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Five Questions to Ask When Choosing a Charity for Your Business

January 15, 2016

corporate-givingWhen you're an individual, picking a charity is generally simple. Even if that nonprofit goes out of business or runs afoul of federal restrictions, the personal financial consequences are usually contained. If you run a business and your favorite charity becomes wrapped up in scandal, you could squander the goodwill of your employees, as well as lose a fair amount of donations.

Even charities with seemingly familiar, professional-sounding names can implode in spectacular fashion. Last year, the family running the Cancer Fund of America, the Children's Cancer Fund of America, Cancer Support Services and the Breast Cancer Society were accused by federal and state officials of taking almost $200 million in donations and spending the money on luxury vacations, cars and college tuition.

So where you place your time and effort as a business is critical. Here are five questions to ask when you're seeking a charity your business can support:

  • Where are your clients donating their money or time? Of the nearly $260 billion given to charities by Americans last year, 72% of the donated money was given by private individuals. By identifying the charities beloved by your clients, and devoting time or money to those causes, you stand a good chance of gaining more of their respect, and possibly business.
  • Should you let your employees choose a cause? The statistics are stunning. According to Charities.org, not only do 93% of businesses conducting annual workplace giving campaigns let employees choose where the money goes, but when employees are given a choice, participation increases. By letting your employees drive the car, you're encouraging them to build a successful charitable giving program.
  • What do you wish to accomplish? Though Americans donate billions to charities each year, the vast majority of donors who donate to cancer research do not expect that their donations will cure cancer within a year. However, charities come in many stripes, and it is entirely possible that your company's contribution can quickly help change laws, stop the destruction of beloved historical properties, support new school programs or build wells in Uganda. Weigh short-term priorities vs. long-term charitable priorities.
  • Should you give time, money or both? What type of company are you? Do your employees routinely work long hours and hardly socialize at all beyond work? If so, without an incentive program, it may be unrealistic to get your employees involved and expect them to donate their precious time to charity. However, organized, work-sanctioned employee giving programs definitely work. In fact, if you're aiming to attract millennials, organize a charity program. In the 2014 Millennial Impact study, more than 50% of millennials were more likely to choose to work at a company that gave to causes.
  • Does your proposed charity pass IRS and basic charitable giving standards? Is the charity of your choice a 501(c) that passes IRS deduction standards? Also, where does your charity rank against similar charities on how much is actually given to your favorite cause, and how much money is put toward marketing and administration? Use the IRS Exempt Organizations Select Check tool to check tax status and eligibility, and Charity Navigator to see your nonprofit's rank based on everything from how long the charity has been in existence to spending practices. How your nonprofit fares in both departments should play a large role in whether or not they receive your time or money.

Though it's tough to quantify just how much a business can benefit from giving to charity, a recent Corporate Responsibility Magazine survey showed that 72% of people felt it was important to work with a company with a CEO involved in corporate responsibility and/or environmental issues. By taking a stand and showing that your company wants to better the world, you'll better your own chances that you'll attract great talent and a bigger client base.