Small Businesses & Charitable Giving: What to Know & What to Look For

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Small Businesses & Charitable Giving

It’s natural to want to give back to a charity or non-profit, either on a regular basis or after some sort of crisis, like a natural disaster. Unfortunately, many non-profits and charities with less-than-stellar records exist, which is why you need to be extra diligent before donating your hard-earned bucks.

Here’s what you need to keep in mind before you write that check.

Have you looked beyond the organization’s website? A charity’s website is its main marketing platform, so it’s going to paint the charity as the best thing since sliced bread. One of the site’s main goals—if not its primary goal—is to get donations, so of course you’re going to see content that will attempt to persuade you to give. While the site’s content might be accurate, you have no way of knowing that for certain (from the site alone), which is why you need to look beyond it. Consult these helpful resources to see if the charity really is telling the truth about all the good it’s doing: The National Center for Charitable Statistics website, Guidestar (which reports on nonprofits), Charity Navigator, and the BBB for Charities and Donors.

It’s important to note that you should also look beyond a charity’s financials, or, at least, you should avoid evaluating a charity or nonprofit on its financials alone. On its page about charities, The State of Michigan website says, “Many experts agree that a donor should not base a decision on whether to give to a charity solely on financial ratios…Financial data, while helpful, may not be a true measure of a charity’s achievements and effectiveness.”

Is the organization the right fit for your business? You certainly can give to whatever group you feel strongly about, but supporting certain organizations—especially if you promote the fact you’re doing so—will send a message to your customers. How they react, of course, is beyond your control. You can’t predict people’s reactions to every non-profit or charity on the planet. But you can do your due diligence and research whether a particular organization is considered controversial and what supporting that charity might mean for your company.

For example, people have strong opinions, both positive and negative, about PETA (People for the Ethical Treatment of Animals). And by “people,” we mean your customers. We’re not suggesting that you avoid contributing to these types of organizations. We’re just encouraging you to think things through and make sure you’re prepared for any potential fall-out.

Does it seem too convenient or too good to be true? After national tragedies or natural disasters, charities or “funds” often pop up to support victims. Many of them are legitimate. The problem is that because these funds are so new and often formed within days of a disaster, it can be challenging to properly vet them. After all, you’ll have a hard time finding a paper trail since not much info exists yet.

But there are some steps you can take to make sure that what you’re donating to is legit:

  • Look for funds promoting affiliations with banks or other financial institutions. Trust charities affiliated with a bank before you trust random web pages with a PayPal button.
  • See if the fund has “critical mass.” After the Boston Marathon bombings, individual pages were set up for victims on sites like Indiegogo. While those pages can be difficult to authenticate, what happened was this: many of these pages were promoted by news sites and other “gatekeepers” that we can presumably trust. Often, these pages have many members or followers as well. This doesn’t mean the masses are always right, but you stand a good chance of donating to a legit “new” fund when it has a lot of traction, members, and press.
  • Check with the press. Thanks to social media, it’s easy to stay connected with your favorite news source. TV station websites and newspaper websites will often have articles outlining ways you can help and where to donate.
  • Watch out for names that sound alike or that hype tragedy names. After the marathon bombings, many sites popped up with the words “Boston Marathon” in them in order to elicit donations from sympathetic and unsuspecting people. As you can imagine, some of these were scams.
  • When in doubt, play it safe. After a natural disaster, like a hurricane, most people can count on the American Red Cross. While this organization is certainly not without controversy, and while the money you give might not necessarily go to people on the ground in those immediate days and weeks that follow, you at least know you’re giving to a charity with an overall strong track record. The same is true with other lauded institutions. For example, for those people who were reluctant to give to The One Fund Boston, which was set up by the Massachusetts governor and Boston mayor after the bombings, people could give to funds that were set up by places like Boston Children’s Hospital.

What’s your motivation? If you’re giving to a charity simply to be able to promote the fact, is that really the best reason? Sure, as business owners, we want positive press, and we want to show people that our organization supports worthwhile endeavors and isn’t all about profits, profits, profits. But sometimes it’s better to let that information come to light organically. So give to charities, but instead of telling people about it, consider highlighting the charities themselves in one of your newsletters (November is always a good month to do this in). You don’t need to explicitly state that you’ve given X number of dollars to the organization. People will be able to infer it. Another idea? Highlight your employees and their favorite charities. This is another way to give back: if your company has a large enough audience, providing these charities with extra exposure is a good thing.

Does your business support any charities? How do you evaluate them? Do you promote the fact that your company gives? If yes, how do you go about it? Share your thoughts and experiences in the comments.

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