By Arash Homampour
As the holiday season approaches, many business owners are thinking about scheduling parties, buying gifts for key customers, and calculating employee bonuses. But now is also the perfect time to think about charitable giving. Year-end gifts are not only important for the recipients, but they can also be extremely beneficial for the companies that make them.Give Back
Those who are successful in business have a fundamental obligation to give back and share the wealth. Rich people who believe themselves to be better than others, who only hoard and consume, invariably live sad lives. They miss out on the true joy and deeply human experience of helping and being of service to others.Tax Benefits
One of the most tangible business benefits of charitable giving is the charitable-donation tax deduction it provides. Such donations can include sponsorships of charities or events, donations of inventory or services, and cash donations.Before taking the deduction on your tax return, however, you will need to make sure it qualifies, and you will need to get a tax form from the charity or nonprofit to file with your tax return.
Recent legislation helps businesses and individuals take advantage of these deductions. Individuals may deduct qualified contributions of up to 100 percent of their adjusted gross income, while C corporations have an increased corporate limit of 25 percent of taxable income for charitable cash contributions made to eligible charities during the calendar year 2021.
You might also consider creating a charitable foundation, to which you make regular contributions. Critically, for every dollar you contribute to such a foundation, the tax laws allow you to write off an equal amount from your business’s bottom line.
Employee Satisfaction
When you engage in acts of charitable giving, you demonstrate to your workers that you care about more than just the bottom line. Especially in this time of labor shortages and heightened employee activism, charitable giving could translate into a greater likelihood of attracting the type of candidates you want working for you.Offering your employees the opportunity to volunteer their time to community causes or to participate in other acts of philanthropy will reinforce the idealism that is part of your company’s core mission. It can also boost employee morale and make your workplace a happier place to be.
Great PR
While you should never do good to get something back or as a marketing ploy, a simple act of kindness can also help build goodwill for your business. Companies that give back are perceived in a more favorable light; they are branded as “good” corporate citizens on social media and in the news. When your business makes a charitable donation, it helps those in need, but it also shows the world that your company has a heart.And people notice. Increasingly, consumers choose to spend their money with businesses whose values align with their own. According to a 2010 study by Cone Communications, 85 percent of consumers favor businesses that give to a charity that they care about.
Charitable giving has a significant ripple effect. When a business supports a charitable cause, it strengthens its relationship with its existing customer base and attracts new customers. It also shines a spotlight on a nonprofit that deserves public notice, increasing the level of public awareness and donations.
It Feels Good
Tax deductions and customer goodwill are wonderful reasons to make charitable gifts. They will undoubtedly help your company’s bottom line. But the fundamental reason for giving to others has nothing to do with taxes and sales. It has to do with doing the right thing.Charitable giving feels good because it is good. When businesses succeed and thrive, they become capable of doing amazing things. This doesn’t just mean curing cancer or flying to the moon. It can also be providing meals to those who are hungry, teaching skills to underprivileged youth, or ensuring that there is a warm place for homeless families to sleep.