Why Your Business May Want to Set Up a Charitable Fund
The pandemic negatively impacted the economy, and many charitable organizations and segments of the population are in need of assistance. As a result, corporate responsibility is more important today than ever. If your business is in a financial position to set up a charitable fund to help others, establishing a grant can be a great way to give back.
Putting a program in place not only benefits your community—it's also smart for your business, as customers are watching how companies live their values. According to one study, 88% of Americans said they'd purchase products or services from a company that demonstrates purpose. It also found that 70% of Americans would like to work for an organization that shows a commitment to its values. Creating a grant can increase your visibility and provide opportunities for building relationships with other organizations or community members.
Is a grant right for you?
Before you set up a charitable fund, make sure your business can afford to make the donation. Look at your cash flow to ensure that giving a grant won't harm your business's financial health. You can always make a difference in your community by volunteering or donating your services or products.
You should also choose a recipient that aligns with your business and values. This can be a charitable organization or an individual. For example, the owner of a hair salon chain may set up a tuition grant to a student who demonstrates need, or a dentist may create a grant for a nonprofit that brings dental services into at-risk communities. The more connected you are to the cause, the more meaningful the grant program will be to you.
How to start a grant
Once you determine that creating corporate grants for nonprofits is right for you and you've identified the type of recipient you wish to help, speak with your accountant to determine how much money you should give. You may also be able to realize tax benefits through the donation, as businesses can deduct up to 25% of their taxable income for charitable contributions.
Next, create a way for potential recipients to apply. You can find grant application templates online or speak to your accountant about having one created especially for you. Establish the criteria of who is eligible to apply and set a deadline. You may also create an FAQ section on your website to address any questions applicants may have. Then, share contact information if someone needs further details.
Determine your review process. You'll want to create a rubric to help you rate the applicants. And you may invite your board of directors or employees to also review the grant proposals so that your selection is free from unconscious bias.
Maximize the results
A key part of the process to set up a charitable fund is creating a marketing strategy for your grant. Share the opportunity on your social media channels, inside your business and through emails to your customers. You'll want to cast a wide net, not only to give more people a chance to apply, but also to share what you're doing with others.
If you're unclear on how to properly distribute the funds, you can talk to your business banker. If your company is in a good financial position, setting up a grant can provide you with several benefits. However, the best reason may be the satisfaction you receive from helping others.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.