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Janice France-Pettit: Funding a company’s philanthropic causes

Posted: June 7, 2013 2:00 a.m.
Updated: June 7, 2013 2:00 a.m.

Janice France-Pettit

You don't have to be a large, multi-national company to support a cause or charity, and many small business owners are finding that incorporating philanthropy strategically into their business plans can result in customer loyalty, happy employees and tax advantages. Below are some tips as to how a small business own...

 

You don’t have to be a large, multi-national company to support a cause or charity, and many small business owners are finding that incorporating philanthropy strategically into their business plans can result in customer loyalty, happy employees and tax advantages.

Below are some tips as to how a small business owners can build philanthropy into their strategic plan:

According to a 2010 study by Cone Communications, a firm specializing in corporate social responsibility and cause marketing, 85 percent of American consumers has a more positive image of a product or company when it supports a cause they care about; and 83 percent said they wished more businesses they use would support causes.

The same survey reported that 41 percent of Americans bought a product simply because it was associated with a cause or issue.

“Giving charitable gifts of time and resources is also an effective way to build your brand and connect with customers in a very meaningful way,” said Carl Ballton, Union Bank senior vice president and president of the Union Bank Foundation.

Supporting a charity can also offer financial benefits in the form of tax deductions. While a tax deduction may not be your main motivation for supporting your favorite charity, most financial advisors agree that you should take advantage of the tax break.

Choose a cause or organization that you, your employees and customers care about and that aligns with your company’s business mission where possible.

Sponsoring local events and charities can build goodwill and brand recognition within your community.

You also might consider choosing a charity that is focused around your specialty. For example, if you sell pet supplies, supporting a local animal shelter can reinforce your brand as it relates to pet care.

There are a variety of ways to support the cause of your choice.

Making a donation to a charity by writing a check is the simplest and most common form of philanthropy; however companies can also provide support to non-profits through corporate foundations, direct-giving programs, donor-advised funds, employee volunteerism or a combination of all.

A corporate foundation is a company-sponsored organization, set up as a separate legal entity that makes grants and donations to non-profit organizations that reflect the sponsor company’s interests.

Direct-giving programs are operated and controlled by the company that funds it and the donations are reported to the IRS as a tax deductible charitable expense.

A donor-advised fund is a charitable giving vehicle set up under the tax umbrella of a community foundation or public charity, which acts as a sponsor. The company contributes a tax-deductible donation, and the sponsoring organization manages the fund, handles the record-keeping and due diligence, and then makes a donation to the causes of the donor’s choice.

And your company can support charities in other ways besides donating cash.

Most charities or non-profits operate as tax-exempt 501(c)(3) organizations and charitable donations can qualify as tax deductions against your business’ annual tax liability.

However, the IRS tax code is complex and not all contributions can be deducted. It may be wise to consult with a financial advisor to garner the maximum tax benefit from your philanthropic activity.

Finally, be sure to communicate to your staff, customers and other stakeholders about your philanthropic works, by including your contributions and volunteer activity on your Web site, company newsletters, reports, your social media outlets and other vehicles, and ask that the charities you support include it in their outreach.

The column is co-authored by Janice France-Pettit and Tina Robinson. France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, San Fernando Valley and Antelope Valley regions.

Her column reflects her own opinion and not necessarily that of The Signal. The foregoing article is intended to provide general information about financial planning for small businesses and is not considered financial or tax advice from Union Bank. Please consult your financial or tax advisor. Visit www.unionbank.com for more information.

 

 

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