How and Why to Support Your Community with Donations from Your Business

Article originally written for and featured in Square’s Seller Community:

My dad and I opened up our small neighborhood ice cream shop in 2004, and we’ve made it a point to donate to local groups and run fundraisers for our community every year since the beginning.

Using your business to support local organizations in your community through fundraisers and donations is a great way to solidify your presence as a contributing member of your neighborhood, and to help those in need. 

Donations to local organizations can really help your community and neighborhood grow and prosper. Fundraisers also end up spreading the word about your business, act as great word of mouth advertising, and have the wonderful side effect of helping your business too. 

Fundraiser events are a complete win-win in providing much needed funds to local schools and groups in your area, and helping you gain new customers along the way. New and existing customers will come because of the fundraiser, and if all goes well, they’ll keep coming back after.

But where do you start? How do you hold a fundraiser with your business? What’s the best way to donate products to local community organizations?

There are so many great ways that you can help your community, each one of them with different levels of contribution, cost, and potential growth to your business and neighborhood.

Even with the pandemic, it’s still absolutely possible, and potentially even more important to hold COVID-safe fundraisers and help your community and your business prosper.

Product Donations

Depending on your business, the best way you might be able to help your community is by donating your product. This was especially shown during the pandemic, but it’s a great thing to do every year no matter what. Restaurants can donate food to those in need, barbers and beauty salons can give free haircuts, and businesses of all kinds can set up drives in their shops where customers can buy their products and immediately donate them.

Whether it’s local shelters, food banks, or first responders, showing your appreciation and care for your neighborhood by donating your products and services directly to people who need it the most is a wonderful thing to do.

Donating your product is a great choice because it doesn’t directly cost you that much to do something great for your area. You’ll only have to front the product cost, and maybe some labor, but overall, it’s a wonderful way to give back without putting too much out from your business.

Sports Team Sponsorship

Another great way to get started is by sponsoring some local sports teams for kids or adults. Depending on what your business offers and who your target audience and market is, finding a little league team or adult recreation league could be a great fit.

There are a few ways to sponsor a local team. Usually they all involve an initial yearly donation of some amount of money, and then depending on the amount and the team, the perks you get may vary. Some will put your logo and information on a banner that they put up at games, others might give you a shout out and put your logo in their newsletters and website, and others might even put your logo on their uniforms.

My favorite benefit of building a relationship with local teams is that they often establish a routine of coming to your shop after every game. Some of our best times were when the little league team would come by to our ice cream shop after their games.

Gift Card Donation

Another great simple way to contribute to local groups is by donating Gift Cards. You can donate them to specific groups in need, or as raffle prizes for local organizations’ fundraisers. These might be at physical events, virtual events, or ongoing efforts held over longer periods of time.

Having your Gift Cards as a potential prize does double duty for your business. Not only will the person winning the prize come to your business to redeem the credit, everyone else who hears about the raffle or event will see your business name as being part of it, which serves as a wonderful extra advertising and promotion opportunity. 

Donating a Gift Card is a great way to go because it doesn’t immediately cost you any money. You would just have the product cost eventually if the winner ends up coming in and using it, which they may not even end up doing. 

If you pick the right Dollar Amount for the gift card, the winner might even end up spending extra money to redeem it. You can calculate and find out your average transaction cost using Data from your Square account and donate a card value that is a little bit less, a little bit more, or a multiple of one of those, in order to increase the chances of them spending more money. For example, If your average transaction cost is $15, either donate a $10, or $20, or $25 Gift Card.

To set up gift cards for donation, you can create a 100% Off Discount called “Gift Card Donation,” and then just load up the Gift Card as usual and apply this discount to the transaction.

In-store Fundraising Events

Holding an in-store fundraising event is the peak of traditional community fundraisers. A lot of organizations would love to have a fundraiser at your shop, and tying a donation to a percentage of sales is a great way to drive traffic to your business. Typical percentages I’ve seen range from anywhere from 10% to 25%, but you can use your best judgement according to your business and the organizations you’re teaming up with.

It’s very important to figure out what policies you want in place and write them all down into a document that you would send out to any organization that has interest in holding a fundraiser with your business. 

Here are some different ways you can run your fundraiser, and different options of policies you can adopt for your business:

Day of the Week

The first step of figuring out the process of how to hold a fundraiser in your store is to pick only one day of the week to hold them. This makes it easy to set a schedule and keep track of your fundraisers. A great way to do this is to use your Square Data to find out what your slowest days of the week are. Using that information, and your knowledge of your business, you can pick a day of the week and set all fundraisers for that day. 

Using one of your slowest days helps boost the sales for that day of the week, and makes it easier to handle a hopefully higher influx. You don’t necessarily need to bring in extra employees to work that shift, depending on how big the organization is and how large the turnout is. Especially if it’s on your slowest day of the week, you may be fine with your standard number of employees, so it doesn’t end up costing you extra to run the event.

We found that Thursdays are best for our business since it’s close enough to the weekend that more people are more likely to come out, and it helps boost sales into the weekend. Because of this, every fundraiser we have is set for a Thursday.

Donation Option 1: Percentage Of All Sales

The easiest way to run, and calculate the donation amount for, your in-store fundraiser event is by donating a flat percentage of all sales for a certain period of time. Whether it’s a full day, week, or just a couple of hours, donating a straight percentage of all sales is a quick and easy calculation. You can use your Square Reports to filter your sales for any period of time, and then just calculate the percentage you chose to get your donation amount. 

While the benefits of this system is that it’s super easy to calculate and run the event, there are some definite downsides. The main one being that it’s easy to be taken advantage of, and your business can end up donating a lot of money. With this method, there is no real way to tell how many customers were sent by the organization you’re helping to raise money for, and how many customers would have come either way. If you end up having more regular customers than fundraiser customers, the organization may end up getting more money than they earned. 

As a result, some groups might catch on and may not necessarily work as hard to bring in people, if they know that they’ll be getting a good amount of money either way. Or even if they do work hard and promote it, if they still don’t end up bringing in that many people, they may get more than they’re due, and cut into your profits too much.

While contributing to your community is a good thing, you are still running a business, and do need to think about your profits, especially if you’re holding a lot of fundraisers pretty frequently. 

So what if this ends up being too much and there’s too much risk? That’s where our next method comes in:

Donation Option 2: Percentage of Participating Sales with Flyer

A safer way to run things is by donating a percentage of only participating sales. The main way to do this is to have customers show a flyer, either paper or digital, when they make their purchase, and to only count those sales towards the total. This is the method that we use at my shop.

This is much more fair, both for you and for the group you’re donating to. The amount that they get relies completely on how many people they bring that show up, and how much money they spend. The better they promote the event, and the more they support your business, the more money gets donated to the organization. 

There are of course a few downsides of this. First, groups may end up earning less than they might expect if they’ve done fundraisers with other businesses where they have received a flat percentage of all sales. If your business isn’t a good fit with their organization’s members, or if it’s not a good day of the week for them, then the donation you give might be lower than they hoped. Although you do always have the option of adding some money to the donation total if you’d like to contribute more directly from your business.

This method also involves a bit more work. We decided to take the extra step of creating the Flyers for each group, so it’s all uniform and is easier for our employees to recognize and verify. I just made a simple template, then I change the name and date on the flyer, and then I email the organizer a PDF file for them to distribute. 

There’s also a few extra steps of calculating the donation amount, but it’s not too difficult, especially with the amazing tools that Square provides for free. We created an item called Fundraiser and priced it at $0, and each time a customer shows a flyer, our cashier adds that item to the order to mark the transaction. For Online Store sales, I also made a $0 Coupon Code and put that on the flyer as well. When the event is over, we open the Transactions tab on the Square Web Dashboard, search for the item called Fundraiser which ends up only showing transactions that have that item, and then filter by the hours of the event. Repeat that process for the Coupon Code. After this is done, this page shows you the Total Number of Transactions and the Total Dollar Amount Collected, which you can then use along with your set donation percentage to calculate how much money the organization will get.

Again, while this does take a couple of extra steps, we’ve found that it’s incredibly worth it to make sure that we’re being fair to all of the groups and to our business. It’s a great thing to donate, but being consistent and making sure your business survives is important too.

Key Points & Summary

If you’re a local neighborhood small business, then your livelihood really depends on the support of your community. So it’s a really great thing to develop a full relationship with community members and organization, and give back to them whenever you can. With in-store fundraising events and donating money, gift cards or products to local organizations, you can show your appreciation to your neighborhood, while also advancing your business along the way. Get creative and find new groups in your area that need support, and be an amazing giving resource to your community.

Good luck, and let me know how it goes!

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