Charity begins at work
By Jenny C. McCune • Bankrate.com

Doing good works is good for business.

"Giving comes back to you in terms of how people look at your business," says management consultant Denise O'Berry, president of the Small Business Edge Corp. of Tampa, Fla.

That positive impression can really pay off, since most small companies depend upon good will and word-of-mouth marketing. When a company donates money, time, goods or services to a charity, an approving community rewards the corporate philanthropist with increased business.

"It's the halo effect," explains ArLyne Diamond of Diamond Associates, a management consultancy in Santa Clara, Calif.

Corporate philanthropy also can help build camaraderie and a team spirit within a company. Just ask Ellen Toplin, whose public relations firm Toplin & Associates celebrated its 20th anniversary by donating $20,000 in services to various charities.

"We debated what to do," Toplin recalls. "Maybe a big bash or take everybody on an expensive trip, but those ideas quickly faded. That's not who we are. Maybe it would be fun, but it would be wasting money.

"So we decided to do something that would give back to others and fit in more with our core values."

And don't forget the bottom-line possibility that your good deeds could help trim your corporate tax bill.

Checking your charitable compass
How your company gives depends on its resources, your personal convictions and how your employees and your customers would like to see your company behave.

Regardless of what your company decides to do, you first should look for a cause or organization that you can be passionate about. "It's got to be something you have a personal investment in or a passion for," O'Berry says.

Toplin & Associates chose to work with charities in the legal and professional arena. The firm donated time and services to a group that helped senior citizens with legal problems and other disputes. According to Toplin, this fit with her business as PR counsel to professional organizations, including law and accounting firms, and her own core values.

It also makes sense to choose a charity or charitable act that will be noted by your customers. A health club, for example, might sponsor a charity race since many of the gym's members are runners or, at the very least, are fit and would look positively on their health club sponsoring such a competitive event.

Keep the books
While many of the marketing advantages of charitable work are tough to measure, some gifts translate easily into entries on the ledger, so don't forget the basics of good bookkeeping when it comes to donations.

Keep good records of your company's charitable contributions. You can claim a deduction on your personal income tax if you're running a sole proprietorship, partnership, limited liability company or an S corporation. Regular corporations can claim a charitable contribution for the company.

If you donate food or purchase an item from a nonprofit fundraising event, plan to deduct only the actual value of the item. Donations of fully depreciated equipment are not deductible. The IRS recommends you refer specific questions to your tax adviser.

Sometimes a contribution can be expensed as advertising. For example, when you support a local T-ball team, you create company name recognition every time the team puts on their uniforms.

Services over cash
In terms of whether to donate money, goods or services, the experts say it's preferable to donate time and services, mainly because such charitable donations are more visible than a check sent to a local charity.

Donating services and time also is usually more affordable for a small business. "You can have a bigger impact by donating your time than by writing a check," says Diamond.

Of course, if writing a check is your best charity option, go for it. Just be sure to get permission to publicize your gift giving.

Consider asking the recipient group for permission to send a letter notifying your clients and the press of your company's charitable act, Toplin says. Or, if your company is underwriting an event, have the charity acknowledge your efforts, either by listing you as a sponsor in a program, on a banner or by making a public announcement.

Also, make sure that what your company is doing has a big pay back. Toplin dislikes "ad books" where companies place advertisements in a booklet that is handed out at a charity event. There's nothing wrong with the practice, but there are more-effective ways, both for the donor and the charity, to do good.

Finally, remember that while charity begins at work, your clients may want you to do more than contribute to causes in their name. That's what Toplin found out when she decided one holiday season to dispense with clients gifts and instead donate to a homeless food project.

"We still wound up sending gifts in January," Toplin recalls. "While our clients liked the idea of us giving money to a charity, they still wanted to get the holiday cookies."

Jenny C. McCune is a contributing editor based in Montana.

-- Updated: Oct. 27, 2003