Success in business is about more than amassing revenue, getting great ROI, or being “the best” in your area. It’s also about working towards a greater good and leaving an impact on the people and community you engage with.
Giving back to your community and supporting your business’s values through the gift of your resources and time is an extraordinary way to consciously define your business reputation and your own legacy.
And when it comes to planned philanthropy, it can be rewarding to be more strategic about your giving and want to engage more with nonprofits in their focus areas. “High impact giving” is becoming increasingly popular among donors who wish to ensure that their gifts are used properly and who want to measure the effectiveness of their donations.
Why is Philanthropic Planning Important?
Planned giving through your financial firm benefits both you and the charitable organizations you choose to support. Today’s world is complex, and many issues require informed solutions to address. Planning your giving allows you to educate yourself about causes and issues important to your community and develop relationships to ensure your gifts make the greatest impact on the problem you’re trying to address.
Outside of that, when you plan to donate from your business, charities can in turn plan more efficiently and fulfill their missions more effectively when they can be secure in their funding sources.
Charity Navigator, an independent charity evaluator that rates nonprofits based on financial transparency and accountability, has found that most highly successful charities spend as little as possible on fundraising and marketing activities.
By establishing a long-term relationship with a charity, you can help reduce the amount of time, money, and energy required to raise funds and help them get back to supporting the cause. Establishing a relationship with a
charity can also help you influence their mission and motivate them to achieve goals to receive more funding.
How Planned Giving Benefits Business
Philanthropic planning can work effectively as part of your overall business strategy by allowing you to set goals for your giving and follow through on your pledges. When donors only give in response to solicitations from charities, it empowers others to determine how and when money’s given.
For example, if you were to review the past gifts that your business has donated, what pattern would emerge? Has your gifting been intentional and driven by your passions and values? Or has it been primarily motivated by external solicitations from friends, family, and charities? Even worse, has it been nonexistent altogether?
As a small business that should be making a positive impact on your community, it’s vital to support the charities and nonprofits that matter to the wellbeing of your area. Even if it’s small amounts, you can shine a light on those donations to build your reputation and increase both trustworthiness and client loyalty.
Planning your charitable activities also helps you ensure that your money is used as you intended and that your gifts make the most impact. The planning process also helps take a proactive approach to charitable work by allowing you or another team member at your firm to do the due diligence needed to understand a cause or situation and identify the major organizations committed to making a difference. By developing an informed understanding of the issues, you take control of your financial relationship with organizations and your business becomes a strategic partner that they’ll cherish.
Use Philanthropy to Support Your Business’s Mission
Your business mission statement helps define your firm’s core values and can lead to a clearer picture of your business’s philanthropic goals.
Remember, philanthropy doesn’t have to be all about money. Many
small businesses make valuable contributions of time to support the causes they love. For example, you and your staff can take a half-day each season to help volunteer at an organization that means a lot to you or some other team member. You can always switch the organization each time too, as you’ll generally have no hard time finding nonprofits that can use extra help. The benefits of volunteering can be manifold: increased wellbeing, new relationships, community engagement, and the joy of knowing that
your business is making a positive difference in the world.
Last Tip: Be a Savvy & Engaged Philanthropist
Many small businesses are becoming savvier about their giving and want to know that their donations make a difference. Financial efficiency is just one way organizations are evaluated. Looking at Charity Navigator again, nonprofits ranked the highest spend an average of 65% or more of their annual budget on program expenses (actually delivering on their mission), less than 15% on administrative costs, and less than 10% on fundraising expenses. While some organizations may deviate from these norms for very good reasons, make sure you understand where every dollar you donate goes. As a donor, you should encourage transparency in organizations by asking them to make their financial statements publicly available.
So, what are the best options for you? You can always check with your local nonprofits, or we recommend using Charity Navigator or Charity Watch to help you choose reputable, honest, and noteworthy organizations. Happy giving!