How does charity and profitability link in your operations?

In a radio interview with a show called Uncommon Giving, I was interviewed along with the CEOs of two companies featured in my book, 50 Marketing Secrets, to discuss the link between profitability and charitable giving. Both of these companies were in industries that had been severely impacted by the Great Recession that occurred between 2007 and 2010, and yet they each realized triple-digit growth.

When being interviewed recently, they confirmed that each had continued to grow their charitable commitments along with their bottom lines, staying on track with double or triple-digit growth and impressive expansion plans.One of the most significant findings discovered when I conducted the CRISP Study comparing high growth companies to negative or no-growth companies during down economic times was the role that charitable and community-based activity played in the operational strategies of growth-oriented companies. Giving back and being a corporate steward was not just a marketing initiative, but a core value-driven operational initiative. If your company is not engaged in charitable activities, consider these practices by growth companies to inspire your initiatives.

1. Donating Time and Talent: In the study, 81 percent of business owners in growth companies were involved in charitable organizations as a board or committee member. Additionally, over 70 percent of the growth companies made charitable and community involvement a company-wide practice with employees also serving on boards and committees. Growth companies actually accommodated time for everyone in the company to be involved in charitable activities, reinforcing the commitment through compensation and schedule flexibility.

2. Donating Goods and Services: When donating goods or services, it should be approached as a budgeted item just like anything else in your business. Determine a budgeted value of goods and services being donated and also track this through actual records. Send invoices showing credits specifically stating donated or pro bono in the itemized accounting to the benefitting organization. There is a difference in how you can account for donations of services and goods. While goods, such as a computer or paper, or some other tangible item can be a charitable deduction to a 501(c)3 organization, services are viewed differently by the IRS, and so you need to check with your CPA to best know how to handle in your accounting. 

3. Adopting a Cause: Dedicating your resources to a specific cause is a practice that enables you to be more focused and intentional in your charitable efforts. Growth companies in the study were savvy in combining the passions of their employees with what was meaningful and relevant to their customers being served to identify the cause that made the most sense for their company. Customers were involved in the cause or donations were given to the cause in customers’ names.  

4. Donating or Raising Money: In determining actually monies to be donated, this should be budgeted and determined on an annual basis as well. Many of the growth companies in the study determined a specific percentage of profits to be dedicated while others determined specific activities focused on raising money with a fundraising goal in mind. Often, in the case of fundraising, this was tied to the adoption of a specific company-wide cause.

5. Return on Altruism: Because you are a for-profit enterprise, balancing your charitable activity with your profit-generating activity is essential. It can be difficult to understand the return on investment from your charitable activities. The return on investment in this case should be calculated based on your genuine concern to make a difference as a corporate steward, or what I like to call Return on Altruism. This genuine concern translates from the viewpoint in the marketplace that your business is credible, caring, invested in the community, appreciative of your good fortune, and are giving back as a way of expressing this appreciation. 

The bottom line for you is the marketplace as a whole is placing more and more value on how a company is being socially responsible and engaged in making a difference. If you are not making this a part of the way you are doing business, there is no better time to start than now.