Best Practices for Small Businesses to Give Charitably
Donating to a charitable cause has a wealth of benefits. In addition to strengthening your local community and making the world a better place, your company’s donation can also demonstrate your values and offer tax benefits.
Pick a meaningful cause
Although you likely have many causes that you support, you can do good for the world and bolster your company’s reputation by picking a benefactor that aligns with your organization’s mission. For instance, if you run an art supply business, you could donate to an organization that helps children receive art education. Forbes contributor Kris Putnam-Walkerly explains that your partnership with a fitting charity could inspire your patrons and crewmembers to donate to the cause more readily than if you’d picked a completely unrelated charity. On top of that, giving to a cause can demonstrate your company’s commitment to bettering the world — and everyone can appreciate a business that uses its power for good.
Do a deep dive
Before you fork over your company’s hard-earned cash, dig deep into your chosen charity’s history and practices. The Federal Trade Commission suggests asking the organization’s representatives some important questions. First, find out whether or not the charity is tax-exempt. Don’t be afraid to ask how the charity applies its donations, as well as what they’ve accomplished. Furthermore, dig deep into the organization’s website and check its reputation using sites like Better Business Bureau, Wise Giving Alliance, Guidestar, or Charity Navigator.
Consider smaller charities
While many large nonprofits champion great causes and do good work, your dollars may go farther when you give to a smaller organization. Your company’s donation will have a bigger impact on a local charity, since less of the money will go to the organization’s fundraising and overhead expenses, explains Forbes council member Jeremiah Desmarais. And on top of that, your company could form a lasting relationship with the charity — along with a reputation for giving back to the community.
Different ways to help out
Not all of your company’s charitable donations have to be cash. You can still receive tax benefits for donating food, supplies, other inventory items, and even intellectual property to charity. Keep in mind that you can’t receive a tax deduction for donating services to a charity. However, you can deduct expenses associated with the service you provided, such as travel expenses or the materials you used to contribute, according to USA.gov. Just keep in mind that these different types of donations come with their own specific IRS reporting requirements.
Keep track of donations
Since charitable giving comes with tax benefits, it’s important to keep thorough records on all of your donations. USA.gov recommends requesting a written acknowledgment from the charity that documents your donation. Also, keep any bank records associated with your giving. On top of that, if you made a non-monetary donation, be sure to fill out Form 8283 for your taxes.
Charitable giving can strengthen your community and show the world that your company cares. For more tips on making the most of your enterprise’s donations to charity, consult a tax professional or business advisor.