As the CEO of a small company, I often get requests for the company to contribute money to a cause or charity. Organizations from the United Way to local town softball leagues want us to be charitable to their cause. Whenever I get approached, I have a similar reaction. I ask myself several questions: is this the best way for us to give back? How do we decide which charities we support and which ones we don’t? If we support a specific cause, will it lead to an influx of other charities that want our money? Should the charities we support relate to our mission as a business?
For many years, I answered these questions simply. As a company, we didn’t make any charitable donations even though I was aware of some of the benefits of being charitable. We invested every dollar back into the business and sought to maximize growth. As the business grew and turned profitable, we revisited this issue a few times but stuck with our decision and didn’t contribute to any charities.
Today, that changes. This morning, my company Punchbowl announced the formation of a new nonprofit. I’d like to tell you about the specific steps we took before starting charitable activities and some of what we’ve learned along the way. I hope this will help guide your decision-making as you think about how your startup or small company can give back.
STEP 1: Determine WHEN is the best time to begin charitable activities. Here are some questions that helped guide us:
1) Is your company profitable? Do you have a reasonable expectation that it will remain profitable in the future? If not, you may not be ready for charitable activities.
2) Do you have some resources within the company that you can dedicate to the nonprofit to help get it off the ground? Can you allocate these resources without distracting your team?
3) Will your Board and investors be supportive of your charitable activities?
4) Are you ready and willing to take a long-term view of your charitable activities?
STEP 2: Examine WHAT charitable model would work best for your company. Here are a few examples:
1) Buy one, give one. This model is common with retailers and is straight-forward for customers to understand. When a customer buys a particular product, the company makes a donation. In the case of Warby Parker’s “Buy a Pair, Give a Pair” program, when a pair of eyeglasses is purchased, they help train men and women in developing countries to give basic eye exams and sell glasses to their communities at affordable prices. TOMS runs a similar program called “One for One” in which every time a TOMS product is purchased, a person in need is helped.
2) Private foundations. A private foundation is a nonprofit organization which is usually created via a single primary donation from an individual or a business and whose funds and programs are managed by its own trustees or directors. Many Fortune 100 companies have private foundations such as the Walmart Foundation, which gave $1.4 billion in cash and in-kind contributions around the world in 2014. Do you want to know if your favorite brands have a foundation? Here’s a list of the top 50 corporate foundations.
3) Nonprofit organization. Some companies choose to create nonprofit charities. The key difference between a nonprofit charity and a private foundation is the funding source. Nonprofit charities have more than one funding source, and often take donations from the public. For example, McDonald’s donates space inside its restaurants to house donation boxes for Ronald McDonald House Charities that helps fund programs for sick kids and their families and solicits donations from their customers. Other nonprofits that have been created by companies include PetSmart Charities and Google.org (nicknamed Dot-org internally at Google).
STEP 3: Articulate WHY you want to form a nonprofit. For us, we narrowed it down to these key points:
1) We wanted to find a way to leverage our platform and millions of customers to do a little good in the world
2) We wanted to find a charitable activity that was meaningful to our employees and key stakeholders
3) We wanted the charitable activity to emphasize the core message and values of our company and product
STEP 4: Determine HOW your company, customers, and potential charitable partners can help you define your mission
1) Your company: What is the long-term vision for your company? How can your charitable activities help underline your long-term vision? For example, the founders of PetSmart made the decision never to sell pets in their stores. Instead they formed the PetSmart Charities to focus on pet adoption and have made it their mission to solve the problem of pet homelessness. They leverage their customers at checkout to drive donations, and train every cashier to ask for a donation. For Punchbowl, we knew that our vision for a digital future would play an important role in our charitable activities.
2) Your customers: What are your customers passionate about? What motivates them? If you plan to create a nonprofit charity where your customers are a primary source of donations, it’s critical to choose a mission that aligns with their values and that will encourage them open their wallets. According to the National Center for Charitable Statistics (NCCS), more than 1.5 million nonprofit organizations are registered in the U.S. That’s a lot of competition for consumers’ charitable donations.
3) Your potential charitable partners: Partnerships are key to any business, and it’s more true than ever in the nonprofit world. As you work to articulate your charitable mission and goals, be sure to spend some time talking to potential nonprofit partners. We learned a lot and refined our mission based on several meetings. Don’t establish your charitable activities in a bubble or vacuum – get out and talk to people and you’ll learn a lot.
STEP 5: Define your MISSION, articulate your GOALS, and get ready to LAUNCH
If you’ve taken the above steps, you are now ready to articulate your mission, set a few goals, and launch your charitable activities. For Punchbowl, we married our long-term vision of a digital future with our belief that there is unnecessary paper waste in many industries. A couple of examples helped crystallize our vision:
1) Define your Mission: Here’s how our mission came into focus. Whenever I get a phone book at my house, it quickly gets tossed into the recycling bin. And about 95% of the mail that the United States Postal Service delivers to my house is junk mail. In this day and age, I think that it’s such a waste. We’ve had a similarly frustrating experiences in our office. For example, every few months we receive a huge 800-page office supply catalog — even though we’ve never ordered anything from the company and have no intention to buy their products in the future. The catalog has become a joke in our office, but the reality is that trees have been cut down, water wasted, and CO2 has been released into the atmosphere — all to create a catalog that we do not want and never requested in the first place. We’re going to do our part to help bring awareness and funding to this kind of unnecessary paper waste. And it perfectly aligns with our company’s digital vision.
2) Articulate Goals: We recognize that our nonprofit is small, and the impact it will have long-term is unknown. But we’re proud to do our little itty-bitty part to help the environment and leave our planet in the best possible shape for our children… and their children. To that end, we’ve set very modest and achievable goals for our new nonprofit, and we’ll measure our progress over a long horizon.
3) Get Ready to Launch: Once you’ve set your mission and goals, you are ready to launch. Resist the temptation to get everything perfect before you launch your charitable activities. You’re going to need a fair amount of time to iterate and learn so don’t get bogged down in a long-term strategic plan. Instead, work on your messaging, build a website, and write a press release. That’s all you need to do to get going on your charitable activities. Once you’ve completed all of the above steps, you’re ready to launch. In our case, we have big visions about how we will encourage Punchbowl customers to donate directly to our nonprofit, but we’re willing to be patient and launch those features in the future.
Now that you’ve read our about the steps we took to launch our charitable activities, I’m happy to tell you about our new nonprofit 501(c)(3) organization called Punchbowl.org Environmental Fund, Inc. I hope you’ll read about the new organization and visit our new site. And if you find that our mission resonates with you, I hope you’ll choose to make a donation. In this case as we are just launching, literally every little bit will help.
Punchbowl.org envisions a world where unwanted and obsolete paper and paper-products are eliminated. While we can all appreciate paper and the value it brings, there are many instances where companies produce millions of tons of paper for products that are promptly disposed of by consumers. This waste ends up in landfills and recycling centers. Punchbowl.org was created to educate people about the harmful environmental impact of wasteful paper production, offer solutions to reduce consumption, and to provide funding to organizations that help address the problem. Learn more about Punchbowl.org.