The many business benefits of participating in charity

How to involve your employees and customers in the process.

With your business’s success, it’s only natural that you begin to look for ways to give back to your community. Corporate giving will not only be personally fulfilling, but also holds a number of benefits for your business. But before you begin supporting your favorite causes, it pays to consider how corporate social responsibility can impact your company – and how to identify the right charities to support.

Proceed carefully with corporate social responsibility

The charitable organizations and objectives your company supports can significantly impact your company’s reputation. If your giving is authentic and aligned with your values, you’ll likely earn goodwill with your customers and employees. But if your organization’s support seems insincere or opportunistic, it can inflict significant damage.

For example, when a cereal company offered meals for children in need based on the number of retweets of a message, observers accused the company of caring more about boosting their social media engagement than children in need.

Involve your most important stakeholders

Because of the high stakes in rolling out a charitable campaign, it’s crucial to involve your most important stakeholders – your employees and customers – in the process.

According to a study conducted by Benevity, 84% of consumers and 86% of employees believe they should have a say in the charities a company chooses to support.

Involving your employees in the process can also boost morale, helping your professionals feel good about their connection to your organization. This employee goodwill in turn strengthens productivity, retention, and recruitment.

You can gather input from your employees and customers through email surveys featuring incentives, or through informal discussions or organized meetings.

Consider causes likely to align with your organization

Causes that directly relate to your organization’s core mission are strong candidates for your organization’s support. For example, if you build custom software solutions for companies, perhaps teaching children to code would be a suitable cause. You might also build software for organizations with limited means.

Similarly, if your core mission is selling an eye health supplement to consumers, you might support eye care for those without access to medical care. Or you might support research on eye health.

Of course, there’s no rule against supporting a cause that doesn’t have a clear nexus to your organization, particularly if that cause is something your stakeholders advocate. But supporting a cause related to your mission will make sense to outside observers, whereas support for unrelated causes may seem like tokenism if not handled in a sensitive manner.

Streamline giving with a donor advised fund

You have several options for following through on your giving goals. For large organizations, a dedicated foundation may be the right option, but the overhead costs and regulatory complexity associated with foundations is a high barrier to entry. You may also write individual checks, but this may not offer the benefits and consistency available from other options.

Donor advised funds (DAF) are one such vehicle for giving as they permit donors to realize immediate tax benefits from a charitable gift. The value of the gift is then invested, potentially growing tax-free to provide an even greater charitable impact, later. Meanwhile, a DAF allows the flexibility to decide which charities to support – and for how much – at any point in the future.

Consistency through the market cycle is another benefit of using a DAF for corporate charitable giving. By contributing to the fund in high-tax years, the business can structure its giving in a way that is tax efficient. It is then able to provide annual gifts to selected charities during lower-earning years without taking on an additional burden to the bottom line.

DAFs are popular for individuals and families for their convenience and flexibility and work similarly for corporate donors, with the same ease of setup and low barriers to entry. One or more named donors – a CEO, CFO or business manager are common choices – can advise the DAF on what distributions to charities to make and when, how to invest it, and can even name a succession plan to ensure ongoing giving. And as with individuals’ funds, a business client can name their DAF whatever they like, such as Acme Corp Charitable Fund – it sounds like a private foundation, but it’s a simplified version without the complexity and administrative burdens. DAFs bring other conveniences too, like an online website for requesting grants and viewing other account information, plus no longer having to track gift receipts from each individual charity.

Speak with your financial advisor to determine if a donor advised fund is right for your business’s charitable giving strategy.

Sources: forbes.com; heraldsun.com; benevity.com; goodbox.com; americanexpress.com

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes. To learn more about the potential risks and benefits of Donor Advised Funds, please contact us.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.