Companies Reap Benefits of Charitable Sponsorships   by Christine Harrell

in Finance / Accounting    (submitted 2010-03-01)

Organizations choose to help non-profit organizations for a number of reasons, both altruistic and otherwise. There are many benefits and basically no downside, but it is important to consult your virtual accounting department so the relationship can be set up in the most mutually beneficial manner.
Tax Benefits of Sponsorship
From a pure accounting point of view, a common reason to sponsor charities is to improve a company's tax situation. Since charitable donations are tax deductible, a company can receive significant tax benefits from such a relationship. However many companies are unsure how much to donate. Balancing the charitable organization's need with the donor's ability to give requires some expert advice.
Your virtual accounting department will help ensure the donations are documented properly for taxes. For example, if your company gets something from the charitable organization in return for the donation this will reduce the amount that can be claimed on taxes. The virtual accounting department can recommend target amounts for donations that will provide the greatest benefit to the company.
Improve Your Company's Image
Charitable sponsorships have benefits that exceed the tax advantages calculated by your virtual accounting department. Associating with nonprofit organizations is a great public relations boost. By giving back to the community you demonstrate you are a company with heart, not a faceless corporation.
Attending charity events gives a wonderful opportunity to form new business relationships. New customers, vendors and other partners can be discovered when networking during fundraising functions put on by the nonprofit entity.
Sponsorship provides marketing benefits. When the charity acknowledges your company's help, your name is put in front of an audience who might otherwise ignore your promotional efforts. Businesses commonly see a significant increase in customer traffic after starting a charitable sponsorship.
Doing Good for the Community
Of course the main reason to partner with a nonprofit organization is to make your community a better place to live. Your business is in a position to help those in need and finding the right charitable organization allows you to make the most of the opportunity.
Many business owners who get into charitable sponsorship for purely selfish reasons quickly find they enjoy the feeling they get from helping others. Although the marketing and tax benefits are great, the joy of giving quickly surpasses these advantages. Employee morale improves when they know their efforts are helping a nonprofit organization.
Charitable sponsorships are one of the few genuine win-win situations a modern business will encounter. Your organization can start small, for example by funding a single event, and as you see the advantages you can increase your support. Some companies promise a specific amount while others donate a flat percentage of their revenues or profits to the charity. Whatever help you can offer will be appreciated by those in need.