My Two Cents: Effectively Manage Your Charitable Donations
You only have so much money and time to give away
As an HVAC contractor who properly markets to the public the services you provide, you’ve probably found you are marketed to, as well. Proper marketing brings on solicitations from any number of charitable organizations. I’m convinced that any relatively high-profile contractor could play golf in a charity golf tournament at least three or four days per week from May through October if he had the time and money. The causes behind most of these charitable events are very worthwhile and sometimes hard to turn down. However, it’s important for a contractor to carefully review the value received from each of these solicitations. The chances are that the cause is a good one and, unfortunately, in most cases, the contractor should not base his decision on the cause. If it appears the cause is not relevant or could be fraudulent, then that solicitation should be discarded without further consideration. The decisions come about when the causes are all good, but, in reality, you can only budget so much money for these types of functions.
TIPS AND SUGGESTIONS
Here are some tips and suggestions I’ve put together over the years, having received literally hundreds of solicitations each year. To begin, if I have any questions about the validity of the charitable organization or how its funds are distributed, I utilize the Better Business Bureau’s evaluation. The one important number to look for is the amount of money received which goes directly for the charitable purpose as compared to the amount that goes to administration. Any good charity will put 80-90 percent of its revenue directly to the charity’s beneficiaries.
Sometimes, solicitations come as a result of an employee or an employee’s spouse being involved with the charity or, in some cases, being the recipient of the services of the charity. I handle these separately and review them on an individual basis and, in almost all cases, will make some type of contribution to the cause. I tend to be conservative regarding the amount of the contribution because of potential precedents I’m setting regarding future solicitations.
I use a somewhat similar approach regarding charity solicitations from customers. I believe it’s necessary to keep in mind the value of the customer relationship compared to the amount you’re being asked to contribute. In this regard, I take into consideration the number of people attending the event as well as the demographic mix of the attendees. In other words, if I’m solicited by a customer to sponsor a hole at a golf tournament, I take into consideration the likely participants and question if the attendees are, or may soon be, customers, as well. These types, I feel, will be worthwhile.
Then, there are the dozens of requests we receive where there is really no connection between the solicitor and our company. I put these in a pile that I maintain on my desk. If I’m personally contacted by someone as a follow-up, I attempt to determine if they might be a customer or have a connection with an employee, and then I make the decision typically on the amount of exposure our company will receive by participating.
On rare occasions, I’ll decide to participate either because the cause is exceptional or because I believe the exposure we’ll receive from participating will be beneficial.
In that regard, a hint: Ads in booklets given out at charitable events are very seldom seen by attendees. Typically, the only ones who look in the books are other advertisers checking to see if their ads are there. A sign on the tee of a golf hole is typically a much better investment.
For several years, up until about 10 years ago, many of our employees put money together for a Christmas gift for me. They came to me and said it was impossible to find the right gift. I agreed. We came up with the idea that they would donate the money to a charity of my family’s choice. The charity has varied every year, and, a couple of times, we even gave to employees who had a bad family situation or were in dire need.
This year, an employee suggested we hold a 50-50 raffle at our company picnic with 50 percent of the money going to the winner and the other 50 percent going to the charity of the winner’s choice. We contributed more than $200 to a worthwhile charity.
The important thing to remember is that nearly all of the causes you’ll be asked to support are worthwhile causes. It’s important for you to make wise business decisions regarding where and how to spend the funds you’ve allocated for such purposes.
Publication date: 11/30/2015