5 reasons small businesses should give to charity

charity donations

Giving back to the world can certainly be morally rewarding, but small business charity donations may also have an astonishing impact on a company’s bottom line.

When surveyed, 68% of SMEs reported an increase in their profits after giving to charity, while almost 40% managed to attract new clients through their good deeds.

However, you wouldn’t be alone in skipping out donations altogether. In fact, 30% of the companies surveyed can’t see any clear benefits behind giving to charity, despite these excellent reasons.

Creates close-knit communities

Charity donations can put you in high standing within particular communities, especially if your money goes towards lesser-known organisations that typically aren’t well supported. Lotto Social’s Hope initiative is a good example of this, where 60% of each lottery ticket bought through the service is donated to a small, chosen charity.

In addition to this, they donate £1,000 to their Charity of the Month, as voted by their members—who are also invited to nominate other charities close to their hearts. They hope this will increase funding to smaller organisations likely to receive less attention from the larger lottery services. Users can then visit the Lotto Social website to see exactly how the donations have helped the local community. Clearly showing how a business has a positive impact on the community boosts its reputation, cementing it as a key element of the area.

Increases brand awareness

A partnership between a business and a charity benefits both entities from increased brand awareness. However, this only works when the two parties make continuous efforts to emphasise the ongoing relationship. For example, your small business could include donation details in its marketing materials, while a charity could mention your company’s support online, alongside a link to the website. This attention may then attract new customers, especially those who already support the charity in question. They’ll be more likely to choose you over a competitor if it will help support a cause they care about.

Boosts employee morale

Giving to charity provides an opportunity for your staff to get involved with fundraising and make them feel fulfilled and proud of their workplace. This, in turn, helps foster a positive company culture which is likely to improve employee morale in the office. Employee volunteer schemes could be particularly effective, as this is desired by 53% of under-35s, and increases to 60% in 18-24-year-olds.

In addition to keeping your current workforce happy, charitable giving could also attract new talent to your team. The Deloitte Global Millennial Survey 2019 revealed that the demographic is typically sceptical of a business’s motives and don’t think they improve society or the world. Many millennials surveyed also aspire to help their communities. By becoming a charitable business, you’re offering prospective millennial employees something that many companies currently don’t.

Provides marketing opportunities

Charitable sponsorship is sure to paint your business in a positive light, and any interesting initiatives could make great marketing opportunities. For example, Allianz recently hosted a special event to announce its partnership with mental health charity, Mind. All the employees were dressed in Mind’s blue and white colours to take part in fundraising activities—such as indoor cycling—to promote wellbeing. Unsurprisingly, the day attracted online media coverageto Allianz’s benefit.

Fundraising events aside, you could simply give profits from a particular product or service to charity. The organisation will likely help you with advertising and extend the reach of your marketing campaigns by targeting its supporters. Prezzo, for example, created the Tropicana pizza and donated 25p from every sale to the Fight For Life charity. In 2018, they sold enough of the pizza to raise a total donation worth £50,026.50.

Charitable donation tax breaks

In addition to supporting a charity’s finances, your business will enjoy a financial benefit of its own in the form of tax savings. Companies can often receive tax deductions if they sponsor a charity or fundraising event, but the relief you get depends on the donation itself, and how it’s made. The most popular option is Gift Aid, where a charity is able to claim basic rate tax from HMRC, increasing the value of the donation.

You could also receive tax relief if your small business donates to charity through a Payroll Giving scheme or gifts land, property, or shares. More information is available on the UK Government website and it’s important to read all the details to ensure your business complies with all tax requirements.