asks, or just throw every solicitation in the trash. Neither extreme is practical though.

The more you give, the more lists you end up on, as groups you’ve never even heard of decide you must be a generous soul – or an easy mark. Keep it all to yourself and you might end up with the reputation as the local Scrooge. You have every right not to give a penny of your money or your time, but most business owners want to be supportive at some level.

Perhaps you want to support a cause you’re passionate about. Or you want to help those less fortunate than you are. Or maybe you simply want to give back to the community in gratitude for the support it’s shown your business.

 

Getting Started

“There is no price tag that can be put on being a good corporate citizen,” says Richard Weinberger, CEO of the Association of Accredited Small Business Consultants. Businesses benefit when they adopt an ethic of social responsibility and doing good, he says, pointing out that giving companies have better employee morale, productivity, more effective marketing and a bump in quality service.

“Customers want to do business with companies perceived as doing the right thing,” Weinberger says.          

So sooner or later, you will have to make some choices.

“The first decision businesses need to make is whether they want to support an organization for philanthropic reasons, to further their own business goal or some combination,” says Gail Bower, president of Bower & Co. Consulting in Philadelphia.    

Bower helps businesses and nonprofits develop corporate sponsorships. Her expertise includes marketing and event and festival production, and she’s written the book How to Jumpstart Your Sponsorship Strategy in Tough Times.

 

The Right Fit

She suggests that if your reason is purely philanthropic, choose a charity that’s important to your staff, customers or community.      

Are your employees handy with tools? You could pay their wages for a shift working on a local Habitat for Humanity project or helping erect equipment in a park. (They might be willing to volunteer their services — but that has to be their choice. Requiring them to volunteer is unfair and likely to land you in legal trouble.)

Or you could support something that offers your business a spin-off benefit – perhaps sponsoring training programs in the kind of skills you hope to see in future job applicants at your shop.

If charitable choices garner goodwill for your business, so much the better. However, public relations may be just a side benefit, not your goal.

“Any type of donation associated with a company’s name has PR value,” says Weinberger. Of course, the price can vary too: “The name of a business on the back of a sports jersey is more noticeable than a name on a placard at a silent auction, so the cost and visible exposure must be balanced.”

 

Raise Your Profile

Giving isn’t ultimately about advertising your products or services, Weinberger points out. If PR is driving your decision, look for opportunities that are more closely connected to your business.

Sponsorship can help there, says Bower. If you’re trying to reach a new segment of customers, work with an organization that reaches those same customers.

Of course, a lot of times your goal might be both philanthropic and promotional. In that case, “select an organization that can allow both,” Bower says. “For example, perhaps the company has a strong environmental component to its brand. It may select a park or clean-water environmental organization.”

John Tichenor, a management professor at Stetson University in DeLand, Fla., recommends aligning your giving with your overall mission.        

Dell Computers once had a program in which the company planted a tree every time a customer bought a computer. “That program doesn’t make nearly as much sense as Dell establishing a recycling program for old computers,” Tichenor says.

 

Draw the Line

Some businesses donate a fixed percentage of annual profits to charity.

“I think 5 percent of profit makes sense as a standard,” says Tichenor. Ken Dayton, the former CEO of the retailer Dayton Hudson – now Target – set the standard not only for his company but also for the business culture of his city, Minneapolis. When introducing new CEOs to the area, Dayton would “basically tell them that 5 percent of profit was expected to be given back to the community,” Tichenor explains.

But Weinberger points out that times change and you can’t bank on a hard and fast number for giving. Instead, focus on the mission of your business and consider your overall goals when it comes to charitable giving. And when your situation changes due to market forces or a change in employee attitudes, get creative with other approaches. Options Weinberger suggests include in-kind donations, free service work or giving employees time off to do volunteer work.

Take time to think through your choices – but don’t just walk away from a decision about charitable giving.    

“For a small business to survive, succeed and grow, their communities must support them,” Weinberger says. “In turn, businesses must also support their respective communities.”