How community involvement benefits company culture

Today companies are finding that philanthropy and community involvement can help improve internal culture and employee job satisfaction. That can go a long way to producing tangible benefits to an organization, such as increased retention and generating connections that could lead to new business.

“Aside from the tangible benefits of giving back to communities, it can be a lot of fun to get out of the office with employees as a team and contribute by participating in fundraisers and food drives,” says Michael Stevenson, CPA, CFE, CFF, ABV, managing partner at Clarus Partners. “It’s an opportunity for employees to get to know one another better, to work as a team. That teamwork and camaraderie carries over to the work environment and improves the business.”

He says it’s important that employees like each other and can have fun together. “That’s good for creating efficiencies in the workplace, and goes a long way toward people enjoying going to work.”

Smart Business spoke with Stevenson about the impact community involvement can have on a company, both internally and externally.

What are the tangible benefits of charitable outreach?

Charitable outreach can mean free publicity for the company through promotion on its website, and there may be some recognition for the company at the event or local media coverage. It also allows the business to create a stronger connection to the community.

While free publicity is good, employees, especially those who are younger, appreciate that a company would engage in those events. It improves happiness and helps in employee retention.

How might giving back to the community have a positive financial impact on the company doing the giving?

One of the major benefits is employee retention. It’s widely accepted that replacing an employee can cost an employer as much as two times the former employee’s salary. It’s critical that an organization retains younger employees who are willing to learn and grow to handle greater responsibilities.

Similarly, charitable work helps employees build new skillsets and connections. While participating in a food drive, employees may get to learn or showcase skills that are different than the skills they use at office.

Gaining new connections in the community is always positive. As employees grow within a company, they may be asked to help develop new business. This can be a step toward that.

The time a company donates for a charitable endeavor isn’t a tax deduction. The IRS can’t define the value of a person’s time, so volunteer hours given toward a charitable organization aren’t deductible. It has to be more tangible — donating food or money, buying a table at a charitable fund drive, sponsoring an event or playing in a charitable golf outing can be deductible.

Tax deductions shouldn’t really be a factor in charitable activities. It can be offset of an expense, but taxes shouldn’t drive what’s right for the business.

How does a company measure the impact of its corporate philanthropy?

It’s not easy to quantify, but it can be felt. Those who get involved in charitable activities often have a better attitude, and improved job satisfaction and productivity.

To receive those positive outcomes, employees should have a say in what activities the company gets involved with. Form a charitable giving committee that comprises employees — not partners or executives because there should be no pressure from top to make certain decisions. The committee can meet a few times per year to set the company’s charitable agenda. Whatever the group decides, allocate dollars in the company budget to allow them to pursue that activity — whether that means matching donations or providing time off work. It’s important that whatever is decided, the owners support the group.

Giving back to the communities in which a company operates should be inherent in its culture. It sends the message to the community and the employees that the company doesn’t just exist to make a profit — the company has a stake in helping the community thrive. That can improve relations with the community, help attract and retain talent, teach new skills and make new connections. Let the employees pick something they are passionate about and support them as they go help out.

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