Return on Community Investment

How nonprofit relationships can profit your business.
by : 

Jacki Smith

August 1, 2015
Return on Community Investment

Your business is part of a community—geographically, socially, spiritually—and your success as an independent retailer depends on keeping that community engaged. Earning its admiration and loyalty takes more than social media posts and a great business plan. Today’s competition comes from every direction—other brick and mortars, online stores, Amazon, and more. What inspires people to shop with you and open their wallets a bit wider is challenging, but connecting with the causes they support is one way that pays off—for them, for the causes they support, and for you and your store.

You can see this trend in the shopping habits of Millennials—they will pay a premium for an item if it gives back to a cause. TOMS shoes, Burt’s Bees, and Patagonia all have missions to give back part of their sales to help those in need. Marketing their missions draws socially conscious customers, and their products are bestsellers in their markets.

Conscious capitalism as a business model

Conscious capitalism is more than a trend, it is a business model. Benefit Corporations (B Charters) were first legislated in Maryland in 2010 and are now available in 28 states and counting. These allow a board of directors to use the profits of a company to benefit society, even when those actions are not in the best investment interests of the shareholders. In other words, giving back to their world community comes before profit, but if done right, the company and its shareholders get both. More than 1,500 corporations use this alternative business model, and it’s making changes in the way Americans do business.

Larger corporations know they need to contribute to the greater community, not only as a tax write off, but also to support their shareholders’ charitable interests. Philanthropic missions are used to create a positive corporate culture, raise employee morale, and create goodwill with their customers. Henry Ford, Dale Carnegie, and John D. Rockefeller all knew they had a social and moral obligation to give back to the community they built their fortunes on, but history shows it also benefitted them in the long run. Many museums and nonprofits are still to this day funded by their largesse.

In the smaller world of independent retailers, this ideal may be a tad too lofty to actualize, but there are smaller and more direct ways independent retailers can give back, engage our communities, and profit at the same time. Giving to a local nonprofit can increase your getting—if you do it with forethought and as part of the mission and values of your company.

How to give and get

Imagine inviting your favorite nonprofit to host their next fundraiser at your store. After saying yes, they will invite their entire mailing list to come to your store for a short, fun presentation. They also will encourage their supporters to shop your store while they are there, since 10 percent of their purchases (or whatever percentage you arrange with the nonprofit when planning the event) will be donated to their charity. Plus, they will send out press releases all over town and promote your store in every event listing available. If they are well connected with other nonprofits, they’ll ask their sister charities to spread the word as well.

Not only do you get free media coverage, your store gets promoted to patrons you might never reach otherwise. You could get dozens of feet in your store and blow-out sales numbers, all for the low, low price of a 10 percent discount! If you plan this right, you also will get to expand your customer base and mailing list with the names of everyone who walks in your door in support of their favorite charity.

I recently went to an event at a local store to benefit Common Grounds, a charity that buys blankets and finds housing for the homeless. The place was packed! There was a raffle of great prizes, a silent auction of a few select items from the store, and a long line at the cash register.

“Mardi Bras” is another popular charity event, held recently at a small local bar in my town. Local women collected bras, panties, and sanitary products for the area’s women shelters. The event not only hit capacity, it created great community feeling and filled more than 50 contractor-size garbage bags with the items collected. The proprietor of the bar donated 30 percent of that night’s sales—one of her largest sale and profit nights ever!

Managing your donations is inexpensive outreach

All local nonprofits have fundraisers, and they all want donations of money. They may start by asking for cash, but they will take almost any assistance you can offer. Nonprofits also know that to increase their funding they have to give something interesting in return. We all want to know “what’s in it for me,” and requiring a measurable return for your support is not out of bounds.

From donating products or services to donating your time or your cash, there can and should be a benefit to your business. Here are some quick tips for a great return on your donations:

  • Donate half product/half gift certificates. Donating a gift basket of products for a raffle or silent auction can make a great impression. If you only give a gift certificate and nothing else, you lose the opportunity to showcase what you carry and the attention a lovely visual presentation offers. Plus, often the winner or highest bidder will come into your store to buy more great items from you, so make that your goal as you design your basket. Whatever your budget for this basket, put in half product and half gift certificate. You want to make sure the product represents the character of your store, is not a dusty dud, and has good perceived value by participants. If many people vie for your basket, you may end up with several new customers.
  • Budget your time donations. Donating your time and skills is a wonderful way to connect with your community, so make sure you do! Donating your time is a great way to interact with new, friendly acquaintances who will seek out your store to support you. Donate only the time you can give—don’t volunteer for everything. Set a budget for your time, just like you set a budget for your money. Nonprofits know anything over 10 hours of volunteer time a month is a lot to ask, and burnout is not the end goal.
  • Optimize your financial donations. Donating money is a big deal for any business, and if you decide to go that route, ask questions to make sure you will be getting a big return on your investment of cash. Ask how often they will mention you in their press releases and ads, who will see your logo, and how many hits they expect on their website. Also, make sure their website links back to you. Many businesses put donations in their marketing budget, because they know giving to charity can be a cost-effective way to advertise. Businesses can sometimes receive five to seven times the number of views that an independent ad for the same cost would garner.
  • Measure your success. Track the baskets you give out, the cash you commit to, and the time you donate, and then measure your results. If you gave money for placement in ads and posters, ask for publication dates and check them. If you gave a gift certificate, note that in your records. Once it’s redeemed you can see whether the recipient spent additional money in your store.

