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Corporate Donation: A Practice Every Company Should Follow

By Author: kanan james
Total Articles: 76

Companies, no matter big or small, consider their responsibility to donate for non-profit organisation and charities. In our day to day lives, we often come across organisations which donate in cash or goods to charities and also sponsor events related to a social cause. Charitable donations help companies in attracting customers, employees and partners.

Let’s read through the major benefits of corporate donations:

Employee Morale
Donating helps companies in building up interest in their own communities and increasing the morale of employees. When companies choose to donate, the work culture improves with increased employee involvement and development of a positive attitude. If a company is indulged in charities, employees start respecting the organisation and emotional attachment towards the company also increases.

Tax Benefits
When corporations donate for public and private 501 (c) (3) organisations, they are entitled to tax deductions. Corporations are entitled to 10% deduction of their total taxable income after donating to public and private organisations. Companies end up giving the 10% of their taxable income in the form of donations in order to enjoy tax benefits. Most of the companies maintain the same threshold while there may be others who may pay more as charity.

Apart from corporate donations, individuals donating for charities are also eligible for tax benefits. Donations under 80G are considered eligible for deduction only when the contribution is done in the form of cash, draft and cheque. Donations made in cash should not exceed the amount of Rs. 10,000 if the deduction has to be availed. Earlier, donations under sec 35 ac were eligible for 100% deduction for organisations which have income coming from some business. The same act has been discontinued from FY 2017-18 onwards.

Many companies sponsor events which help them in advertising their products and services. This technique helps in marketing about their companies and goals. Companies are able to demonstrate their current and future clients that they are concerned about the business and the community.

Sampling of Products
Often hotel chains donate in the form of hotel reward points to NGOs and charities. The donation of reward points helps them in doing well for the society/community and also assists in spreading information about the hotel. The rewarding of points also helps in building a good reputation of the company. Similar to hotel chains, all other forms of businesses can donate and advertise about their products/services.

Donating for charities helps in increasing the profit margin of businesses. It is because organisations are able to advertise about the products they are selling without an additional cost. Moreover, because the company is indulged in charity, the perception amongst consumers related to the products changes. This leads to an increase in the number of consumers coming to the organisation. When a company is donating, the employees become more connected to the organisation and the goals of the company are fulfilled at a faster pace.

Consumer Perception
When consumers come to know about a company which is into charity and donations, the perception towards the company is positive. Consumers ascertain that the organisation is concerned with the ongoing issues which allow them to connect with the organisation at an emotional level. Because of positive perception, the bond in between consumers and the company becomes stronger and long lasting.

To summarise, corporates should choose charities for donations after a bit of research and planning. The company who wants to donate should make sure that the charity matches with the company’s goal and brand values. It should be ensured that donating helps in creating a positive impact with no minimal cost.

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