Donating money or time to charitable initiatives makes people feel fulfilled and happy. That’s one of the reasons why one-in-four Americans volunteer.
The good feelings that result from giving back can also occur when corporations and their employees participate in charitable initiatives. In addition to the good feelings people get when they do good, there are several benefits corporations can receive from giving to nonprofits or to their communities.
“The essence of life is to serve others and do good.” — Aristotle
Here are four reasons corporations should consider undertaking volunteer work:
1. Tax Breaks
First and foremost, business is a business. It has to make a profit in order to continue operating and pay its employees. Finances are an unavoidable and critical aspect of any organization, so it’s only fitting to discuss the financial benefits of corporate giving—tax breaks.
When corporations give back, they may be able to file charitable donation tax deductions on their income taxes. The contributions to charitable organizations are usually reduced up to 50% of a company’s adjusted gross income. Tax deductions generally include the monetary value of charitable donations from corporations.
Check to see that the company is a registered nonprofit with the IRS before agreeing to make donations to it.
Tax-deductible donations may include
- Charities
- Donations of inventory of services
- Cash donations
- Volunteering expenses
2. Bigger Bottom Line
Additional financial incentives exist for businesses participating in philanthropic efforts.
This is partly due to the fact that consumers prefer to support businesses that give back. Eighty-one percent of Millennials prefer to support brands that demonstrate good corporate citizenship.
“Purpose-driven consumer companies achieved a compounded annual growth rate of 9.85% over five years, compared to just 2.4% for the whole S&P 500 Consumer Sector.” — Nonprofits Source
Businesses with a strong culture of corporate philanthropy are more likely to have loyal customers.
3. Beneficial Publicity
Having your company’s logo on a 5k t-shirt is an excellent way to get people talking about you. But even if the nonprofit you sponsor doesn’t broadcast your company’s donation to the world, publicity can come in other ways.
Your corporation can write a press release about the donation, or include the nonprofit’s logo on your website under a “Giving Back” section.
News organizations and other media channels are more inclined to share “feel good” stories than traditional marketing pieces.
4. Satisfied Employees
Employee retention is an essential part of any organization, and one of the most impactful ways to boost retention is to offer volunteer opportunities to employees. The chance to give back to the community provides a greater sense of purpose for employees and the organization as a whole.
Volunteering together can also help employees form deeper relationships with their coworkers. Seventy-one percent of employees said it is imperative or very important to work where the culture supports volunteering and giving back. And eighty-seven percent of corporate leaders believe their employees expect them to support causes and issues that matter to those employees. People find their jobs more fulfilling when they feel like they are truly making a difference.
Happier employees lead to less employee turnover. Board members may also be more engaged in the work if the corporation they work with is making positive contributions to society.
Corporate giving has an immense impact on a company’s bottom line, and also on its public image.
Corporate Giving vs. Social Purpose
Social purpose is more encompassing than corporate volunteer work or donations. It’s about how the business holistically influences positive economic, social, and environmental change.
Corporations with a social purpose have committed to making strategic decisions that benefit the society or the environment in the short- and long-term. But they must also accomplish the goals of their shareholders. A social purpose may include making eco-friendly decisions about production, packaging, and shipping, or focusing on diversity by having a diverse workforce and boardroom.
Over the past four years, there has been an increase in investor interest to leverage a corporation’s social purpose to differentiate them from competitors.
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