The importance of business philanthropy

in Small-business

Business owners, especially in a down economy, are so involved in making their numbers, that they probably do not give much thought to asking about business philanthropy.  Why is it important?  As it does not directly add amounts to the bottom line, why be involved in it?  If you are a family owned business or a closely held corporation, you may be wondering why is it important to you?  Are your philanthropic efforts all giving to the charity (certainly, a good cause) or does your firm get something back from all of your efforts or donations?

 

It has been said that business philanthropy is one of the most effective ways to teach children family values (if you are a family owned business and your children are involved in the business) or establishing the culture of the company and its values (if you are a closely held company).  A company that makes business philanthropy a part of who they are has a value that goes beyond just dollars.  They are acknowledging that they are part of the community that supports their business and want to be involved in that community and give back to it.  Through our philanthropy efforts, business owners address issues or needs in the community that government is unable, unwilling or not well suited to address adequately. 

 

Part of the corporate culture and values for the business may be the underpinning that after achieving financial security for the business owners and their families, that success brings with it an obligation of sorts to share that success with others.  This may emanate from civic responsibility (businesses who want to be good corporate citizens), a moral or religious conviction (businesses who "give back" to the community do it because it is the right thing to do) or leaving a lasting legacy as the business tycoons did of earlier generations, such as business owners in Chicago who established many of the museums that we have come to enjoy (Field Museum, Shedd Aquarium, just to name a few).

 

In a closely held business or family owned business context, the business can institute a regular pattern of giving money, inventory or other property directly to certain charities.  For instance, companies in the food business may regularly give food the various food pantries.  Or the company may set up a matching gift program to benefit charities supported by their employees.  Some companies have set up their own foundation to aid the communities in different ways.  Other companies may have a donation program to The United Way, which is deducted from the wages of employees who elect to participate and those donations may be matched by the company.

 

Another method of supporting charitable organizations in the community may be to give employees "charity days" where the employees volunteer their time to a particular charity to do various things that may range from being a mentor to troubled children, to painting or updating the facility where the charity is located to acting as volunteers as a community event.  Any activity of this nature will reinforce the company's value system, as well as to give the company visibility in the community.  In addition, although this is not why a company might have this as part of their value system, consumers might buy from that company more regularly, knowing that the business supports the community in a number of ways.

 

If a charity that the company normally supports asks one of the company's midlevel or upper level managers to service on that charity's board of directors or on committees for the charity, it is a good opportunity for those managers to use their skills that they have acquired in that for-profit business and upgrade the methods used by the not-for-profit business.  It is an honor to serve in that way and each employee gains the respect of those in the business, the charity and the community.  He or she meets valuable contacts which may be helpful for the business in the future.  Because that employee may be making substantial decisions with respect to the direction that the charity may go, this experience may make those employees much better managers of the business that they work in on a day to day basis.

 

While the primary motivation for a company's involvement in business philanthropy may be civic responsibility, establishing a corporate culture that embraces such value, it is apparent that participants in business philanthropy more often than not get back much more than what they put in, both in experience and satisfaction.  

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Denice Gierach has 1 articles online

Denice Gierach is a lawyer and owner of The Gierach Law Firm in Naperville. She is a certified public accountant and has a master\'s degree in management. She may be reached at deniceg@gierachlawfirm.com. For more information on Denice and The Gierach Law Firm visit Gierach Law Firm

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The importance of business philanthropy

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This article was published on 2011/07/21