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Is Your Small Business Socially Responsible?

Corporate Social Responsibility (or CSR as it is often referred), has rapidly become woven into the fabric of marketing campaigns in the corporate world. In fact, as reported by The Government & Accountability Institute, the number of leading businesses publishing corporate social responsibility reports rose from just 20% in 2011 to 81% reporting in 2015. As an owner of a small business, are you familiar to the CSR trend? Have you started to dig into how you could use philanthropic efforts through a company foundation to not only give back to causes that are important to you, but also to actually MAKE MORE MONEY?

We see it everywhere, big corporations teaming up with nonprofits, like in Dove’s Real Beauty Campaign and with Yoplait’s Save Lids to Save Lives. We see restaurant chains committing to donating a percentage of their sales to their charitable work, like 4 Rivers Smokehouse is known for. We also see big corporations like Walmart and Microsoft widely proclaiming how much money they give away through their corporate foundation every year. These programs not only allow big companies to use some of their fortune to give back, they actually work to increase sales and profits!

The idea of being socially responsible has become so pervasive that it has practically spurred a new field of research, with various firms and agencies studying the effects on both consumer opinion and corporate profitability. One Boston reputation-management consulting firm, by the Reputation Institute (RI), now conducts an annual study tracking social responsibility reputations across many companies. The most recent annual analysis included over 170,000 company ratings from respondents in 15 countries! It was intended to shed light on which companies consumers perceive to be the most socially conscious, or which have the most easily recognized work related to the company foundation or corporate foundation.

RI’s research is so serious, in fact, that they have developed their own proprietary RepTrak Pulse scoring system. They use it to rate public views of a business’ company governance, positive influence on society, and treatment of employees. So what companies are best using their company foundation to become a big hitter in the field of social responsibility? Let’s look at some of the companies RI found recently to be doing this CSE thing right.

Lego

Lego consistently tops lists of companies with great corporate social responsibility reputations because, according to RI Chief Research Officer Stephen Hahn-Griffiths, the company “has embraced corporate social responsibility from top to bottom.” Through its corporate foundation, The Lego Foundation, as well as other corporate sponsorship and cause marketing initiatives, the company promotes creativity and learning. They do this through play, promoting sustainable business practices, and supporting the work of other well-known charities like the World Wildlife Fund.

Microsoft

It seems like Microsoft has it all together when it comes to strategy and innovation of any kind, so why would their corporate social responsibility be any different. Microsoft adds to its many achievements through social responsibility. Through its corporate foundation, Microsoft has demonstrated an outstanding commitment to enhancing educational opportunities around the globe. Co-founder Bill Gates does even more through his own private family foundation.

Google

Google AdWords grant, anyone? Through their company foundation, Google provides support to innovative nonprofit organizations around the world. In addition to significant financial contributions, Google makes highly discounted digital tools and free web-based advertising available to nonprofits, scoring them big on the social responsibility scale.

Walt Disney Company

Through diverse corporate philanthropy, Disney uses its ability to give back and be seen as a family-loving, world-changing do-gooder as a major driver of its sales and profits.

Colgate-Palmolive

It is not only technology and entertainment companies that are using a corporate foundation to give back and improve their company’s reputation. Household staples from Colgate-Palmolive are also getting in on social responsibility. Scoring consistently high on CSR evaluations, Colgate-Palmolive is best known for how diverse their sustainability efforts have become. The company foundation supports education, healthcare, dental care, and animal shelters. They focus heavily on efforts to ensure the health of their employees, as well as to promote the value of volunteerism amongst their staff and others.

BMW Group

Through multiple company foundations, BMW shows responsible leadership and inspires leaders worldwide to work towards a peaceful, just and sustainable future. To this end, the BMW Foundation is aiming to advance the Sustainable Development Goals of the United Nations 2030 Agenda.

As an owner of a small or medium-sized business, you’re probably thinking how could I keep up with these social responsibility heavy hitters? What could my business ever accomplish with a company foundation? Would it really make a difference or make us more profitable?

The good news, my small business friends, is that the benefits of corporate social responsibility programs are not just awarded to the biggest, most profitable corporations. A company foundation is effective for businesses of any size. Your small business can just as easily establish a company foundation through which you can reap a wealth of benefits, while also giving back to the causes that mean the most to you.

