More than ever, nonprofits look to businesses to keep charitable organizations afloat during an economic recession that has seen costs rise, individual donations decrease and demand for services increase.
Instead of turning a blind eye to the problem, businesses must continue to set a strong standard for American philanthropy – for their sake and for the sake of workers looking to their employers to set the tone in giving. As is often the case, if you lead, many more are sure to follow.
However, before implementing any strategy, be sure to check with the appropriate professional advisors to be sure you are not running afoul with insurance, legal, tax, employment or other regulation that might affect a giving plan.
First, choosing a company-giving strategy that's right for your business will take some research and planning. It's important to determine organizations that fit within appropriate guidelines. While many nonprofits qualify for the Internal Revenue Service's 501(c)(3) classification, many others do not. The best bet is to review a nonprofit's stated purpose and the percentage of funds spent on actual services to the community versus administrative costs.
It's also important to establish donation guidelines for your employees. For example, it's common to see payments to political organizations, private school tuition, payments to fraternal organizations and membership dues to a private not-for-profit athletic clubs considered "excluded" donations. Since the goal is community giving and empowerment, you don't want you or your employee's efforts to draw the same negative attention as a Detroit "Big Three" CEO flying a corporate jet to Washington, D.C. for a Congressional hearing.
People feel good about giving – especially charitable giving. Organized events and activities can become part of the solution to so-called "recession depression." Also, a company-sponsored giving program creates a sense of camaraderie among your employees and promotes teamwork that will carry over into the workplace. For this reason, now may be the best time to implement or reestablish a company-sponsored giving program.
A company giving program can take various forms:
- Matching Gift Programs
Employees donate personal funds to approved charities and amounts are matched by the employer.
- Nonprofit "Partnership"
Choose a specific nonprofit organization to "partner" with. While your support of their organization helps their cause (either through time or dollars), there may be creative joint marketing opportunities that can develop from such a strategy.
- Find a Project
Many nonprofit organizations are looking for manpower and resources for various projects, not just money. Perhaps they or their clientele need property capital improvements, repair services, or just new faces on their boards – a good opportunity to groom the future leaders of your business in community awareness. There are a host of ideas to think about, limited only by the collective imagination of what you and your people could do to make a difference. These efforts do not go unnoticed; there is no better "team building" experience than working together to do good work for others.
- Take the Day Off
Take advantage of a furlough or other temporary closures by encouraging employees to take time off for volunteerism. There are a myriad of ways to compensate them for that time, including future time off, extending or creating a sick leave bank, outright pay, or deferred compensation for volunteer services.
Also, there may be some tax benefits for your organization in the plan. We suggest checking with your CPA or other tax preparer to discuss charitable tax planning with them. Who knows, maybe employee management of a company donor advised charitable fund is in your future.
Well-thought out giving strategies are good for business, employees and the community. Giving can also benefit your bottom line by increasing community awareness of your brand, increasing customer loyalty – not to mention a few tax benefits.
Tiffany Couch is the principal owner of Acuity Group, PLLC, a CPA firm specializing in forensic accounting and financial fraud investigations.
Newt Rumble is vice president at Peterson & Associates, P.S., a CPA firm providing a full range of accounting, tax and financial consulting services to businesses and individuals.
