Why should a small business engage with the not for profit angels?
What the consumers say….. Last year Forresters produced a survey of 1100 people from the UK which reported that most consumers think businesses should support charities.
When faced with a choice between two companies that offered products and services for the same price, 82 per cent said their decision would be affected by whether a company engaged with charities and its local community. [Della Woolfe 2014]
What the companies say….. 40% of business respondents said that partnerships with charities is important to their business agenda and a third said that partnering with charities was very important to them, a rise of 19% since 2011. [The Guardian 2013]
Reputation and credibility was the most popular reason for setting up corporate partnerships among companies, with 91% of them saying this was the reason for engaging with charities. [Third Sector, Sept 2013]
The charitable element of a small business can be a cornerstone of its brand showing the local area, or even the world, that they are ethical and trustworthy. It can also define a small business as different from its competition which not only aids the brand image but can be an important recruitment tool for attracting the top talent to your business, or indeed customers.
Better public relations
Sharing the stories can benefit your small business on many levels. Visitors to your website can see what activities you are doing, coverage in the media can reinforce to current customers that they made a good choice; it can demonstrate to clients, customers and business partners that your business and its leadership team are dedicated to charitable causes. In addition, in many business awards applications there is a question about the companies CSR practices.
Enhance employee relations
Many people want to volunteer or raise money, but can’t find time in their busy lives to do it—or may be scared to try an opportunity on their own. Participating in employer-sponsored activities allows employees the opportunity to do things where they don’t feel like they are taking time away from their work or families to help others, or trying to squeeze yet another item into their jam-packed schedules.
When raising money together employees are able to partner across divisions and work in team environments outside of their direct work groups. People from different departments or offices, who wouldn’t see each other during a typical workday, can serve a meal, volunteer in a classroom or help build a home, side-by-side. This promotes a greater sense of camaraderie and unity among employees as they work towards a shared mission and common goal. More for big businesses maybe but don’t underestimate the value of promoting camaraderie amongst a two man team or even a sole trader and suppliers or even family members.
Giving employees a chance to give back to their communities also helps to instill a sense of pride in themselves and their organisation. They are proud to work for a company that supports philanthropic programs, which can lead to increased loyalty and better retention.
Through being part of a charity you can belong to a powerful network of like-minded business owners that you meet with regularly for a joint cause.
Oh and of course there is the personal benefit from helping others.
Since 2006, through its “1 Pack = 1 Vaccine” campaign. To date Pampers has successfully donated 300 million tetanus vaccines, which are helping to protect 100 million women and their babies around the word.
Again big business stuff but translate this to the local vehicle service station who give £5 to a charity for each MOT they perform. A quick survey shows that the first year saw a 17% increase in MOTs after an article in the local press. Further questioning of their customers revealed that 65% of customers would definitely return for their MOT the following year if the garage continued the scheme.
The Legal Stuff
Most charities will want some sort of a contract before entering into a partnership with a large company or a small business. Obviously for big business where the partnership may expect to raise £millions then this needs to be comprehensive and thorough. For a small business however this needn’t be too onerous, maybe just a one page document laying out start and end dates and when monies will be paid over i.e. a big cheque presentation at the end or monthly payments. Just so everyone knows where they are.
Most businesses are very protective of their brand and charities are no different. We have already discussed the benefits to the business of being associated with a charity and in some cases fairly large licence fees are paid for the use of the charity logo and other brand elements.
It doesn’t have to be taxing…
Trading is subject to corporation tax (a tax on profits).Much of the trading carried out by charities is non-taxable trading, such as primary purpose trading in direct furtherance of the objects. Other trading carried out by the charity is taxable trading which must nearly always be carried out through a separate non-charitable entity. For this reason most large charities have a separate non-charitable entity, in the case of the BHF its BHF Ventures.
VAT law refers to business supplies and is charged on goods and services (if VAT registered) so VAT is chargeable on the use of a charity logo, as it is a supply of services.
A non-charity does not have to pay tax on any profits it donates to a charity under gift aid hence BHF Ventures gift aid’s its profits to the charity.
If a single payment is received that covers both a donation and a payment for the use of the logo, corporation tax is payable on the whole sum.
A separate licence fee for the use of the logo is charged which is paid to the non-charitable entity so that the profits the non-charitable entity makes can be gift aided to the charity and no corporation tax is paid on those profits.
The donation is paid straight to the charity and is ring-fenced from any corporation tax.
Partnerships with The British Heart Foundation
The BHF are happy to talk to companies of any size about partnerships that will raise funds to pay for the best heart health research in the UK. Community Fundraising Managers are able to discuss large commercial partnership arrangements right down to simple charity of the year partnerships or sponsorship agreements. It could be the best thing your company has ever done.
Fundraising Manager (Northants & Cambs)
British Heart Foundation
colen@bhf..org.uk | 07734 072973