With news headlines like this, the real reasons why we give are being diluted into just another way for us to put money back into our pockets.
Don’t take this the wrong way if you are enjoying the tax benefits from years past (we all do), but we know many people give simply because it is the right thing to do. What these headlines do is make us feel as though giving is about us (and our deductions) instead of making the world a better place. With this fear of changing laws, many charities and news sources cite individual giving increased significantly in 2017 simply due to the wake of the new tax laws.
2017 was in fact a record year for global giving movements like #GivingTuesday where a cool $274,000,000 dollars was donated online (over 50% increase from 2016). Additionally, The Chronicle of Philanthropy recently noted that U.S. donors gave 17.4% more online from the same week in 2016.
The fear mongers might be onto something for individual giving in 2018. That said, we encourage you to think about donating your money differently. We can’t change the rules, but we can remind ourselves of the real reasons we give. A true giving spirit is not going to be diminished by tax law changes.
Like the Avett Brothers so eloquently stated in Head Full of Doubt,
While not all may relate to this sentiment, the right reasons to give still exist. Giving provides a share of other benefits for individuals, endorphins (the happy hormones), being one. In a survey of 600 U.S. citizens, social psychologist Liz Dunn and colleagues found that greater happiness was triggered by spending money on other people over oneself. Even more interesting, income levels did not affect the results. Whether you give $5 or $500, giving is mutually beneficial for both you and the receiver (regardless of what Trump and our current administration have to say about it).
The Reality of New Tax Laws for Corporations
According to Giving USA 2017, giving in the U.S. has risen to a $390 billion dollar industry with $281 billion made up of individual contributions and around $19 billion by corporations. Other sources include foundations and bequest (legacy). As we look to individuals vs. corporations, this disparity is quite shocking, and concerning, given the way new laws might impact both significantly.
Rather than painfully watch individual giving dollars deplete, corporations have the opportunity to step up and give more. In fact, some analysts say the new tax laws might actually lead to more individuals trying to become corporations. This could really cause a disparity for contributions. According to a recent Harvard Business Review Article, Breaking Down the New U.S. Corporate Tax Law, one analyst projects more individuals will try to incorporate in order to get taxed at the new low rate of 20 percent which would skew these giving numbers significantly and appear more favorable for corporations.
Regardless of what happens with passed-through entities, C-Corporate form businesses are now being taxed at 21% down from 35%. A huge win for those corporations who fall in this tax category! As a result of this gift, a host of these beneficiaries in the financial institution industry including BB&T Corp, Bank of America, PNC Financial Services, Wells Fargo, Fifth Third Bancorp, and others announced their plans to make new investments and raise employee wages.
Use Corporate Tax Breaks For Good
Corporate giving is an area where many C-Corporate businesses may plan to spend their newly reallocated tax money. What a brilliant idea!
This isn’t simply on obligation of corporations to pick up the slack with their improved balance sheets as there are very real business benefits from corporate giving:
- Business Sustainability – In order to attract talent, gain trust in buyers, and sustain in business today, brands must stand for more than just profits. The profit and purpose movement is here and smart business leaders understand that public perception of the company is leading to true effect on purchasing decisions by consumers. If more brands do not start to adopt similar strategies, their longevity will be threatened. A structured corporate giving program that not only engages employees but also consumers has the opportunity to transcend other more stagnant approaches.
- True Loyalty – Corporations are always looking for new ways to engage their employees and customers to drive loyalty and differentiate themselves from competitors. It is imperative to business success. Why not use a personalized model for philanthropy? By giving employees and customers the ability to support individual causes important to them, you are creating personal and authentic connections with stakeholders inside and outside of your organization.
- Increased Respect for Leaders – Developing a corporate giving initiative must start at the top. The leader of your organization needs to not only decide what is the right program for your company, but embrace it fully. Employees and customers respect leaders who care and will be more likely to connect with those whom authentically support the world outside of just profits and bottom line. A corporate giving initiative engaging employees and customers has the ability to transcend traditional “taking” approaches for philanthropy and drive a greater respect for business leaders.
- Supporting Your Local Community – Whether your business has one location or 500, you are affecting communities outside of your concrete walls. Choosing to support your community rather than harm it will provide immediate business benefits for you. With personalized giving solutions, you can get your people involved and significantly increase the impact by supporting organizations that are important to them. Otherwise known as a double bonus! Check out what our neighbor next door, Askov Finlayson, is doing to support their local community.
- Marketing and PR Benefits – To some, even mentioning the idea that businesses are looking to achieve these types of outcomes from corporate giving seems inauthentic. We know that is not the case for most. You give because it is the right thing to do. Even so, our world needs more stories about good companies and our news outlets recognize this and are responding. Marketers, take note.
We are only touching on a short list of business benefits from corporate giving. No matter what your reason (or 20 reasons) why, do corporate giving because it is good for the world, a great way to use your tax breaks, and benefits your bottomline.