Give Thanks And Give Back: How Your Business Can Do Both

 It’s that time of the year when I get calls for quick ideas on tax deductions. One that often comes up is, “How can I get a tax deal for charitable giving?”  My blunt answer is, “Write a check!” There are obviously rules, restrictions and limits that apply, but basically, documented cash gifts offer a dollar-for-dollar income tax deduction.
Ask yourself, however, if this is the extent to how you want you and your company to give back? Now might be a good time to consider a long range plan for making a difference. We are a giving nation, and a lot of that giving is facilitated through private businesses, their owners and employees. As we enjoy this Thanksgiving week, it’s a good time to consider a business structure for giving thanks.

Giving = Time and/or Money
Traditionally, we think of charitable giving from a business as providing money to worthy causes and organizations. Write a check and let the charity put it to good use. In more sophisticated planning, we may be giving financial assets such as life insurance policies, tangible assets like cars and equipment, or business assets including company stock.
Many charitable organizations will tell you that time is an equally valuable property to donate. Some companies organize Habitat for Humanity days for employees to donate time to build a house. Others allow the use of company time for managers and executives to serve on charitable boards. Or, it may be as simple as permitting employees to “ring the bell” during the Christmas season. The key is that a company should use a targeted and documented approach for determining how the business and its employees give back to the community.

The Many Ways to Give
Businesses have many ways they can organize donations to worthy causes. If your company is large enough, a foundation may be an effective long-term way to share a portion of your company’s success with the community.  Even if that is too large an undertaking, it may still make sense for your company to have a charitable giving committee. A standing committee helps manage the company’s donations, plus it involves staff in a “feel good” service.  If a donation pool is budgeted at the beginning of the year, and a committee is in place, the company can quickly respond to emergencies caused by natural disasters and other unanticipated events, as well as have a plan for ongoing gifts.
A business can leverage the giving power of its employees. Gift matching programs have proven to be a popular way to encourage and enhance employee giving. Much like a 401(k) employer match signals to the employee, “if your retirement is important to you, it is important to the company”, so too, does gift matching send a message. It gives the employee a feeling of control over charitable donations, and creates an appreciation for how the company is willing to be a partner. Another approach is to set up a United Way campaign and then have the company match employee contributions. Many companies allow their burgeoning talent to be a “loaned executive” to the campaign. All these efforts not only help in the cause, but also provide a clear message to employees that the company cares about the community.
Giving back doesn’t just have to be about money either. Many companies have embraced the concept of “volunteer time off” or “VTO”. The idea is to formally allow a paid day-off each year to provide volunteer services. The services can be through company-sponsored events or of the employee’s choosing.  Because it is a purely voluntary option, the VTO day becomes a part of the company’s employee benefit plan.
Giving Impacts Your Bottom Line
Business books are replete with examples of how companies and their owners have given to worthy causes and benefited financially from doing so. It may be as simple and powerful as The Giving Pledge, where billionaires like Warren Buffett and Bill Gates commit to giving at least half of their wealth to charity. There are more elaborate designs such as Ted Turner’s $1 billion donation to the United Nations, where trusts and deferred gifts with tax advantages were employed. Stated bluntly, the uber-wealthy can either give back to society in the form of a 40% estate tax or control the giving of their wealth through charitable donations.
The concept of “benefiting through giving” can be more subtle and marketing related — yet worthy.  Life is good, Inc. has been a success story with a unique twist. Rather than just selling their stick figure emblazoned hats and shirts to the public, and then giving some of their profits back to charity, this young company has built its charitable giving into its marketing plan. The company sponsors festivals for children-related causes, often giving both merchandise and profits to the charity.  They want people to associate their “Genuine Jake” logo with children’s causes and are willing to put their marketing, money and muscle into the effort. With enough time and consistency, a company’s charitable ethos can become part of the consumer’s buying experience. I’ve been buying Patagonia outdoor wear for years, knowing that since 1985, Patagonia has pledged 1% of sales to the preservation and restoration of the natural environment.