Year_end_Charities_body.jpgBy Erin O'Donnell.

Small businesses field a lot of requests for donations as the year draws to a close. Before the solicitations start rolling in, it's important for business owners to make a plan for giving, by setting a budget and choosing causes that align with their industry, their company's goals, and their values.

Susan Hyatt, author of Strategy for Good: Business Giving Strategies for the 21st Century, says corporate giving should be strategic. There's nothing wrong with seeking a benefit when making donations as a business. In fact, Hyatt says it's vital.

"It absolutely benefits a company if they combine their heart with a little bit of strategy, because small businesses often are more tightly grounded in the community," says Hyatt, who also runs the consulting firm Big Purpose Big Impact in Denver. And, according to Nielsen Global Research, 42 percent of North Americans surveyed last year said they would pay extra for products and services from "companies committed to positive social and environmental impact."

Here are some of Hyatt's tips for small businesses and their charitable giving:

Choose causes strategically

Rather than fielding requests on a case-by-case basis, Hyatt recommends that businesses decide in advance which types of issues or causes they want to support. That can lead to more in-depth relationships or networking opportunities down the road. Hyatt says charitable giving can be an especially effective form of marketing for some companies by increasing positive name recognition, especially if the firm donates goods, services, or volunteer time.

Small businesses also get the most mileage out of supporting local organizations. "Staying local makes a lot of sense for a small company, because their reputation is positively affected," she adds.

Year_end_Charities_PQ.jpgPublicize your focus

Once you've determined the types of nonprofits you'll support, make it public. It can be as simple as a page on your website that details the types of requests your firm will consider. Then it will be easier to decline requests that don't fall within those categories, Hyatt says.

"You can make more impact if you don't give to everyone," Hyatt says. "You can do more good that way, even with limited resources."

Do a background check

Before you sign a check, it's important to vet the organizations that you'd like to support. Start with websites such as GuideStar and Charity Navigator, which aggregate financials and reputation information for millions of tax-exempt nonprofits and other groups that aren't required to register with the IRS. Charity Navigator also maintains several "top 10" lists on topics such as most-followed charities, nonprofits that are routinely in the red, and inefficient fundraisers.

While it's important to know if a charity will manage your contributions wisely, Hyatt says other factors are just as important. Look at who is on the board, and who the nonprofit's top corporate sponsors are. Make sure they're a good fit for your company's values. And try to gauge whether the organization is effective or making an impact on the issues it supports.

Get your staff involved

Charitable giving is a good way to boost employee engagement. Kevin Layton, CEO of digital marketing firm Data-Dynamix, tasked his employees last year with recommending charities for the company's year-end giving. Layton says most of his 20 employees suggested giving to nonprofits with whom they already had a relationship.

"We divide it up so it's not me making all the decisions," Layton says. "We set a budget and take suggestions. It works well for us."

Because his employees felt a sense of ownership in the giving process, Layton says, they were careful about choosing reputable organizations that seem to be moving the needle on the issues they support. "I believe successful companies are just like successful people," he added. "They tend to give back more than their share."

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