Combining your small business with a charity venture is a kind, generous, and strategic implementation of your business. According to the United States Small Business Association, “85 percent of consumers have a more positive image of companies who are philanthropic.” When planning your donation, there are a few important factors to consider:

  • Is the charity actually a legal 501(c)3 charity under the government? If not, your donations may not actually be tax deductible, and worse, they may not actually be going to charity.
  • How much of your donation is actually going to benefit the cause?  Using a website like Charity Navigator can help give you a financial breakdown of where your money is going.
  • Are you planning a one-time donation or an ongoing donation? Understanding this can help focus your marketing strategy.
  • Is the charity aligned with your branding?  You want to pick a charity that your target customer will care about (not that all charities aren’t important), but an organization that will spark the pathos of your particular company. For example, if you’re a company with beach branding, a charity that helps clean water or ocean life would make more sense than saving snow leopards.

Once you’ve found a charity organization that is suitable, you should contact their ambassador director or donations director. Have a conversation with this person to explain your plans (ongoing or one-time donation) and to inquire about any permissions you will need in order to use their logo or their name in your marketing.

Ironically, as a business, you cannot just assume you can start donating without proper permissions. When items are sold to benefit a charity there are certain guidelines that must be followed in order to protect their 501(c)3 non-profit status. Using language that indicates a sale or action will affect a donation amount (such as “a portion of the purchase price” or dollar amount per sale) triggers the need for a commercial co-venture legal agreement, which may require both the business and the charity to register as co-venturers in certain states.
You’re much better off getting the permissions required and using simple language such as “[Business Name] is proud to support [xyz] charity.”
To keep things simple, I advise most businesses to avoid using wording that mentions dollar amounts, percentages, or proceeds and adhere to the language provided above. This way, a commercial co-venture agreement is not necessary.
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