Leadership & Productivity

Calling all business owners: Is your corporate heart big enough?

5 min read

14 February 2019

Reporter, Real Business

It's Valentine's Day, and in the spirit of love and care, it's time to think about whether your business is giving enough money to charity. The benefits are numerous and include more motivated staff, positive corporate reputation, tax benefits and a great (and 'free') marketing campaign that can spread stellar messages about your brand.

Today marks the annual celebration of love, in all its forms. But for business owners up-and-down the country, Valentine’s Day should be about taking stock of your commercial heart as well as your personal and romantic one.

In honour of this special day, Informi, the online portal offering free expert advice for small businesses, is calling on small business owners to consider how much they give to charities. According to their findings, there are commercial benefits for doing so that goes beyond the stroking of one’s own ego.

But first, let’s find out just how many UK businesses have a ‘charitable heart’…

The state of SME charity giving in the UK: The results are dismal

Only 2% of all UK charity income currently comes from the business sector, and with SMEs making up over 99% of all businesses in the UK, it means that smaller businesses are not pulling their weight when it comes to having a charitable policy.

“There are 5.7 million SMEs in the UK, and annual charitable giving in total currently stands at £10.3 billion.” – Informi

To resolve this, it’s up to business owners themselves to incorporate charitable giving into their business planning, and for entrepreneurs who are starting a new business to drill it into the bones of the business from the outset.

Why should SME owners care? Here are four reasons why

Charitable giving holds more business benefits than you might think.

1. A Brand with a conscience sells 

Customers increasingly have a strong social conscience. They are looking to buy from a brand whose values align with their own. According to Informi’s findings, two in three businesses that regularly gift have seen noticeable positive impacts on their profitability. So, businesses, make sure you keep terms like “impact” and “founding mission” across your site’s content.

2. Staff like it and will market it

Staff are more likely to be recruited and retained if the business has a strong charitable bent. It can prove to be an effective motivator for staff who feel like they’re working for more than profits and a useful marketing tool as they will spread the word. Informi has also discovered that over four in five workers would be more loyal to a company that helps them contribute to social and environmental issues.

3. You can’t buy a stellar company reputation, can you? But you can invest in it

Engaging with Corporate Social Responsibility (CSR) initiatives gives businesses some extra credibility. Informi says that nearly nine in ten businesses said corporate responsibility activity had a positive impact on their company’s reputation.

4. Think about tax advantages!

Businesses can claim the tax back in the form of a refund against tax on their profits.

What types of tax advantage are available through charitable giving, for me and my business?

Businesses can make donations from their sales or profits. These donations are deductible from the business’ total profits in the year during which the donations are made.

“Donations by businesses are offset against their profits, meaning that they can pay less corporation tax. If, however, you aren’t profitable, you cannot access this tax relief. We’d like to see cash giving incentivised, either through increasing the rate of tax relief on donations made so that the tax refund outweighs that of general business expenses, or through using a tax credit approach, so that businesses who are not in profit are also motivated to give.” – Steven Drew, Informi’

You have to set up a CPA to give charitably as a business

Businesses have a legal obligation to set up a Commercial Participation Agreement (CPA) with every charity they intend to support.

These exist to help protect charities’ brands from being inappropriately leveraged by businesses for their own financial gain without the charity’s consent. Here is some additional advice about why setting up a CPA can benefit your business commercially and operationally as well as helping you to fulfil charitable objectives.