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Friday, June 21, 2024

5 Benefits of a Giving-Back Strategy and How to Get Started


If you’ve participated in a charity event or donated to a cause you care about, you know that giving back is its own reward. But do you know it can also be good for your financial advisory business?

At Commonwealth, our nonprofit organization, Commonwealth Cares, evolved from a long history of giving back. While helping others is its main objective, and it’s made a big impact, it has also helped the firm, our staff, and the advisors we affiliate with in countless ways.

So, how can you harness these powers in your practice and community? In honor of Giving Tuesday, we’re sharing five benefits of developing a giving-back strategy and how to put a plan into action.

5 Reasons to Adopt a Giving-Back Strategy

  1. It helps foster client relationships. Rather than host a client appreciation dinner, wine tasting, or movie night, why not bring clients together to give back? Inviting them to participate in a worthy cause shows them you care about more than just business. It can also help deepen relationships and may even lead to new referrals.

  2. It encourages employee engagement. Allowing employees to connect and build bonds creates a great workplace culture. By organizing a team to participate in an event or fundraiser, you’ll bring people together, raise awareness, and help your staff feel good about making a difference in the community.

  3. It’s an investment in the community. Giving locally means propping up your own community or hometown. And when you show support for your community, it will want to support your business. No matter the cause, everyone benefits.

  4. You can market your efforts. There’s nothing wrong with highlighting your efforts on social media and your website—it’s an excellent way to show clients and prospects what causes are important to you. And depending on your involvement or donation level, you may receive a callout on an organization’s site or in an event program book.

  5. There are potential tax savings. The contributions you make should be eligible for a tax deduction. But remember to consult with your tax adviser beforehand, as the structure of the donation and who you’re donating to will determine what you can write off.

Creating Your Own Giving-Back Strategy

When you’re ready to implement a formal giving-back strategy at your firm, it’s wise to start small. That way, you can ensure a consistent, repeatable process and build on your efforts over time.

Next, you’ll want to create a mission statement. This will help you focus your efforts on the causes most important to you and keep you from writing a check every time someone asks for a donation. Your mission statement should answer questions such as:

  • What’s motivating you to give back?

  • What kind of charitable impact do you want to make?

  • What’s your geographic scope?

Once you’ve answered these questions, you’ll be able to narrow the scope of organizations you want to get involved with and decide how you’re going to make an impact. There are several ways you can do this:

  1. Give sustainably over time. Rather than a onetime donation, this is an excellent way to help an organization over the long term. You can give monthly to a specific cause or spread donations across different organizations that serve your mission statement. You can even combine this effort with special occasions: rather than giving gifts to clients or employees, consider making a donation on their behalf.
  2. Host an event or join a cause. There are many ways your efforts can go beyond monetary donations. For example, if an organization you admire runs a charity walk, form a team with employees and urge clients to participate. Or offer employees a volunteer time off (VTO) day, so you can all roll up your sleeves and pitch in for a good cause.
  3. Serve on a charity board. There’s no better way to support a cause you believe in than to become an integral part of the organization. By serving on a board, you can bring the skills, experience, or subject-matter expertise that the organization desperately needs. Donating time or money to a cause over an extended period may lead to a board position. You can also check out BoardStrong.org and search for board openings at organizations that resonate with you.
  4. Establish your own vehicle for giving back. If you want more control over how your contributions are used, consider setting up your own fund or organization. There are two ways you can do this:
    • Create a donor-advised fund (DAF). This option is a relatively simple, flexible, and tax-efficient way to support your favorite charity. You contribute cash, securities, or other assets to an account, invest the funds for tax-free growth, and direct grants to the charity of your choice. Note that you may not solicit client donations to a DAF.
    • Set up a 501(c)(3) organization. Public charities and private foundations are two tax-exempt organizations established for charitable purposes. While these options may provide a wider range of giving options, they are much more complex. For starters, they are legal entities, so they require extensive paperwork and costs to establish and maintain. In addition, public charities require one-third of funding to come from public donations. But with the right amount of time and effort involved, these options could help achieve sizable fundraising goals for construction projects or funding research.

Helping Others While Helping Yourself

Giving Tuesday was created as a way to encourage people to do good. And while your main reason for creating a giving-back strategy should be to help those in need, your practice can also benefit from your generosity. It can improve your brand image, engage clients and staff, and let prospects know you care about more than just your business. If you’re ready to pay it forward by giving back, there’s no better time to start than now.

Commonwealth Financial Network® does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

Please consult your member firm’s policies and obtain prior approval for any marketing ideas or other strategies discussed in this post.



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