To Give or Not to Give? Should You Donate Profits to Nonprofit Customers?

Are charitable gifts included on your firm’s tax filings? Many firms demonstrate their corporate social responsibility by setting aside a percent of their profits to give to nonprofit customers. Read on to learn more this tactic.

How Does This Tactic Work?
If you enjoy a profitable year, you donate some of your profit to your nonprofit customers. A national office technology firm, for example, gives one-third of its profits.

Pros
  • Give-back donating offers low-risk giving: you donate if you profit.
  • Nonprofits receive cash. Cash endears you to them. Corporate support allows nonprofits to compete better when seeking grants.
  • Your gifts trigger recognition packages that enhance your brand.
 Cons
  • You establish a quid pro quo relationship, not a partnership. You lose breakthrough wins.
  • You risk planting unrealistic expectations. Your customer anticipates $5,000; you planned on $500. An insurance executive complains, “Nonprofits think we’re made of money.”
  • From some, the transaction holds a whiff of bribery.
 Avoid the Bite
  • Discover how the nonprofit will leverage your gifts. Together look for opportunities with greater wins.
  • Be upfront about the average donation size. It’s never about how much you give; it’s about what you accomplish.
  • To meet new partners and markets, include other nonprofits besides your customers.

Business Philanthropy Tactics

This article is the third in a series about different business philanthropy tactics. Click here to read about contests and discounts. To assess your business philanthropy, take Karen’s Bottom Line Philanthropic Assessment.