Small Business Benevolence: A Giving Guide
What do executives at DiCesare-Bentley Engineers; James B. Oswald Insurance; McNeeley, Piggott & Fox Public Relations; and Cranium-board-game inventors have in common? They have all established giving plans that involve employees and that make every dollar count.
Even in austere times, many companies believe that establishing a charitable-giving program is an important way to give back to their communities. In 2002, U.S. corporations gave a total of $12.19 billion, an 8.8% rise from 2001 when adjusted for inflation, according to the annual “Giving USA” study compiled by the American Association of Fundraising Counsel's Trust for Philanthropy.
Owners of small and midsize businesses are equally generous, and many of those who are charitably inclined give at least 1% to 2% of each year’s operating income or pretax profits to charity. Given their smaller operating scale, though, business owners must have smart strategies in place to ensure that every donated dollar counts. Working with a community foundation, involving your employees in giving and volunteering projects, and understanding your noncash options are all strategies that can help you chart a long-term course for your company’s giving programs.
The most effective giving programs for small and midsize companies are clearly focused on charities that align with the values of the company and that are active in the community where the company operates. For example, DiCesare-Bentley Engineers, Inc. in Groton, Connecticut, a company with 15 employees and revenues in the $2-million range, has established a scholarship fund for engineering students. “When we add to our staff, we generally depend on the regional labor pool,” says Michael Scanlon, a partner in the firm. “So this is our way of helping educate engineers who might come to work for us someday.”
Work with a Community Foundation
When Scanlon and his partners decided to grant scholarships, they quickly learned that giving involved administrative intricacies that neither their company nor even the area high schools were equipped to handle. So five years ago they set up a donor advised fund with the Community Foundation of Southeastern Connecticut, which has now awarded $19,000 in scholarships on the company’s behalf. The community foundation screens the scholarship applicants and chooses the winners.
Through donor advised funds, community foundations across the country can manage every aspect of a giving program, including tax filings, annual audits, and liability insurance. The funds can be set up in the name of an individual, a family, or a corporation. While the administrative costs of a private foundation are prohibitive unless you start with an endowment of $5 million or more, most donor advised funds require an initial bequest of around $10,000, which can be in the form of cash or closely held stock, with no start-up fees. “It’s the most efficient and effective way to run a giving program,” says Jim Pender, chairman of the James B. Oswald Insurance Company in Cleveland. Pender set up a donor advised fund earlier this year to mark the 110th anniversary of his grandfather’s cofounding of the company.
Richard Tait and Whit Alexander, creators of the adult board game Cranium, have also benefited from their partnership with a community foundation: The creators turned to the Seattle Foundation to run their “Buck a Box” program, which contributes a dollar from every game sold to a fund for after-school arts education for at-risk youth. In addition to running the fund, the Seattle Foundation helps the pair identify deserving recipients across the country.
Get Employees Involved
One way to get more charitable bang for your company’s bucks is to encourage employees to give to their own favorite causes through both donations and volunteering. At the James B. Oswald Insurance Company, a charitable-gift committee approves donations based on requests from employees. At Ipswitch, a 145-employee software company in Lexington, Massachusetts, every employee’s third anniversary with the company is celebrated with a $1,000 donation to the employee’s community organization of choice.
Getting your company’s entire staff together two or three times a year for a day of volunteer work is also a good way to foster a sense of corporate pride and common purpose. Recently the Oswald staff took a weekday afternoon off to paint and weed the gardens at a children’s home. “It makes everyone view the workday a little differently,” says Chairman Jim Pender.
Make Noncash Contributions
While you may be short of office inventory to donate, consider what other assets you might be able to offer charities. You can claim a tax deduction based on the value of your costs (rather than fair market value) for such in-kind gifts as Web site development, the products your company produces, or use of your office space on evenings or weekends.
Lending staff expertise can also be a valuable contribution that gives both you and your employees the bonus of on-the-job training. “We’ve contributed pro bono services to 36 nonprofit organizations,” says partner David Fox of McNeeley, Piggott & Fox, a 65-employee public relations firm with offices in Nashville and Memphis. “For young employees who want to gain experience in such areas as media placement, participating can be a great career boost.”
With a little planning, your company’s philanthropy programs can provide a similar boost to organizations in your own community. Doing well by doing good is an accomplishment that you and your employees can be proud of.