Philanthropy; good for charity and great for business
28th January 2019
Reputation is everything when it comes to doing business, and nobody knows that better than a family-run company. Over the past 12 years, businesses with a clear ‘Brand Purpose’ - those seen as making lives better - grew on average three times faster in value.
Many smaller businesses want to give to back to society and make a difference, but it’s not always easy; when time and money are tight, good intentions can fall by the wayside.
We asked the businesses and charities we work with about the main challenges they face in terms of charitable giving, and explored some of the reasons to overcome these barriers and become a force for good.
Firstly, failure to see the benefit of charitable giving is a significant factor in the decision-making process of the one in four business that are yet to give. Increasing the bottom line, elevating customer perception and attracting/retaining staff are fundamental aims for most businesses, but charitable giving may not be perceived as a driving force in those areas.
However, of those that do give to charity, two thirds saw noticeable positive impacts on their profitability. The more they gave, the more benefits they reported. Those that donate over 0.5% of turnover were twice as likely to report enhancements in their reputation, and nearly 50% more likely to see it as a factor that helped to recruit and retain staff.
Secondly, charitable giving is seen as a ‘nice to have’, outside of the main aims of the business. Aside from the occasional bake sale or some ad-hoc donations, giving is often not built into the strategies of small-to-medium sized businesses. With tight margins and prohibitive overheads, designating a budget of both time and money can seem like a struggle. Choosing manageable, meaningful ways to incorporate incremental giving into your strategy can take the additional work out of the process, and keep the costs within an acceptable range.
A great example of this is BTE Automotive, a family-run garage service business based in Hampshire. Started by husband-and-wife team Jan and David Parker 27 years ago, day-to-day operations are now run by their son Barry. BTE Automotive are building giving into their business in a serious way. Barry told us
“As a family-run business, our values are at the heart of what we do. As well as offering our customers the best possible service, we also want to give back to the community we serve and the causes close to our heart. By donating a £1 for each MOT undertaken this year, we’ll raise more than £3,500. And that’s just the start. We’re looking at giving through product sales and ways to get customers involved in choosing the charities that we support. It’s a great way to develop trust and relationships.”
One final challenge is the admin involved in the process of giving as a business. To donate off the back of business sales, there must be a Commercial Participation Agreement (CPA) in place, which involves negotiations, admin and legal issues.
It takes an average of ten hours to secure one donation from an SME. This can means that charities have to turn down donations under a certain threshold, as they aren’t viable. Of course, family-run businesses often have enough on their plate without their philanthropic efforts costing them time as well as money. So, charities lose out on vital funding and businesses lose out on the long-term benefits of profits and positive PR.
The good news is that online platforms now exist to make business giving easy by automatically creating CPAs and removing all the legal, tax and admin hassle. Hopefully this will lead to a huge increase in business giving from small-and-medium businesses.
Top tips for family-business philanthropy
Our top-tips to help family-run businesses really reap the rewards of charitable giving are as follows:
- Make a statement with the charities you choose. Who you choose to support will say something about your business. If local connections are important, choose a well-loved local charity. There may be a charity whose mission directly relates to your business purpose, for example, a tech company may choose to support an IT-related charity. Or there may be a very personal story you want to tell about a cause that is close to your heart.
- Involve your clients or employees in the giving process. People love to get involved in making a difference, especially when they get to choose a cause close to their heart. It's a great way strengthen relationship and build loyalty. Applegarth Farm shop is a family-run business that asks customers to choose the charity that will benefit from the proceeds donated from their meal.
- Blog, tweet, make it social. Post your giving stories on LinkedIn, Twitter and Facebook. If there's a strong local angle, you might find your local newspaper is interested, too.
Work for Good www.workforgood.co.uk was created to make business giving easy, flexible and beneficial to SMEs and the charities they choose to support. It helps businesses to put purpose at the heart of their company, by enabling them to embed charitable giving in smart ways that drive business growth at the same time as funding good causes. Participating businesses also have access to a distinctive mark that creates a point of difference and a connection to a movement that is transforming the world of corporate giving.