As a business owner, you are committed to serving the needs of many different stakeholders, including your customers/clients, business partners and investors, employees, vendors, and family members. And like many business owners, you may also be highly motivated to have an impact on the "greater good." The benefits of giving back are both tangible and intangible, but where do you begin? Start by fostering a culture of philanthropy within your business.

Understand the "triple bottom line" approach

First coined in 1994 by John Elkington, an authority in the area of corporate responsibility, the triple bottom line (TBL) approach is used by many large companies to measure not just their financial impacts but their social and environmental impacts as well. Small businesses can use this triple bottom line philosophy as a guiding framework in meeting their philanthropic and social responsibility goals. Incorporating TBL thinking and language into a written mission statement may help clarify such goals for important stakeholders.

Determine your organization's focus

Consider tackling your organization's philanthropic endeavors in a manner similar to your business plan. That is, identify a need that is related to your business or one it may be uniquely qualified to address, and draft a written plan to support it.

What are your organization's strengths, talents, interests, and products? How can you put them to use in a charitable way? For example, if your business is a law firm, you might consider offering pro bono services to a specific group of individuals who cannot afford legal counsel, or perhaps to a nonprofit organization that needs a periodic review of documents. If you own a sporting goods store, maybe you can find ways to work with the community to encourage physical fitness or donate equipment to a children's organization. The key is to match up local needs with the resources your business can provide.

Involve your employees

Once you document your area of philanthropic focus, you may discover a variety of ways to get your employees involved, which could have the added benefit of boosting employee morale. You might, for example, match employee donations to nonprofit organizations (within certain financial limits and donation parameters) or allow your employees to take paid time off to volunteer. You could ask staff members to lead a committee that coordinates charitable events throughout the year — just be sure this work doesn't become an additional burden or obligation on top of their everyday responsibilities. You could incorporate charitable giving into team-building or ice-breaking exercises, such as randomly assigning groups of employees to work together on specific projects that aid underprivileged children or homeless families.

Consider sponsorships

Many organizations help citizens directly (and also get a little positive publicity) by sponsoring teams or events within their communities. Such tactics might include sponsoring a youth soccer team or providing funding for a charity road race. Remember to ensure that your company's name and logo appear on event clothing, promotional materials, and signage to help spread the good word that your company cares.

Provide cash donations

You could make direct cash donations to charitable organizations. Remember to get receipts and maintain appropriate records for donations of cash or goods for tax purposes.

Realize tax benefits

Speaking of taxes, don't neglect to take advantage of any tax benefits that may result from your philanthropic endeavors. In most cases, you can take a deduction of up to 50% of your adjusted gross income if you itemize deductions on Form 1040, Schedule A.

Corporations (other than S corporations) can deduct charitable contributions on their income tax returns, subject to limitations. See the instructions for Form 1120 for more information.

Not all contributions are deductible. Following is a brief summary from the Small Business Administration.

  • Cash contributions are deductible as long as they aren't set aside for use by a specific person. Cash contributions should be made within the current tax year, regardless of the accounting method used by your business.
  • Property or inventory donations are tax deductible. Use Form 8323 to determine the fair market value of goods valued at more than $500 ($5,000 for C corporations).
  • Although you cannot deduct the value of volunteer hours donated, you can deduct the costs incurred for a volunteer activity.

For more detailed information, consult IRS Publication 526, Charitable Contributions, and be sure to consult with a tax professional.


IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or compleness of these materials. The information in these materials may change at any time and without notice.