SMALL COMPANIES ALSO NEED CHARITABLE-GIVING PLAN Business size has little to do with solving community problems The owner gives personally and gives gifts of company products or services to charitable organizations.


When most of us think of corporate gifts to charity, we form a mental image of giants like IBM, which gave more than $150 million to charities last year. After all, such companies have entire departments devoted to boosting the company's community image through charitable donations.

But think again. Small- and medium-sized companies, ranging from the mom-and-pop delicatessen to the entrepreneurial high-tech upstart, also donate a significant amount of money each year.

Such smaller companies are providing the fuel to keep our economic engine running, economists note. These companies also will provide local leadership in community affairs and charitable work in the future.

As these smaller companies mature and begin to look outward, they often see critical community needs that they feel obligated to address. What I sometimes find amusing is the way in which they do so.

Not content to take a back seat to the big guys, these lean companies often turn standard operating procedures on their ears. In the conservative, but-we-always-do-it-that-way world of

corporate charity, these entrepreneurial minds have added a -- of refreshing new ideas.

Most small companies do not have a formal charitable-giving program. More likely, the owner gives personally and gives gifts of company products or services to charitable organizations.

In other cases, the company might purchase a table at a banquet or an advertisement in a community newsletter. In fact, small businesses are asked -- some would say pestered -- for such donations daily.

How, then, does a small company know whether it needs a formal charitable-giving program? There are many indicators, and they become all the more apparent once the company grows beyond $5 million in revenues.

Here are some common signs that a formal program is needed:

The Company Sees a Need. A local high-tech company, for example, finds it difficult to recruit well-trained employees with solid grounding in science.

Or, over lunch, some company officials mention a report on the difficulty of finding positive male role models for disadvantaged youth in their business location. Sympathetic sighs no longer suffice. The execs look around the table and realize they must be part of the solution.

The Requests Are Overwhelming. Every day brings more requests for donations: $50 to attend a dinner, $1,000 to sponsor tutoring program. There is no pattern to these requests. Money seems to ooze out of the company with no return on the charitable investment.

The Company Wants to Do More. The present corporate program has no focus or direction. Company officials get no feedback from recipients about the gifts' impact. Executives want to see results in areas that matter to the company.

The Company's Image Is Suffering. Involvement in community affairs is one of the most cost-effective ways of positioning a company in the marketplace. Without such involvement, community leaders begin to wonder about the company's commitment to the community. Involvement also opens doors through networking.

The Satisfaction Index Is Low. The company's owners and executives wish there was more that they could do. Giving away money has become only that: throwing money at a problem, while avoiding the roll-up-your-sleeves involvement that characterizes community-minded businesses. They see that other business leaders derive great satisfaction, and rewards, from community affairs.

For those that elect to take the plunge and start a charitable-giving program, the rewards are great, both for personal and bottom-line reasons. One example that comes to mind: the upcoming United Way of Central Maryland campaign, which many small businesses use to put entrepreneurial skills into practice.

"The most successful small companies use this process as team-building," says Jim Brady, managing partner of Arthur Andersen and Co. in Baltimore. "The campaign is an integrated part of corporate goals, part of the corporate culture."

Brady should know. As chairman of the United Way Campaign, this friendly and outgoing business leader has held brainstorming sessions with the CEOs of Maryland's most successful companies to learn the elements of successful workplace campaigns.

In next week's column, I'll examine some of the do's and don'ts of charitable giving for small companies and look at how they dovetail with the lessons learned at United Way.

Les Picker, a consultant in the field of philanthropy, works with charitable organizations and for-profit companies.

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