Accounting & Finance
Andrew Miller On How Businesses And Charities Can Work Together
Do you think of businesses and charities are opposites?
If your answer is ‘yes’ you’re not wrong, but you’re also not absolutely correct and here’s why. Both have a lot in common, for example, companies are ‘for-profit’ and charities are ‘not-for-profit’.
Companies pay tax, charities usually don’t, or it’s heavily subsidised. However, to say for-profits and non-profits are opposite in everything they do would be incorrect.
Businesses need to make a profit to reinvest in the business and also pay a dividend.
Charities usually spend all they raise, and excess funds are reinvested in delivering better services to their customers, i.e. causes needing donations, not loans to support their beneficiaries.
Therefore there is are differences as well as a commonality between the two types of entities. Plus a symbiotic relationship also exists between for-profit organisations and charities.
Donations to legally registered charities receive tax credits. Individuals and companies choose to donate to registered charity instead of paying the same or a similar amount in tax.
Former Polycom CEO Andrew Miller, who runs the Andrew Miller Foundation has shared his thoughts on where charities and businesses benefit from working together.
Tax Write-offs For Business
Tax write-offs are at an all-time high, and whether you agree with this or not, where there are loopholes, management accounting firms will use them so their customers, i.e. for-profits pay less tax.
Corporate giving is a palatable way to reduce the tax obligation. When a company gives money to a worthy charity, in most cases, it’s not dollar for dollar, i.e. a dollar to a charity does not reduce your tax bill by a dollar. However, even when it’s only 50 cents in the dollar, this is still a significant write-off for a company who will also gain a lot more than just a lower tax bill. There’s the feel-good that goes with helping those in need, and consumers will buy from organisations that have similar mindsets to their own.
Builds Brand Recognition
Consumers love a good feel-good story. When a business teams up with a charity, and the partnership resonates for the right reasons, it’s a perfect brand building opportunity. Marketers know the power a feel-good story can have on conversion and sales, and this is why most organisations attempt to set themselves apart from their competitors with their give-back initiatives.
What’s interesting is, it’s the consumers who are actually raising the donations. For example, when you get to the payment gateway online or you’re at the payment counter in a store. Before completing the purchase, you’re asked if you’d like to donate $1 to animal welfare or a hospice or another charity.
However, marketing content is clever insofar as the total amount of money raised can be shared in marketing, PR and advertising campaigns without the business needing to say it was the consumers who actually donated. 🙂
When we’re looking for a new supplier or a new product, we will recognize the brand associated with a charity we lie and immediately give the brand reputation. It may feel strange to think of it as advertising, and there are indeed cheaper ways to advertise. Still, businesses working with charities is a win-win and another example of a symbiotic relationship.
For-profit organisations working with charities is an ice-breaker at networking events. You may not know anything about the business but enough about giving back that you can approach and then build a relationship within the organisation. Hosting events that have a charitable component also improve attendance so donating a sum to a charity from funds raised at the event is a fantastic way to ensure high attendance from your loyal suppliers, advocates and clients.
Invite prospective clients, and media and share the success of the event on your social media profiles and your blog. Plus if you’re donating to a foundation like the Andrew Miller Foundation a great review is perfect PR for your business.
Show Your Customers You Share Their Vision
Partnering with charities resonates with customers and potential partners. Whether it’s working with the Red Cross, or forest conservation groups or something else, it gives your brand a personality.