According to SCORE, about 75 percent of small business owners participate in charitable giving. They reportedly donate about 6 percent of their profits each year to charities. They contribute in support of youth organizations, donate to first responders, support local service organizations like the Rotary, for example, and they donate food and service time to places like soup kitchens and food banks. Clearly, charitable giving is valuable, but it must be approached wisely.
The Benefits of Charitable Giving
The benefits of charitable giving include:
First, the community benefits, making it a better place to live and work.
Second, your involvement in community causes results in increased goodwill and name recognition. People clearly like businesses that help others and they like supporting those businesses. Your involvement will increase customer interest, trust, and loyalty.
Third, involvement in community causes can help build camaraderie and morale among employees.
Fourth, it can help to attract and retain highly talented employees.
Fifth, it can increase your opportunities for making valuable connections and enhancing networking.
Sixth, it provides beneficial tax deductions.
Best Practices Charitable Giving
Here are six best practices for charitable giving:
- Pick a cause that will be meaningful to the company. It can be a cause that is important to the owner or to the employees. It should be a cause that employees can readily connect with, one in which they will be proud to be involved.
- Choose a cause that is aligned with the mission of the business.
- Do thorough due diligence on the causes that you are considering. Is the cause well run? Does it have a good reputation in the community? Find out how and how effectively they use their donations.
- Develop an ongoing relationship with any causes that you support. Don’t just send them a check and call it done. Ask their leadership to speak to your team. Ask how they will publicize your involvement. Make your involvement a win for both teams.
- Work to engage your employees. That can include their volunteering time and offering a matching gifts program.
- Of course, don’t give to unknown causes.
Ways to Donate to Charity
A business can participate in charitable giving in a variety of ways including sponsoring a sports team, creating a charity drive and accepting donations of food or goods at its place of business, or seeking online donations for a cause. A CPA tax advisor will know how to properly handle all types of charitable donations including cash, gifts of property, and gifts of equipment. Know that travel expenses related to charitable activities can also be deducted.The Benefits of Working with a CPA Tax Advisor
An experienced CPA will know how to handle your charitable giving properly according to tax laws and can help you maximize your tax deduction benefits. CPAs are experienced in helping their clients because they have the technical expertise necessary and they understand their client’s goals and financial condition. They can provide strategic advice that will assist them in planning your charitable giving so that giving is approached wisely. That includes specific, purposeful giving. Accurate record-keeping is critical and a CPA will help assure you that correct records are kept.
Get Expert Accounting and Tax Planning Assistance
Contact Doerhoff & Associates, CPA, based in Jefferson City, MO for professional accounting and financial assistance that you can count on. Doerhoff & Associates has one goal in mind, to provide comprehensive business accounting services designed specifically for your success.