Turning purpose into profits

Charitable giving a win-win for businesses

By Leslie T. Snadowsky

Philanthropic footwear company, Toms, used to give free shoes to those in need with every purchase and now gives one-third of its profits to grassroots organizations.

Bombas, an altruistic apparel company, donates with every purchase and has given 3,500 community organizations more than 40 million socks and T-shirts for the homeless.

When someone buys a pair of Warby Parker eyeglasses, the warmhearted company donates a pair to someone in need.

And points from Marriott’s Bonvoy rewards program can be turned into donations to social action organizations. Magnanimous Marriott then matches donated points and converts them into cash for charity.

According to the National Philanthropic Trust, corporate giving in 2021 increased 23.8 percent to $21 billion. And Forbes finds 71 percent of consumers will purchase from a purpose-driven company over the alternative. Eighty percent of consumers are more likely to remember a company with a strong purpose and are almost five times more likely to recommend it to friends and family.

But big corporations don’t corner the market in benevolence. Any small business can support a charity, turn purpose into profits and build a customer base around its generosity.

PICK A PASSION

Choose a local cause that aligns with your business’s brand and mission statement and boosts morale among employees. You can ask your team what charities are important to them and see what they are passionate about. Psychologically your team should feel good about working to make a difference or a contribution and feel a sense of camaraderie that they are all building something together, especially if you let employees take a few days off a year to volunteer. Plus, a commitment to a cause can be very attractive to prospective employees who are looking to work for a business that cares about its community.

ENGENDERING GOODWILL

Whether you sponsor or donate or fundraise, attaching your business’s name to a respected local cause builds name recognition and good PR. And when customers are faced with choices, they tend to support and become loyal to charitable businesses. They feel their dollars are being spent wisely for them and the greater good. When efforts focus around helping schools or local nonprofits, the effects can be tangible and be seen and felt throughout the community. Charity also can be a great way to network, as many political, civic and business leaders are aligned with causes. Getting involved would allow you to introduce your company to new audiences, influencers and decision-makers.

TAX BREAKS

When endeavoring to donate, your prime focus should be helping a cause and not getting a tax break, but it’s hard to ignore the tax benefits when contributing to a local nonprofit organization. A tax professional can help navigate the tricky landscape, especially if you choose to use donor-advised funds. Generally, your business can receive deductions on cash, property, equipment and travel expenses when used to help public charities, private operating foundations and private foundations. 

Regardless of to whom or what you donate, and for how much, keep written records and receipts of every donation for your tax return.