Published In: Puget Sound Business Journal - on May 12th 2009
Author: Alwyn Scott
Small companies can reap big rewards from charitable giving. But they face many pitfalls unique to their size. Big companies usually have full-time staff dedicated to charitable work. Small companies rarely have that luxury.
To help you get started, here are tips from Tom Varga, managing partner of CFO Selections, Cary Clark, director at Argosy Cruises, and Bennett Weiner, chief operating officer of the Better Business Bureau Wise Giving Alliance.
- Make your company’s donation policy clear to the public. Clark and Varga say this helps focus your giving and makes it more effective. It also helps decide what request to fund, and lets those seeking funds understand what the company is looking for in requests. “Youth athletics, homelessness, breast cancer research — whatever you particular thing is,” Weiner says. “Even a small business can have a directed giving program.”
- Get community-based advisers to focus your giving. Varga’s foundation has a seven-member board of advisers that decides how the charitable money is distributed. But only two are from the company. The rest are selected carefully from the community. Since board decisions are by majority vote, people closest the community are the ones who choose what programs to fund. “We have no ability to direct where the money goes,” Varga said of the company.
- Have a structured, disciplined approach to contributions. Varga’s foundation is paid every month, much like a 401(k) account. When the contribution is an ongoing operating expense, it is much easier to fund it consistently. “If you look at it annually or quarterly, it can be much more wishy-washy,” Varga said.
- Verify that they have charitable status and are eligible to receive charitable gifts. Using the IRS.gov website, look for Publication 78, which is a search function that allows you to look for a list of qualified organizations, Weiner says.
Small businesses usually don’t have the staff to evaluate charities. By checking the Better Business Bureau, “you can spot a potential problem organization before you send a check,” Weiner says.
To check charities evaluated by the BBB for Alaska, Oregon, and Western Washington, go to http://www.bbb.org/us/charity/.