Charitable contributions—we all think about them in terms of our private lives outside of the office, but how much thought do we give to such things as it regards to our business practices? There are many benefits to be gained from charitable giving, not just on your individual tax return, but from a business perspective as well.
In terms of a business’ “goodwill” in the community, much can be said for the impact of charitable giving. The charitable contributions may even have a greater impact on the business’ bottom line than the direct impact of the deduction itself. Businesses are often asked to donate to a number of charitable causes. From a business perspective, it’s important to realize that the benefit can be reciprocal—the charitable organization receives your support, but then your business receives visibility in the eyes of the consumer.
Since business owners are often asked to sponsor charitable events, determining where to give is something you should consider. You should think about the audience who will receive your message and consider sponsoring events that have an audience that could lead to future business opportunities. For example, many consumers, all things being equal in terms of quality, education and experience, will make a decision to select a particular physician or practice based on the physician’s or practices’ respective reputations within the community. Having this goodwill in the community can not only solidify existing clients but gain you opportunities for new clients as well.
This increased visibility and goodwill within the community not only benefits your business in terms of gaining and retaining new clients, but it can also help add value to your business in other ways. If you try to sell your practice, a practice with considerable goodwill in the community with a steady client base will potentially be worth more.
Additionally, there are income tax considerations that you should plan for as part of your business strategy. Sometimes the timing of your business’ charitable contributions can have a large impact on your overall tax picture. To take things a step further, sometimes business owners set up charitable foundations to actively serve the community or perhaps passively by distributing the foundation’s funds to other charitable organizations based on specific criteria. In either case, tax planning becomes even more important and in these instances, the charitable foundations can be used in connection with the business owner’s overall tax planning strategy.
To find out more about how to plan your charitable giving from a tax planning perspective, speak with your accountant or call our offices to discuss tax planning opportunities that are right for your practice.
Headquartered in Richmond, Virginia, Piascik & Associates provides premier personalized financial services to a number of physician practices, high net worth individuals, as well as private and publicly traded companies, including those with international operations. In 2004, the firm was recognized nationally by Practical Accountant magazine with a Practice Innovation Award. It also is the recipient of the 2004 Torch Award for Marketplace Integrity by the Better Business Bureau of Central Virginia.