The Benefits of Philanthropy

If you own a family business, there's a good chance the company and your family are an integral part of the community. And that means public relations aren't just part of the job — they're fundamental to your company's success.

As a result, volunteering or donating to local organizations can benefit not only the community, but also your company's long-term relationships. That, in turn, can improve your competitive edge.

Philanthropy can bring several benefits. More and more of today's consumers would likely switch to a brand or retailer associated with a good cause when price and quality are equal. In addition, employees at philanthropic companies often feel a stronger sense of loyalty.

But that's not all. In addition to enhancing your standing in the community, charitable giving can help your company build liaisons with key leaders and form valuable relationships with not-for-profit organizations.

Here are some actions to consider:

• ‍Identify internal resources other than money that you could contribute. Examples include expertise, employees, products and services.‍
• Assign one or more people to handle charitable activities. Once they make a few donations, more people may start knocking on the door. Sorting through the requests can be time-consuming. In some cases, companies set up foundations, which require a board of directors.‍
• Create a mission statement with goals for your program that aligns with the values of your company. For example, a computer software business might select school technology projects. This type of focus can increase the impact of contributions.‍
• Establish guidelines to explain your charitable policies and the criteria used for selecting recipients. Being clear can make it easier to reject requests that don't fit your guidelines.‍
• Set a budget to reinforce the importance of maintaining profitability. For example, you could designate a percentage of your pretax net income.‍
• Decide the structure of your donations. Options could include gifts that can be used any way the organization wants; restricted gifts that must be used for a specific purpose; capital grants for construction or renovation; matching gifts; non-cash contributions such as in-kind donations of products, supplies or services; loaned talent for a single event or on an ongoing basis; and employee participation programs, such as fund-raising walks.‍
• Keep in mind that attitude can be as important as giving. It's fine to seek recognition for donations, but you don't want to appear as though your family business is self-serving rather than interested in benefiting the community.

Training Ground: Your family business may also be able to use charitable activities as a way to help groom future family executives. Before taking on corporate responsibilities, for example, a family member could learn valuable skills by being an executive within a charitable foundation or serving as the person in charge of your company's charitable activities.