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Charitable giving is on a roll

More firms are tying contributions to a relevant cause, which can boost profit. As always, research is key.

July 14, 2008|Cyndia Zwahlen | Special to The Times

Carol Head's mission is to feed the hungry.

As owner of Oliver's Artisan Breads, she delivers hundreds of European-style loaves and rolls each day to restaurants, grocery stores and food-service operations in Southern California and beyond.

Last month, she decided to increase her efforts by donating a portion of her San Fernando company's profit to Bread for the World, an international charity.

"When you are a business owner, you have both a responsibility and an opportunity to sort of bring everything that you are and everything you have to help solve a problem," Head said.

The food-focused charity is a perfect fit for the small business the former marketing executive bought in 2002, expanded to 36 employees and projected sales this year of $2.5 million.

Head's endeavors are part of an increase in charitable donations nationwide. Giving by small businesses isn't tracked separately but their contributions helped push total giving in the United States last year to more than $300 billion for the first time, according to estimates from Giving USA 2008, an annual philanthropy report released last month by Giving USA Foundation.

The $306.4-billion estimate is up 3.9% over the previous year, according to the foundation, an arm of Giving Institute, a Glenview, Ill.-based consulting firm. That compares with a 4.2% increase in 2006. More small businesses are making charitable giving part of their business strategy but not all have the know-how to do it effectively.

"It's the rage, it's wonderful, we love it on the one hand," said Jennifer Stapleton, senior manager for marketing and branding at Washington-based Bread for the World.

"On the other hand, I just spend a lot of time flipping through [e-mails from] random businesses or people who want to work with us in a way to elevate their business. They clearly haven't done their research."

How can you make sure that your good intentions lead to good results?

"They have to do the same thing they do with their cash flow; they have to manage it," said Paul Jones, a cause-related marketing consultant and principal at Alden Keene & Associates in Sandy, Utah. He also writes a blog on the subject.

As with any business strategy, skimping on planning or the tactical steps probably will result in disappointment for the small business and the charity.

To avoid that, here are tips from Jones and other experts:

* Don't pick a charity that's a poor strategic fit. More small businesses these days want to tie their charitable giving, whether time or money, to a cause that means something to them and their customers. Such an arrangement can boost profits but it has to make sense first.

"If you're a local welding shop, you'd better have a pretty good reason to support the Susan G. Komen Breast Cancer Research Foundations -- a reason your customers will easily and quickly understand," Jones said. Research shows that both parties -- your small business and your target charity -- "get the most bang for the buck when there's a clear strategic fit," he said.

* Don't overlook smaller charities. Some small businesses pick a charity that is just too big to work with them well, Jones said. Not all of the biggest charities can offer the kind of recognition or help that a small business might want or need, he said.

"Some small-business owners might be OK being a minnow in a big lake," Jones said. Those that aren't should probably choose to support smaller charities.

* Don't skip your homework. Don't assume every charity offers the same benefits to donors or is even willing to work with your small business.

At Bread for the World, Stapleton had to turn down a sports-drink maker who wanted the charity to market its product in exchange for a cut of sales. Simple research would have shown that the organization doesn't seek those kinds of arrangements.

At Santa Monica-based Heal the Bay, Natalie Burdick, development program manager, turned down a jewelry maker who wanted to partner with the charity on a trunk show spotlighting items made from seashells.

"There is a commercial trade in seashells and coral, and the practices are very environmentally destructive," Burdick said.

* Don't expect advertising and marketing exposure. Businesses often expect a charity to broadcast its offer to charity members in some way. Most charities don't.

"Nonprofits are not set up to do that," Burdick said. She's also had to turn away businesses that wanted Heal the Bay to put on a charity event featuring the company.

* Don't treat the arrangement casually. If there will be a public tie between Heal the Bay and a small business, the charity will typically insist on a formal written agreement.

"They were actually pretty rigid about what they needed because we actually had to sign a contract with them that stated that in order to publicize that we donate to them," we had to follow certain rules, said Lisa Peri, co-owner of Lucky Earth, which makes a cleaner for waterless car washes.

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