Committing to donating just a small percentage of profits to a company foundation can go a long way in boosting your business’ reputation and increasing the bottom line. And with the luxury of social media available to spread the word about your corporate foundation mission at almost no cost, your company can establish a reputation as a social do-gooder in no time! By forming a company foundation, you stand to realize a wide array of advantages, many of which you may not have ever considered:

Companies Are Thinking More Strategically About Their Philanthropy

As a business owner, we are sure you know that when sales and profits are up, the tax bill will also be higher! Normally it’s up to the CPA or controller to provide options to reduce your tax bill. Fortunately, we have another idea – one that can help you lower your taxes while also promoting your brand and increasing sales. We are talking about starting a corporate or company foundation!

Companies big and small can reap the benefits of having a company foundation. For example, placing a full page ad in your local newspaper to create awareness of your company will cost thousands of dollars! On the other hand, through cause marketing initiatives, your company can get free advertising in TV or newspapers. This will help create a greater awareness of your business, increase brand recognition, and ultimately generate more sales growth!

Increasing Sales

You may not realize it, but a corporate or company foundation is actually a meaningful sales tool. The work you do with your corporate foundation can do a lot to entice potential customers. According to the Small Business Administration (SBA), fifty-five percent of consumers said they are willing to pay more for products when purchased from socially responsible companies. Other studies have shown that a well-administered company foundation can increase a business’ sales by as much as 20 percent!

Attracting Quality Staff

Giving back through a company foundation also drives staff recruitment. Millennials, in particular, are known to not just look at the job and benefits. They look at the larger organization. The SBA also found that 79 percent of millennials said they consider the company foundation when deciding whether to accept an offer of employment. And a PricewaterhouseCoopers (PwC) survey found that nearly sixty percent are intentionally looking for employers whose sense of corporate responsibility matches their own. Promoting the way that your company foundation gives back to society will go a long way in helping you recruit top talent.

Tax Relief

Donating money to charity via your company foundation can be a very tax-efficient way of supporting your chosen cause. Even if your company foundation didn’t increase sales, donations made to the foundation result in less money paid to Uncle Sam. When your company makes a charitable donation, you receive the benefit of tax relief by deducting the amount donated to the corporate foundation from your company’s profits and paying less state and federal income tax.

Generally, a corporation may take a deduction of up to 10% of its taxable income for the year. An LLC is allowed an even greater deduction limit, in some cases up to 50% of its taxable income. Keep in mind that the corporate foundation does not even have to spend the funds your business donates to it right away. A foundation can invest some of its income to produce sustainable returns, so that your business doesn’t always have to contribute more and more of its profits to continue its good work.

good Press

If you’re established in your community, starting a nonprofit is going to be big news. With each event or donation, your for profit will be given some of the spotlights. If you’re a business that’s eagerly trying to capture and retain part of the millennial demographics, a corporate foundation may be a way to help draw in the right crowd. If your business model isn’t built around giving like Tom’s Shoes,  it might be worth considering.

Whenever we bring up good press as a reason to consider a corporate foundation, we often hear business owners tell us that they already give to charity. While that’s already a great start, the advantage here would be that your organization is associated with the action as well as the contributions for the good deeds of the charity. Not only that, but you know 100% where your donation is going. Many larger nonprofits are well known for paying CEO’s an outrageous salary or using donations to hand out six-figure raises. When it’s your nonprofit, you not only get more good press, but you get peace of mind knowing your donation is being used for good.

Corporate/Company Foundations – The Bottom Line

Foundations have two primary benefits. They can improve the local community through charitable programs or corporate giving to nonprofits, and they can also improve the company’s financial results. All companies are interested in increasing profits. Forming a corporate charity can be a great way to improve the bottom line by generating goodwill in the community and benefiting from the positive marketing that can come from it.

Setting up a corporate or company foundation, however, can be an intimidating process. The process of establishing a corporate foundation can be a lengthy one if you do have experience in it. Even after the corporate foundation has been legally formed, there are many steps that must be taken to ensure the charity has the best opportunity for success. From branding to strategic planning, corporate foundations require a substantial time commitment in order to be successful. Even the largest corporate foundations experience the growing pains of foundations. Let our experienced consultants guide you in forming your corporate foundation. We can make the process easy and simple.

Ready to Get in the Game? Get Help from the Experts.

Establishing a new company foundation doesn’t have to take your attention away from running your business, especially when you’re working with BizCentral USA. Our team of experts is skilled and trained in all aspects of nonprofit management, including corporate foundation administration. Contact us on 1(407) 857-9002 today or visit our website.