Making donations to a noble cause goes a long way – and not just for the receiver. Whether aware of it or not, small businesses can benefit tenfold for their generosity. Here are some of the advantages to help your business prosper in the long run and ultimately grow your bottom line.
Receiving a Tax Deduction
This seems a bit obvious, but nevertheless, it needs to be mentioned because some caveats are present when deducting charitable contributions.
First off, ensure your preferred charity is eligible in the eyes of the Internal Revenue Service. You’re usually in good shape if an organization sports a 501(c)(3) status. If you’re uncertain, the IRS provides a search tool to help find qualified candidates.
To make a valid donation, you don’t have to simply write numbers on a piece of paper or check and sign it. Sponsoring a charity event, offering business inventory or volunteering your services are all legitimate approaches. But there are a few limitations. For example, let’s say you own a paint company and decide to lend your services to reinvigorate your child’s school. You can’t deduct the value of your volunteered services, but you can deduct expenses from paint, brushes, tools, etc.
This is why keeping thorough records is imperative. ClientBooks, our web-based bookkeeping system, is a beneficial tool allowing you to sync your bank account and credit card information, so you don’t have to haul around a plastic bag full of receipts.
It’s also worth noting – under IRS guidelines – your total charitable donations can only amount up to 50% of your adjusted gross income. In some cases, it can just be 20% or 30%.
Spreading Brand Awareness
Sponsoring a charity event is one of the ways to obtain a tax deduction for your business’ philanthropy. As a result, you can expect your brand’s visibility to skyrocket, too. Promotional tools such as banners, mailing material, and billboards will have your company’s name plastered all over, creating positive publicity and more sales.
Keep in mind: It’s important to sponsor an event that aligns with your business in some capacity. If you’re a mom-and-pop vitamin store, supporting a 5K run for diabetes would be an admirable way to target a health-conscious audience.
More Networking Opportunities
The saying “it’s not what you know, it’s who you know” isn’t just a throwaway phrase. Networking is an invaluable resource to help spur your business’ growth, and immersing yourself in a charitable cause is an excellent gateway to achieving these desired results.
When you’re sponsoring or volunteering for a charity event, you’ll be surrounded by like-minded entrepreneurs and business owners. This builds a solid foundation for attracting potential partnerships, as well as top talent to come work for your small business.
Boosting Employee Morale
Whether you decide to offer your company’s time to help at a food drive or charity auction, volunteering has a tremendous impact on team-building. According to a study, 81% of employees who volunteered through their company reported that it strengthened bonds among co-workers.
It’s not called “the daily grind” for nothing. Your workers strive for a sense of fulfillment and purpose in their professional lives. If you show compassion for helping others, your employees will take notice and gain more respect for your business. After all, happy employees equal happy customers, leading to longer customer relationships.
Helping Your Community
While the aforementioned advantages are vital to your business, helping your community should be the most important reason for making donations of time or money. Supporting a cause not only gives you that warm, fuzzy feeling that’s good for the soul but also makes your town a better place to live.
It’s a win-win situation for your business and your surrounding community. In fact, 85% of consumers are more likely to purchase your goods and services if you’re associated with any humanitarian efforts.
Looking to make a positive footprint in your community? Let 1-800Accountant be your guiding light. We provide accountants, certified public accountants and enrolled agents who are available year-round to ensure you’re making the right financial decisions regarding philanthropy. For information, visit www.1800Accountant.com or give us a call at 1-800-222-6868.