Going local and building your local connections

You can find non-profit, community-building organizations all around you: local business associations, downtown associations, Chambers of Commerce, your local rotary club, and women-in-business organizations. Add DECA and 4-H, which both prepare emerging young leaders, and you have resources galore. Donating your time and expertise or just supporting them by hosting a meeting will boost their awareness of your store and its place within the community.
Getting to know the other business owners in your area helps create a strong local business culture and builds a great resource for referrals. Good connections with other business owners makes them much more likely to come to you when they have a need you can fill. And, who better to check in with for information when something changes in the community?

Just by the fact that you own and operate an independent business, you are a leader in your community. Whether you want the role or not, people see you as a community leader, and that position can be beneficial to you and your store.

When I was initially invited to speak to high school students at a recent career day, I wondered what I had to offer. Was I really a viable role model? I never went to college, and isn’t that what administrators want to drill into kids’ heads? Would I revert to my high school days and feel like the outcast again?

That talk ended up one of the best things I’ve ever done. I enjoyed preparing for the talk, and I met other local parents and business owners, which helped promote my store in a whole new arena. And whether or not the students were inspired by me in the moment, many came to shop in my store and some even gave me a nod of recognition!

Giving a talk about what it takes to run a business to the DECA chapter, the local 4-H club, or even the business class at your local high school can have far-reaching effects. Getting out of your store and into the community to talk about your business and your life as a store owner will get you noticed. The more people you talk to, the better you get at speaking to individuals and groups and the more attention and recognition your store attracts. I didn’t know how well known my store was until I went to an event 40 miles away to volunteer with a new group of people. As I introduced myself, two out of five people had heard of my store and one out of five had shopped there. All my volunteering, donating, and interacting was definitely paying off for my store!

Co-marketing as a strategy

Kalalu, Yoobi, Better World Books, and Out of Print Clothing are companies that have made giving a part of their business model. You could even say many of these companies were founded specifically to give back to the charities they believe in. They market themselves in this way and receive a lot of press for their generosity. You can do a Google search on “companies that give back” or “socially conscious businesses,” and these companies, plus hundreds more, are written about in countless publications. I found a new favorite sock company just by doing research for this article: Mitscoots (www.mitscoots.com) gives a pair of socks to the homeless for every pair customers buy—and they are good socks!

Giving this way doesn’t end with a one-way promotion. The recipient charities want to promote the good works of their benefactors. Nonprofits are focused on the effectiveness of their mission. They are in the game of collecting names, emails, and mailing addresses, and they will promote their funding partners to everyone they can. If you are a business that signs up to co-market with them, you will exponentially widen your marketing footprint.

From Martha Stewart to SXSW (South by Southwest), corporations and event sponsors are looking to honor businesses that give back. They want the press, too, and your partnership with them makes a great story. Many communities have awards for giving back, and receiving that recognition in your own backyard means more traffic in your store. Last year I got a Good Neighbor award from the Ferndale Community Foundation. I was nominated for the award by people I volunteered with. The award was written up in many local papers, and I noticed immediate results in my store’s sales. I don’t volunteer just to get more sales, but you cannot ignore that lovely increase when it happens!

Leveraging nonprofit loyalty

Business-management guru Peter F. Drucker praised the role of nonprofits in a 1989 Harvard Business Review article, “What Businesses Can Learn from Nonprofits.” He pointed to the fact that the nonprofit sector is the largest U.S. employer, noting, “Every other adult—a total of 80 million plus people—works as a volunteer, giving on average nearly five hours each week to one or several non-profit organizations.” That’s an amount equal to 10 million full-time jobs. Think about the loyalty that giving garners. When part of your mission is the desire to give back in some way to someone, you are honoring the work of all these volunteers, and they will choose your store over a competitor’s because a social conscience is important to them.

Today’s consumers are burned out on traditional marketing pushes. They are learning to ignore the constant flow of advertising into their lives. Instead, they’re looking for more meaning with their purchases. If your business mission aligns with nonprofits that benefit a greater good, you already stand above your competition. Don’t be afraid to step out as a true leader in your community. It is the small acts that change the world, and as an insightful and conscious retailer, you can share your knowledge and wisdom with the world in many unique and wonderful ways.


Jacki Smith is Founder and Enchantress of Coventry Creations and designer of the Blessed Herbal Candles. Jacki has a passion for small business (she owns three), has two books under her belt, and is a regular contributor to Retailing Insight. Contact her at jacki@coventrycreations.com.