We’re sure many of you are familiar with the age-old saying: “No good deed goes unrewarded.” This truism has been passed down for generations and is meant to reinforce the concept that if we are kind and share with others, their good fortune, as a result of our generosity, will make its way back to us.
One of the key insights we gained from our 2020 Spring into Kindness Small Business Study validates this saying with real data. Being kind and giving back to the community has many seen and unseen returns which help businesses and the neighborhoods that surround them grow. We have explored the return of investment (ROI) of kindness, and the data from our study gives insight into what returns small businesses expect — and are seeing — from their charitable giving efforts.
First, it’s important to know how small businesses view their community giving efforts. We asked respondents if they considered giving to be an expense, a trade-off, or an investment for their organization. The majority, 60%, thought giving was an investment, as opposed to 18% that viewed it as a trade-off and 16% as an expense. We dove deeper by asking what types of ROI their organization has received from their community giving.
Most small businesses reported that the top ROI results they receive from their good deeds are the personal satisfaction they feel from their efforts (69%) and the benefit created for the community (68%). Secondary ROI benefits include deepening relationships with customers (59%), boosting reputation (54%) and strengthening brand visibility (50%). Other ROI include: media coverage (36%), expanding partner network (24%), lead generation (22%) and employee retention (20%). The importance small businesses place on their communities and on how much personal satisfaction they gain through their giving, show that when businesses give, it’s genuine and from the heart.
We know that small businesses are big givers, giving throughout the year and showing lots of love for their local communities. In fact, we found that 99% of businesses gave back to their communities within the past year, 70% of them gave back throughout the year and 87% were asked to donate to the community at least once a month. This pattern does not seem to be slowing down, with 93% saying they plan to give in 2020.
Even amidst the uncertainty and challenges posed by the coronavirus pandemic, small businesses across industries, sizes and regions continue to step up to give back to their communities. They give from a desire to support their communities but also because the success of their businesses is greatly dependent upon the strength and health of their communities. How important is giving to the growth of a business? Our study revealed that 70% believe it is important for their business’ growth.
Since small businesses view their community giving as an investment which helps support their growth, it is important they have clarity of what they give. Just as they strive to maintain accurate inventory, payroll and financial records, quantifying what they give ─ every dollar, every minute and every item ─ and the true value of their giving, will reveal a complete representation of their community investment.
To get a handle of what small businesses are measuring, we asked them to share the top ways they give back. We found that they most often give financially, either as money donated (75%) or funds raised (38%). They also give through time volunteered (62%), sponsorships (58%) and items gathered in collection drives (58%). Other forms of giving that could be overseen for measurement are in-kind products or services (35%), such as items for a gift basket or a complimentary gift certificate, and access to or loaning company resources (28%), such as providing space for events and vehicles for transport.
We found that the majority (95%) were keeping track of their community giving. However, most of them (73%) were keeping track of the money associated with these efforts, followed by 41% that tracked the time spent volunteering, 37% that tracked sponsorships and collection drives, 30% that tracked fundraising efforts, 27% that tracked in-kind products and services and 21% tracked company resources.
While small businesses have a good grasp of the monetary value of what they give back, the picture starts to get hazier when it comes to other key components of their giving ─ time and things. As a result, small businesses are undervaluing their total community investment.
Take, for example, time. Business owners are generally constrained for time. A study by Mavenlink revealed small business owners thought that time was their most valuable asset, even above their technology, websites and storefronts. One in four small businesses stated that just getting an extra hour was worth more than $500 to their business. Now consider if that hour were donated to the community in their specific area of expertise, such as legal, accounting or marketing, then the value of that hour would increase significantly for the community, as it offers the additional value of the business's knowledge, skills and experience.
There is a saying that "you measure what you value." If a small business values it's connection with the community, then it needs to track and measure its commitment to it. Peter Drucker, known widely as the father of modern management stated, “you can’t manage what you can’t measure.” Additionally, he said that “if you can’t measure it, you can’t improve it.” Having a complete picture of everything it gives is a key element to a small business’s overall community give-back story.
Next, we wanted to understand what tools small businesses were using to track their community giving. Over half told us they used accounting systems (51%), followed by keeping manual records (47%), spreadsheets (36%) and point-of-sale systems (19%). As a follow-up to this question, we asked how easy it is for small businesses to keep track of their community giving. About a third of the respondents (31%) told us that their current systems are difficult to use. Furthermore, two out of three businesses admitted they thought that tracking their community giving could be easier.
This revealed that the difficulty in tracking impedes small businesses from painting the entire picture of the true value of what they give. Part of this may be that the tools used to track their giving efforts lend themselves more for financial measurement. Also, there are more immediate and direct benefits of providing an accurate dollar total for charitable deductions for taxable income.
But small businesses have the opportunity to garner greater value by measuring everything they give back to the community. This starts by not only striving to attain community impact, but also realize a benefit for their business. The first step to doing this is showing their community they care. Notice I said, showing versus telling. Similar to the saying "actions speak louder than words," when it comes to demonstrating that you care, being transparent about how much time, energy and resources you invest back into the community speaks much louder.
I have spoken with many small business owners, and they are generally humble about how and what they give back, and often express they they would like to do more. Our study found that the key obstacles to them giving more were finances (50%), lack of time (46%) and being unsure of the best way to give (16%). However, when it comes to giving, the power of aggregation is a small business’s friend, and the value of their commitment runs much deeper than they realize. Accurately tracking all three components – money, time and things – provides a more representative picture of their overall giving.
Businesses that do good can be a key differentiator for today’s consumers. According to a 2018 consumer study by Mintel, 73% of consumers say that an organization’s charitable work affects their purchasing decisions. In this digital age where consumers can research and pull up information on an organization with a few keystrokes, being visible and transparent about the good you do is now an important part of the new “business as usual.” Transparency means being open about who you support, what causes matter to you and backing it up by showing the value of your investment in the community. And it’s not just about the total value, the consistency and frequency also help to demonstrate the authenticity of what you do, that your act of giving is not merely a one time and done.
When businesses are involved in doing good, providing transparency helps build trust for the organization and shows the community that their business cares about the people in it. Doing good, and being transparent about it, is a differentiation factor that helps small businesses stand out and stay on the top of their communities’ minds. And it can’t be overlooked that for small businesses, their reasons for doing good are authentic and come from the heart.
At seedership, we have built a platform to help small businesses efficiently keep track of the good they do for the community in an easy and simple way with a real-time interactive dashboard. It offers access to data and analytics as well as automated reports for clarity about what they give back.
When a business is involved in helping their community grow, they create more customers, more employees, more partners, and, importantly, more brand advocates which help the business grow as well. Giving, and sharing these efforts work together to create a positive feedback loop that keeps customers coming back to charitable businesses, and keeps businesses motivated to keep giving. When businesses are able to grow, their communities grow with them.
Visit our research page to download our full 2020 Spring into Kindness Small Business Study. You can also register for our webinar on Thursday, May 28 at 3 p.m. (EDT) to review the key findings.