Propane distributors have a long history of supporting communities in the aftermath of natural disasters. Suburban Propane, for example, has partnered with the American Red Cross’ Annual Disaster Giving Program, ensuring rapid disaster response efforts and efficient critical aid distribution.
Ferrellgas also collaborates with Operation BBQ Relief by supplying propane to fuel grills and smokers, enabling hot meal distribution to those affected by hurricanes and other disasters. After Hurricane Helene devastated communities in the southeast last fall, the company helped serve more than 1.3 million meals in 34 days to people in need.
Charitable giving can be a powerful way for family-owned and independently operated propane distributors to support their communities while also achieving business and financial benefits. By incorporating philanthropy into their company’s financial planning, businesses can help strengthen their brand, build goodwill and take advantage of potential tax incentives. Thoughtful planning can help ensure charitable efforts align with company values and financial goals.
Setting a Charitable Budget
Successful corporate giving begins with budgeting. Small and mid-sized propane distributors may evaluate their annual revenue and profitability to determine a sustainable amount for charitable contributions. According to Groundswell, a common approach is to allocate a percentage of net income — typically between 1% and 5% of pre-tax profit — to donations. Companies can also set a fixed annual amount or adjust their giving based on business performance.
In addition to direct donations, businesses can include non-monetary contributions, such as sponsoring local events, donating equipment or providing discounted propane services to nonprofits as part of their charitable giving. These alternative forms of giving allow companies to support their communities without significantly impacting cash flow.
Tax Considerations & Benefits
Charitable contributions can offer tax advantages, but business owners should understand how different corporate structures impact deductions.
- LLCs & S Corporations: These pass-through entities do not pay federal corporate taxes directly. Instead, charitable contributions flow through to owners’ personal tax returns. Owners may deduct donations on their individual returns, subject to IRS limitations based on adjusted gross income (AGI). Typically, cash contributions are deductible up to 60% of AGI, while non-cash donations have lower limits.
- C Corporations: Unlike pass-through entities, C corporations pay federal corporate taxes separately from their owners. These businesses can deduct charitable contributions up to 10% of taxable income. Any amount exceeding this limit can be carried forward for up to five years.
To maximize tax benefits, companies should ensure donations go to IRS-qualified 501(c)(3) organizations and maintain proper documentation, including receipts and acknowledgment letters from charities.
Choosing the Right Giving Strategy for Your Company
Many companies structure their charitable giving in various ways. Some strategies include:
- Direct Donations: Businesses can contribute cash, equipment or nondeductible services directly to nonprofit organizations. This approach is straightforward and allows for immediate community impact.
- Matching Gift Programs: Encouraging employee giving by matching donations fosters a culture of philanthropy within the company while maximizing the overall impact of charitable contributions.
- Donor-Advised Funds: These funds allow companies to contribute to a charitable account, take an immediate tax deduction and distribute funds over time. This method provides flexibility and strategic planning opportunities.
- Corporate Foundations: Larger family-owned propane distributors may consider establishing a corporate foundation. While this involves administrative effort, a foundation allows businesses to manage charitable giving systematically and create a long-term legacy.
Incorporating Philanthropy Into Company Culture
A successful charitable giving program goes beyond financial contributions. Engaging employees in volunteer initiatives, partnering with local nonprofits and integrating philanthropy into company values foster a sense of purpose and strengthen relationships with customers and the community. To build a culture of giving, consider:
- Encouraging employees to participate in company-sponsored volunteer days.
- Providing incentives for employee donations, such as paid volunteer hours or contribution matching.
- Highlighting charitable efforts in marketing materials, newsletters and social media to showcase commitment to the community.
Final Thoughts
Charitable giving can be a meaningful and beneficial aspect of your business strategy. By setting a budget, understanding tax implications and choosing the right giving approach, your company can make a lasting impact while helping to strengthen your financial position. Working with a financial advisor or tax professional ensures donations are structured effectively to maximize benefits for your business and the community.
