Profit Donation 101: Examples of How to Donate Profits

Lindsey_P1 — Fri, 01 Oct 2021 21:07:39 GMT

At Pledge 1%, we embrace a flexible model for profit donation. We want you to do 1% of whatever works best for your business. If you aren't ready to donate a full 1% yet, you can donate a smaller percentage of profits and perhaps pair it with a different pledge donation type (such as time or product).

There are multiple ways to donate profit with the 1% model:

Different Ways to Donate Profits

1% of gross or net profit
1% of transactions (this option is popular with eCommerce and consumer good companies such as food or apparel)
1% of each deal closed or new client signed (popular with B2B companies and agencies)
Start an employee match program

One percent of gross or net profit is pretty self-explanatory. Let's break down the others with some examples.

1% Upon Transaction

Some companies donate a portion of profits from each product sold. This model is popular with businesses that sell straight to the consumer (B2C), such as eCommerce platforms, food vendors, or clothing shops.

The most straightforward way to implement this model is donate 1% of profits for each item sold to a single nonprofit. Be sure to highlight this donation on your product and checkout webpages (or in-store signage)! Customers want to know that their purchase helps do greater good in the world.

Another option is a product spotlight where the proceeds from that product sale help a specific cause. Take the (RED) campaign for example. