You've probably heard that giving back pays off in more ways than one. For example, according to a 2009 Harvard Business School study [PDF], giving money to someone else boosts happiness more than spending it on yourself. A 2006 study by Rachel Piferi of Johns Hopkins University and Kathleen Lawler of the University of Tennessee shows there are some health perks, too: people who give to others tend to have lower blood pressure than those who don't.
Then there's the business side of charitable giving: it sure looks good when you do it. But if you don't have much wiggle room in the budget, how can you reap these benefits?
We asked some small-business owners and nonprofits for their pointers on how you can give back without breaking the bank. Their advice? Partner with an organization, give consistently, and donate your expertise.
1. Partner with an organization.
If you don't have a lot of time or money to spare, consider partnering with a nonprofit. For example, Yooree Losordo (@y00ree), owner of indie Boston-based bookstore On the Dot Books (@onthedotbooks) partners with the Boys & Girls Clubs to run a book club for middle-school children.
Losordo says, "I donate my time, and the books are paid for by my partners at a discount." It's a good model for businesses that sell goods, but don't have inventory they can flat-out give away.
2. Give a little consistently – it adds up.
Motivational business speaker Thom Singer (@thomsinger) reminds us that you don't have to give a lot of money to make a difference – even small contributions add up over time. Singer calls it "compounded generosity."
Singer says, "I have donated a small percentage of all my fees to two different children's hospitals that specialize in research for cranial facial abnormalities. Over the years, it has added up to over $50,000."
To ensure you donate consistently, Singer suggests you pick a cause you care about. He chose children's hospitals because his daughter was born with a condition that required a daunting surgery when she was a baby, so the cause hits close to home.
3. Make giving back part of your referral program.
"For each customer that comes in through this program, we give $100 to Operation Hope," Kim says. "It's a nonprofit that has a strong small-business empowerment program and is invested in markets that we're interested in."
And it's a win-win for both parties. Kim notes this form of giving actually helps grow the business. Meanwhile, Operation Hope can boost its funding by referring small businesses to the 401(k) provider.
4. Make sponsorship part of your advertising budget.
"If advertising is received in exchange for the donation, that amount can be deducted as a business expense," Fraim says.
Say, for example, you donate money to a cause and the nonprofit splashes an ad for your business on its website. You may be able to write that off as a marketing expense. Fraim notes the IRS considers advertising to be any message containing…
- Qualitative or comparative language.
- Price information or other indications of savings or value.
- An endorsement.
- An inducement to purchase, sell, or use any company, service, facility or product.
Fraim warns the charitable donation deduction will only be beneficial if a taxpayer can itemize deductions on Schedule A and if all their itemized deductions exceed the standard deduction. But if the payment is an advertising expense, then it can generally reduce your taxable income.
5. Donate your time and expertise.
Karen Ellis, president of educational nonprofit Life Learning Center (@LifeLearningCtr) in Covington, Kentucky, suggests volunteering your business savvy. For example, Ellis recommends that you give one lunch hour per week as a mentor. You'd be surprised how many social service nonprofits need professionals to help others learn how to:
- Manage their finances.
- Resolve conflicts.
- Manage their time.
- Search for jobs.
- Prepare for interviews.
Ellis reminds small-business owners that raising awareness is a huge help, too. You can forward holiday fundraising marketing to your circles of influence via Facebook, Twitter, LinkedIn, and Instagram.