As a business owner, you are likely to be approached throughout the year by numerous charitable organizations seeking donations or sponsorship. Of course, you cannot support them all!
Choosing the right charities for your business
When deciding which causes to support, consider how a charity's mission aligns with your own business values.
Does the cause resonate with your customers or community?
Supporting local food banks, youth sports, or community arts often creates a meaningful impact close to home.
Is it a cause your employees care about?
Involving your team in the decision helps build morale and reinforces your workplace culture.
Can you verify the charity’s impact and transparency?
Whether you're approached by a charitable organization or researching one to support, it's important to do your due diligence. Review annual reports, donor feedback, and third-party evaluations to ensure your donation will be used effectively.
A charity’s annual report should include the mission statement, a list of its board of directors, and the most recent audited financial statements with accompanying notes.
If a charity doesn’t provide the information you request, that may be a red flag. Legitimate organizations are usually transparent and welcome your questions.
You’ll also want to understand how donations are spent.
Look into how much of your contribution goes to administrative and fundraising expenses versus program services, i.e., the activities or causes the charity actually supports.
Most well-run charities allocate 75% or more of their budget to programs. However, newer organizations or those tackling less visible or less popular issues may have higher administrative costs as they grow their outreach and donor base.
Does the organization issue tax receipts?
If you’re making a cash donation, check whether the organization provides official receipts for tax purposes, and make sure its registration number appears on it. Registered charities in Canada can issue donation receipts, but they are not required to do so. If a receipt isn’t available, keep an email confirmation or another written record for your files.
Giving back doesn't always mean writing a cheque
Cash donations are great, but there are other impactful ways to give:
Donate products or services.
For example, a bakery might donate unsold goods to a shelter, or a landscaper could volunteer time to a local park.
Offer employee volunteer hours.
Give staff a paid day per year to volunteer at a charity of their choice.
Sponsor community events.
A banner at a charity walk/run or a booth at a fundraiser is not only generous, it's also good exposure.
Run a matching campaign.
Encourage customers or staff to donate and match their contributions up to a set amount.
Avoiding scams or misdirection
There are a great number of legitimate charitable organizations and worthy causes to support. Unfortunately, some requests are outright scams, while others use misleading sales tactics, such as selling products under the guise of supporting a cause.
Beware of requests that appeal to your emotions with a sense of urgency! If you're not familiar with the organization they are claiming to represent or are not sure it is a legitimate charity, do some research before opening your wallet!
When in doubt, the Government of Canada offers a basic search tool that can help you determine if the charity you are contemplating supporting is legitimate or not.
Need further assistance?
You have questions or need personalized support? Our Business Advisors are here to help:
1-833-568-2342 | hrnow@cfib.ca
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