The Charitable Solution
About 10 years ago, the Maine Innkeepers Association (MEIA) was struggling with very low numbers during the month of May. Instead of offering coupons or pushing more advertising, however, the MEIA decided on a different route: sponsoring a charity.
MEIA now keeps a running list of Maine inns that will give customers half off select room rates between late April and late May for donating $35 to Habitat for Humanity. The campaign has been going strong for more than a decade and in 2010 alone, more than 350 reservations were made through the campaign. The $13,500 raised was enough for the local Habitat program to finish the interiors of six homes.
It’s partnerships like this that can help businesses and charities alike through rocky times. And when customers learn that their purchases are having a positive and charitable impact on their local community, they’re far more inclined to do business with that company. In fact, according to a recent 25-year Cone Communications/Duke University study on cause-related marketing:
- 79 percent of consumers surveyed were likely to switch from one brand to another of equal quality and price if the new brand was affiliated with a charity (up from 66 percent in 1993).
- Of those surveyed, 38 percent stated that they bought a charity-associated product in the past year (up from 20 percent in 1993).
It’s a win-win situation, but it’s also a partnership that can bite you back—and hard—if you don’t do the proper research.
Find Potential Charity Partners
According to the Foundation Center, there are more than 1.5 million charities in the United States alone—and they cover an ever-increasing range of outreach programs. From collecting pajamas for shelter children in Las Vegas to building portable water purifiers for villages in Africa, there are a lot to choose from. Aligning common goals is a great place to start. A dog daycare would naturally do well partnering with the local chapter of the American Society for the Prevention of Cruelty to Animals and a boutique grocery store would fit well with the Global Hunger Project.
To identify charities with goals most in line with your company’s mission statement, try one of these dedicated search engines:
CharityWatch.org. Founded in 1992 by the American Institute of Philanthropy, CharityWatch.org provides a watchdog service that not only lists certified and valid nonprofits, it also looks into how efficiently the funds donated to each of these charities are being spent. As stated on its website, its goals are: To research and evaluate the efficiency, accountability and governance of nonprofit organizations; to educate the public about the importance of wise giving; and to inform the public of wasteful or unethical practices of nonprofits and provide recognition to highly effective and ethical charities.
CharityNavigator.org. Founded as a “guide to intelligent giving” in 2001, CharityNavigator.org provides ratings on a charity’s financial health as well as its accountability and transparency. Its database contains more than 6,000 of “America’s best-known and some lesser-known, but worthy, charities.”
BBB.org. The Better Business Bureau may have a stronger reputation as the watchdog of America’s businesses, but it also has a strong and well-maintained list of certified, valid nonprofits through the BBB Wise Giving Alliance. Along with providing help for charities who wish to attain the BBB charity seal status, it also allows people to inquire about charities not on its approved list and to file complaints.
In addition to checking those resources, you should examine a potential charity’s business structure. Unfortunately, for every honest and conscientious charity there is, there are far more crooks trying to scam you and your customers out of every cent they can. To ensure that your final charity candidates are on the up and up, examine the following questions:
What does an Internet search reveal? This may be a no-brainer, but doing a search on your charity candidates can dig up important information such as comments, reviews and reports from objective third parties.
Are they willing to discuss programs and results? Good charities will not only be happy to discuss their programs, they will also go over the real impact of their efforts—especially if your company is looking at a long-term commitment. Setting up a face-to-face meeting with a charity representative to go over the important paperwork, as well as current impacts and long range plans, can help you make that final decision.
Does the charity have a clear mission statement? If the mission statement is muddied up by iffy statements such as “could result in” or “possibly impact,” or if there is little evidence of services producing clearly effective results, then it might not be the best candidate for your company.
Have others backed the charity? This might be a tough one for newly developed charities, but valid feedback from other companies and from the people the charity has helped can give you a good idea of its impact.
What is their financial growth? As a charity grows, the cost of infrastructure will naturally grow with it. While the ideal distribution of funding is 75 percent to programs and services and 25 percent to administrative fees and fundraising, a healthy charity should also show a revenue stream that is at least equal to the rate of inflation. One way to check on this is to request the charity’s most recent IRS Form 990. This will provide information on what the nonprofit’s finances are, where they’re being spent and, perhaps most importantly of all, if the organization is willing to give you that information in the first place.
Do the charities you are considering really do what they say? This is another reason to request the charity’s 990 form and look under “Statement of Program Service Accomplishments” to see where the bulk of funding is being allocated.
Do they have a 501(c)(3)? This tax-exempt status is a bear to achieve, but it shows the charity you’re considering has gone through the rigorous and extremely long process of verification under the Internal Revenue Code.
If You Can’t Find One, Start One
For some companies, creating a charity instead of supporting a current one simply becomes the best approach. Our company, Lyoness, fosters rewarding and mutually beneficial relationships between shoppers and merchants throughout the world. Its community is characterized by cultural diversity and innovation and is where everyone can “live together with a mutual commitment to aiding others and preserving the environment.” That part of the corporate identity led to the creation of the Lyoness Child & Family Foundation, which has helped more than 6,000 children and families through more than 30 projects in 18 different countries since its establishment in 2008. Our Greenfinity Foundation, which began in 2011, is currently working on eight international projects, from providing sustainable power to impoverished Kenyan farmers to establishing educational forestry programs in lower Austria.
But you don’t have to be an international player to start your own charity. Take Beau’s All Natural Brewing Company, a Canadian brewery that recently raised more than $75,000 during its annual Oktoberfest for local organizations including the area’s agricultural society, United Way and the local junior ice hockey team.
And then there’s the Mortgage Capital Group Inc. in Crystal Lake, Ill., which started a charity called the Uplift Foundation, a program that helps local real estate companies and employees support nonprofits by donating a portion of each mortgage deal to the foundation.
Even online entrepreneurs are getting in on the action. Since starting her online business in 2010, 16-year-old Asya Gonzalez, founder of the 1940s-inspired clothing store Stinky Feet Gurlz, has started a foundation for fighting the worldwide sex slave industry called She’s Worth It.
Starting your own charity can be challenging but worthwhile. You know exactly where every cent is being spent and how much of an impact it’s having on your cause. Before you start looking for the right forms to fill out, however, consider the following questions:
Do you have the time? Not only is a charitable organization a full-time investment, you also have the pre-legwork of filling out grant applications, applying for 501(c)(3) status, developing fundraisers, setting up programs, writing out a business plan, setting up a website and starting social outreach.
Do you have the funding? Even though the point of starting a charity is to make money for your cause, you need a base amount for legal costs, creating logos, kicking off promotions and more to get your charity off the ground.
Do you have the help? You’ll need dedicated associates who are passionate about your cause and willing to put in the hard work and hours necessary to launch, maintain and grow the program.
Get Back What You Put In
Regardless of whether you decide to go with an established charity or to start your own, the rewards are the same: Your company will benefit from the association, the charity will grow because of you and your customers, and you’ll know that part of your daily efforts are supporting a cause that you’re passionate about. So what’s holding you back?
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