Norton Seal A hand signing a check.

Your Business

Things to Know Before Donating a Percentage of Sales

While more sales can lead to higher profits, they can also help small businesses make a greater impact in their communities.

That’s what real estate agents Sarah Chatel and Lisa Black of The Distinctive Atlanta Homes Team, a division of Keller Williams Realty Inc., discovered last year when they decided to donate a portion of their sales commissions to charity.

“We wanted to make sure our real estate company was about more than buying and selling homes,” says lead listing agent Chatel, about the decision to work with Giveback Homes, a community of real estate pros committed to helping build homes for deserving families. It was a good fit since the charitable donations were sent directly to a local organization—Atlanta Habitat for Humanity.

Their 2016 philanthropic goal was big, yet simple: Complete 50 real estate transactions and donate $50,000. By December, they did $15 million in volume and donated nearly $46,000.

Many small business owners give back by donating a portion of sales. If you plan to include charitable donations in your business model, here’s how to make it work.

Step 1. Choose a charity that aligns with your core values. Look at your company’s mission and culture. “It can’t be the CEO making an edict,” says Chantel. “You need buy-in from the entire team.” According to the philanthropic organization GuideStar, you must define what’s important. Some questions to answer include: What are the company’s goals? What are the company’s values? Where is the company currently giving and why? How does the company want customers to perceive it?

Step 2. Engage your stakeholders. These individuals or groups are vital to your business’s success. They may include employees, executives, customers, suppliers, investors, and community leaders. Ask them what’s most important in how you do business together. Once Chatel and her team selected a charity, they alerted clients. “In my listing appointments, I spoke about how we market homes to get them sold, and then said, ‘By the way, a portion of this sale will go to Atlanta Habitat for Humanity,’” she says. Such conversations can transform stakeholders into allies and enhance your company’s growth.

Step 3. Establish giving guidelines. “Go back to your margins and look at your profit and loss statement for the year,” advises Lauren Tomlin, operations manager of The Distinctive Atlanta Homes Team. “From there, you can determine your line of comfort and how much you want to donate.” The real estate firm initially donated $1,000 per transaction but later adjusted the amount to correlate with the size of the deal. According to one 2015 study from the small business network Alignable, the ‘local business down the street’ gives more than 10 percent of its profits, yet the top one percent gives 2.8 percent of their discretionary income. Give what makes sense for your company.

Step 4. Implement a strategic giving program. Cash is still king, but maximizing the company’s resources equals smart giving. For example, match your employees’ interests or skill set to a charitable organization’s needs; donate products/services to better a community; collaborate with business partners to create a new charitable giving initiative, and reach out to customers to raise funds and awareness for a cause.

Step 5. Market your philanthropic efforts. Once The Distinctive Homes Team saw success, “we included a slide in our listing presentation to say we are committed to doing this,” says Chatel. To create buzz about your charitable efforts, ask employees to share your story; co-brand your marketing materials with both the charity’s logo and your company’s logo; and tell the story about how you’re helping a community blossom and in turn creating good karma.

When your company’s giving strategy aligns with the company’s goals, it’s a win-win for everyone.

How would you rate this article?

Related Topics: Business Growth , Passions , Finance