Research shows small businesses deeply involved in community investment

• DOI: http://doi.org/10.1002/nba.30650
• Date: 01 September 2019
• Published date: 01 September 2019

NONPROFIT BUSINESS ADVISOR SEPTEMBER 2019

6© 2019 Wiley Periodicals, Inc., A Wiley Company • All rights reserved

DOI: 10.1002/nba

Industry News

Research shows small businesses deeply

involved in community investment

New research conducted by TD Bank shows that

nonprots looking for support from the business

community shouldn’t focus just on large companies—

small businesses do their best to give back to their

communities as well.

According to a survey conducted by the bank,

nearly three-quarters—73%—of small businesses

provide some form of support to local charities to

show their commitment to giving back and to express

appreciation to customers and their local community.

The survey denes small businesses as those with $5

million or less in annual revenue.

That’s despite the fact that small businesses

typically have far fewer resources to devote to charity

than larger companies, and are often facing nancial

or stafng constraints of their own.

According to the survey:

• 61% of small businesses provide support valued

at up to $10,000 to their community through cash

and in-kind donations, sponsorships or employee

volunteer time on an annual basis.

• 16% of businesses report donating $50,000 or

more in gifts and time annually.

When asked to identify the ways in which they give

back to their community, survey respondents said

they are most likely to donate:

• goods, like products or food (35%);

• money (29%);

• time to volunteer (29%); and

• space for community events (12%).

Further broken down, the data show a tendency

for many small businesses to support local groups

and causes over more nationally focused nonprots.

Per the survey, local charities (30%) and youth-

focused organizations like schools and sports teams

(29%) are the most popular among small businesses.

That’s followed by religious organizations (18%) and

police and re departments (18%), arts and culture

organizations like theaters and music programs (16%)

and environmental organizations (14%).

This focus on local groups and causes makes sense,

considering that most small businesses get the bulk

of their customers from their local communities and

surrounding areas, according to Jay DesMarteau,

head of commercial specialty segments at TD Bank.

“Most small businesses, by their nature, are

entrenched in their local cities and towns, serving

as both an economic engine and a resource. Small

business owners are local heroes,” DesMarteau said.

However, the survey did note a difference in

preferred causes, with younger small business owners

(Gen Z and millennials aged 18–34) giving the

most money to youth-focused organizations, while

their Gen X and baby boomer counterparts aged

35–65+ prefer donating to well-established charitable

organizations such as the Red Cross.

Favoring in-kind giving also makes sense when

considering the stage of development most small

businesses are in, DesMarteau told Nonprot Business

Advisor.

“Many small businesses, especially in their new-

business stage, rarely break even or make a prot

that could then be invested in the community through

nancial contributions, so setting aside thousands

or even hundreds of dollars may be challenging,”

he said.

“It makes sense, then, that they want to fulll their

desire for community involvement through in-kind

donations, whether it’s offering a conference room

for a nonprot board to meet or donating items at

cost, especially if they have unused or excess capacity

in their products or inventory.”

And, just as large corporations strive to align their

giving with their core business functions, and try to

match the resources they are donating to the needs

of those they support, so do these smaller operations,

he said.

“We also see that small business owners may have a

core competency or resource to give that ts the needs

of their market, such as a restaurant owner donating

meals or unused food to a food pantry.”

That’s a good rst step toward a more strategically

minded giving program. But the survey data show

small businesses have room to improve in this front.

The vast majority of small businesses (79%) do not

have an established corporate social responsibility

program or dened community giving or volunteer

(See BUSINESS on page 8)