Key Philanthropic Tactics Every Business Leader Should Be Using Right Now


Business owners who fail to embrace the leadership opportunities presented by philanthropy might be leaving commercial opportunities untapped, according to recent consumer surveys.

In 2015, Nielsen reported that 66% of respondents to its sustainability survey said they would be willing to pay more money for products and services that demonstrate social responsibility, especially when it came to environmental conservation.

Another 2015 survey of millennial consumers by marketing firm Cone Communications found that 91% of millennials would switch to a brand associated with a cause they also espoused. The same report revealed that 62% of surveyed millennials said they would be willing to be paid less to work for a socially responsible company.

Cone Communications also reported in 2010 that 85% of consumers had a more positive impression of companies that supported causes they cared about.

Clearly, philanthropic efforts can positively affect the bottom line, even beyond the potential tax deductions available to businesses for charitable giving.

This is not an endorsement of philanthropy for the sake of commercial advancement alone. Rather, it is an indication that companies where leaders actively embrace social consciousness are more attractive to consumers – especially consumers in their 20s and early 30s, who are just coming into their own as earners.

Philanthropic gestures must be genuine, socially conscious acts that a company can proudly share across all social media platforms and internal employee communications.

The willingness to donate time or money to a favorite cause should not arise from a profit motive. Why? Because consumers who perceive that a company pursues philanthropy simply to make itself look better in public are likely to reject it as a cynical attempt to curry favor.

The trick for business leaders is to balance altruistic impulses with fiscal realities. It is vital, therefore, for charitably inclined companies to find a way to measure the business benefits of philanthropy.

These include:

  • Better customer relations
  • Greater employee retention
  • Community good will and support
  • Potential tax deductions
  • Leadership opportunities for company executives

How to Embrace Philanthropy

The first step for companies that want to embrace philanthropy is to align with a cause or causes. This can arise from a personal preference by the owner, or it can arise as a natural result of relationships established during the course of doing business.

It also can be a cause that is connected to the local community, such as a particular food bank, animal shelter or school fund-raising effort. The cause can be ongoing, or related to a natural disaster, such as hurricane, earthquake or wildfire relief.

Whatever cause or causes a company chooses, the next step is to determine whether there might be tax benefits for donating money or time to related organizations. The SBA provides an IRS-approved list of organizations that fall under the 501(c)(3), or non-profit, category and are eligible to receive tax-deductible contributions.

In order to receive a tax deduction for a charitable contribution, the SBA provides the following guidelines:

  • Identify an eligible charity.
  • Make an eligible donation. This can include cash or inventory, volunteered time or event sponsorship.
  • Understand the limitations of the category of each donation. For example, the time volunteered for an event is not deductible, but materials and supplies used during that time might be.
  • Make sure the donation is paid in full by the end of the tax year.
  • Remember that the IRS limits the amount of charitable donations that are considered tax-deductible to 50% of gross adjusted income.
  • Keep scrupulous records of all related transactions, including a written statement from the receiving organization or a receipt.

How to Engage Employees in Philanthropy

An important element in business leadership is encouraging employee engagement and input. This holds true when it comes to a company’s philanthropic efforts, as well.

Employees not only like it when their company is socially involved; many of them also like to take an active hand in the effort. There are two main ways for business leaders to involve employees in a company’s philanthropy:

  • Ask employees for suggestions. While no company can (or should) adopt every cause, it makes sense for business leaders to draw on the experience and emotional commitments of employees. Many employees already donate their personal time and/or money to specific causes, and knowing that their employer shares their social concerns helps engender loyalty.
  • Provide employees the means and time to engage in company-endorsed philanthropic activities. This could be as simple as creating a team to take part in a local 5K for charity, or as complex as organizing a crew to help repair a damaged home or sort grocery donations at the local food pantry.

Most important, employees should see your organization’s leaders at the forefront of philanthropic efforts. An authentic expression of compassion is a powerful indication of values, and people are far more likely to follow leaders they admire.


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