Donate_Body.jpgby Erin McDermott.


The requests can seem endless: school auction items, charity golf tournaments, team uniforms, table sponsorships, gift certificates, gift baskets, door prizes, free classes...  


But you’re not made of money.


So, how can you communicate that to those flooding your small business with appeals for donations and other freebies, while not coming off as Ebenezer Scrooge or giving away the store?


We all want to be generous. Who doesn’t fantasize about all the people you would help with a winning mega-lottery ticket? And Americans are a giving bunch: Nearly $300 billion was donated to charities in the U.S. in 2011, according to the National Philanthropic Trust. A wobbly economy has left many nonprofit, school, and community groups strapped for cash, pushing many to turn to the local business community to help bridge the gap. 


For many small businesses, that’s the trickiest aspect: You’re part of a community, there are client relationships to consider, there’s your reputation and marketing to think about, not to mention feelings of guilt at turning down someone in need. But how much can you afford and how often should you give?


Sherry Thomas, founder and president of Palm Beach Etiquette, an etiquette instruction and business coaching service, says she contributes to numerous local Florida charities related to health, religious organizations, and other groups. But it’s a delicate line for her. “There’s no way I could stay afloat and fulfill the amount of donation and free services requests that I get. It adds up,” she says. So every year, she picks four or five charities and sets aside a certain amount of her time and resources for them, including the offer of a full suite of her classes. “I try to give as much as I can, so my conscience is clear,” Thomas says.


If you’re getting papered over with requests, try to focus on the relationships you have with the folks who are doing the asking, says Hilary Hamblin, a marketing consultant for small businesses in Saltillo, Miss. In a recent blog post, she wrote about the importance of keeping a good customer happy, particularly if it means a contribution to their children’s school-club fundraising effort. But what if the request to your company is made by a stranger? “I have this conversation all of the time with my clients,” Hamblin says. “This is not about advertising your business. It’s about supporting the people who are supporting you. It’s OK to say no.”


Here’s some more advice from other givers about how they manage their philanthropic efforts—and the art of saying no.


Set an annual budget

When you start looking ahead to next year, factor in what percentage of your revenue you can afford to use for donations. Later on, if the money allotted for a particular month is spent, relay that news to the requester. One great bonus for such generosity: Many contributions are tax-deductible, including some expenses incurred during volunteer work and donations of property and business inventory. The Internal Revenue Service has online tools to help locate tax-exempt charities and which properties, contributions, and scenarios do and don’t qualify at tax time.


Donate_PQ.jpgCreate a policy—and an application

Whom do you want to help: A cancer-research foundation? A local Little League team? A developing-world charity for women? Whatever you pick, make it something that is close to your heart or aligns with the mission of your company. Some businesses make their affiliations known, with in-store posters or marketing or social media postings. If new charitable groups approach you to make a donation, you can point to those that you have already elected to support.


Thomas says she often invokes her annual-selection policy when declining a request, and has had requesters ask to be considered for the following year. “And then I say ‘Of course you may,’” she says.


It’s also wise to be sure where your contributions are going. While there are few fans of more paperwork, a bit of documentation can be a smart line of defense. Assemble an application process to get details about each group, who your donation would help and how, and contact and tax-status information. That extra step might separate groups most in need from those seemingly just going through the motions with requests. And it’s OK to be wary: Sadly, numerous charity scams are out there—from phony police and fire telemarketers to fraudulent collections for the victims of tragedies in the news.  


Create a win-win

Instead of making one-way donations where the impact is never seen, some businesses are opting for sales events that benefit one specific charity. For example, owner Tim Holliday says he has hosted “shopping nights” for several groups at his Children’s World Uniform Supply in Sarasota, Fla. At those events, the charity invites their customer base to shop with Children’s World on a specific night, and the charity gets a portion of the evening’s sales. Or you could try something like what Stacey Alcorn has set up with her 14 RE/MAX Prestige real estate offices in New England: Proceeds from their referral program for buyers and sellers benefit a specific charity—for example, here’s one for her firm’s work with Habitat for Humanity.


Work with a coordinating service

Renee Zau is a veteran of both sides of the relationship. She’s the franchisee of a health club and has managed requests for a regional marketing cooperative, as well as been a charitable auction chair for nonprofits around San Diego. The frustrations with the inefficiencies of dealing with hundreds of requests led her to start up, which connects charities to business decision-makers online, speeding tax-exempt verifications and communication tracking, including personalizing your responses.


If you can’t help, just say no thanks

If you are unable, how do you politely decline? Thomas, the etiquette instructor, suggests the following: “Say ‘I’m so honored that you’ve asked me. I must respectfully decline due to budgetary constraints.’ And I think being honest is the best way to go.”

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