Hey WSJ - Here's a Better Way for Small Companies to Give to Charity

small business supports charity

Last week, the Wall Street Journal published an article on how small companies should give to charities. The article included some good, basic information. But small businesses will need more than the basics if they hope to help nonprofits.

Here's how small companies can really help charities - and boost their own bottom-line in the process.

How a Small Business Should Choose a Charity

small businesses need an army

The Wall Street Journal advises businesses to choose a cause that's related to their business.

Besides having meaning to an owner and employees, the cause should be related to the business. Customers would likely appreciate a pet-supply distributor’s supporting an animal shelter, for instance, but might be perplexed if it donated to the opera.

I disagree.

A pet supply chain supporting an opera would be hilarious and disruptive. You could do a howling dog contest to raise money for the opera. A contest would give you endless content for your Facebook page and engage pet owners, which is exactly what a small business owner wants.

Did the Ice Bucket Challenge have anything to do with ALS? No. (People with ALS were warned not to do the challenge because of their weakened state.) But for everyone else the challenge was fun, engaging and different. Instead of picking something that blends in, businesses should choose a cause and fundraiser that stands out.

However, before you pick an opera - or any other charity - you should ask yourself these four questions. [TWEET THIS POST]

Tweet: Hey WSJ - Here's Here's a Better Way for Small Companies to Give to Charity  http://ctt.ec/7KnA5+ via @joewaters

Do you care about the charity? People always recommend that you pick something that customers love. But if you don't love it, it will show in your support of the campaign. You may be the only pet supply store raising money for your local opera, but you'll be the best damn advocate they have. Work inside out from owner to employees to customers.

Does the charity have an army? If your nonprofit doesn't have a loyal, active following, your fundraiser will be for existing consumers, and not a program to recruit new customers. People complain about "Pushtober," but the reason so many businesses color everything in pink in October is because breast cancer supporters are active and loyal shoppers. They actually buy the products and services breast cancer organization suggest to them!

How can you tell if your potential charity partner has an active and loyal following?

  • Meet with people who support the organization. Are there more people like them?
  • Check out their social media sites. How active are they on Facebook and what kind of engagement are they getting in likes, comments and shares.
  • Attend one of their events. Are the attendees the kind of consumers that would shop at your business?

Does the charity have a strong emotional pull? There's a good reason why most business fundraisers for charity focus on children, women and pets. They work! These types of causes have a strong emotional pull that melt consumers' hearts and rake in donations. 

Regardless of the which charity you choose, stress the part of their mission that pulls at the heartstrings. For example, the opera won't have a strong emotional pull for most people. But maybe the opera company has an inner-city program that exposes needy children to opera and the arts. Always lead with your strongest emotional message.

Does the charity relate to your business? It's only after choosing something you love and recruiting an army and leading with emotion that I would choose a charity that's business-related. I call this Garanimal cause marketing. (You may have heard of or even worn Garanimals - children's clothes that are easy to match because different animals show you what goes together.) A good example is the matchy-matchy partnership between Vitamin Shoppe and Vitamin Angels, which sends vitamins to kids in Third World countries.

But just because something matches doesn't mean it's a good fit. I would put other things first.

How a Small Business Should Support a Charity

food truck helps hurricane victims

The WSJ was right on this point. Companies can write a check to charities, but that's not the best way to support a cause or grow your business. The key is tapping OPM - other people's money. 

Kmart did just that last year when they asked customers to donate to St. Jude's Children's Hospital. Kmart raised $22 million for the Memphis-based hospital. This is a lot more money than Kmart could donate from the corporate checkbook. 

When I asked Kmart how they raised so much money for St. Jude, they pointed to employees, customers and better business practices.

We can tell you that St. Jude is a cause that clearly resonates with our Kmart Shop Your Way members and customers, and millions of them embraced the campaign like never before. In addition, Kmart associates were as dedicated as ever, consistently reminding and educating our shoppers about the campaign. Further, we’re always looking to streamline our process to better serve our members. This year we upgraded our check-out technology to make it even easier and faster for customers to make a donation at the register.

If your goal is to make a difference, you'll be doing a disservice to the charity and your business if you don't involve your employees and customers. You can find plenty of ideas here and here

Also, be sure to check out my post on the 10 Best Cause Marketing Promotions of 2013.

How a Small Business Can Stay Out of Trouble

charitable giving transparency

Supporting a charity does have its pitfalls. As the WSJ points out, employees and customers may not agree with your charity choice. And investors may be unhappy if you donate two percent of sales to charity. You could also get in trouble with consumer groups and your state's attorney general's office if you don't disclose the details of your fundraiser.

Here's what I suggest.

Involve customers and employees. If you involve employees and customers in choosing a charity, you'll get fewer complaints. Be clear on just how important the cause is to you and your business. Employees and customers will respect dedication. Also, there's always the option of supporting more than one charity.

Educate investors on the value of social good. That two percent you give away isn't an expense, it's an investment in building favorability with consumers that expect companies to balance profit with purchase. This is especially true of Millennial consumers - men and women under the age of 34. Purpose marketing isn't a profit-drain, it's a requirement that will boost the bottom-line.

Know the law. Contact your attorney general's office and ask them about the laws for commercial co-ventures in your state. In general, follow these best practices.

  • Clearly describe the promotion
  • Disclose exactly how much is being donated 
  • After the fundraiser, celebrate and tell people how much was raised

There's always a chance that a small business might not meet its commitment to a charity. I guess I've been lucky on this front. In my 20-year nonprofit career, it's only happened once. Fortunately, repeated the fundraiser the following quarter and met its commitment.

As a small business owner, it's about setting the right expectations with the nonprofit.

  • Keep your fundraising goals low, especially the first year or two. Better to exceed expectations than fall short.
  • If you do donate a percentage of sales to a nonprofit, cap the donation at a specific amount. If you end up giving more, that's your decision and under your control.
  • Until you know what your business is capable of raising for charity, stay away from nonprofits that require you to commit to a certain dollar amount. Some charities even require an upfront payment in order to work with them. You don't need to work with these charities to achieve your charitable and business goals.
  • Your donation to the charity should be a mix of company money and customer and employee donations. Your donation to a charity shouldn't come from just your customers and employees. That won't pass the smell test for most people. Conversely, if you're only donating from the company checkbook, you're missing out on the biggest opportunity of all. [TWEET THIS]
Tweet: If you're only donating from the company checkbook, missing the biggest opp of all. http://ctt.ec/5abhk+ via @joewaters

Fortunately, small business owners don't shrink from an opportunity - especially when it comes to helping others and growing your business.