Does the idea of restructuring your whole company to explode with your values feel daunting? I totally get it. I’ve told the story many times about feeling like I needed to win the lottery to change all of my household and beauty products over to green/natural ones. I’m here today to give you a little bit of relief from that feeling. One of the easiest and most common ways that people navigate the intersection of values and profits is to build a give-back component into their business plan.
We’ve all seen the companies that advertise that a portion of their proceeds go to this charity or that cause. In fact, this was part of my initial introduction to the whole concept of Values Based Business. In 2004, I discovered Hand in Hand soap and their mission to spread clean drinking water through the sales of their beautiful and luxurious soap. The idea that I could buy products I love AND have them support causes that matter to me was life-changing.
The give-back model can be executed in a number of ways. It’s just up to you to decide what works the best for your business.
you can donate a portion of your profits (in actual $) to causes that you support
you can follow the one-for-one model where an actual product is donated when you make a sale
you can set aside a portion of your profits in order to pay yourself for donating your products or services
The first one seems like the simplest, but can be super challenging for small businesses! If this is the model you want to follow, I suggest building this into your profit margins. Being mindful about how you run your business means taking the time to sit down and go through the numbers. How much from each sale will go to the donation fund? Is the % based on top-line revenue or net revenue? It’s also important to recognize that unless you are a C-Corporation, any monetary contributions funnel up to your personal tax return and you have to hit the ceiling required by the IRS to get the write-off. And, in order to qualify for that write-off, the company has to be a 501(c)(3) non-profit. We all know the write-off isn’t the reason you are doing this, but having all the facts helps you decide which model is best for your business.
If you are a product-based business, you might opt to donate actual product. In this case, it doesn’t matter if you are donating to a non-profit or a for-profit mission-based company. There’s no write-off involved for the product, but you do still get to write-off the cost of making the product.
I’ve worked with service-based entrepreneurs who feel like they can’t afford to donate $$ while they are growing their business and don’t have the time to donate their services for free. They are dedicated to helping social impact organizations and struggle with what to do. One solution I frequently share is this: set aside a small portion of your profits from each sale and use it to pay yourself when you do pro-bono or discounted work for non-profits or mission-based companies. For example, if you are a web designer and you charge someone $5,000 to build a website, you might put $100 in a separate account when you get paid. Then, when that account reaches $2,500, you can offer to do a website for a non-profit or company you support at a 50% discount!
The key is really to figure out which model works for your business finances and structure. It’s been proven time and time again that running a values-based business will increase your bottom line, and part of that success is because business owners take the time to adopt the practices that support their values AND help them make more money! And then, I tell all of my clients - don’t be afraid to advertise what you are doing. There are people, just like me, everywhere who choose to spend their money with companies that have incorporated a give-back model and we want to be able to find you!!
In December, I’ll be featuring a number of values-based businesses that will inspire you to consider all the ways you can incorporate this into your own business. This month, I’m featuring two that are super near and dear to my heart, Personal Hero and Violets are Blue.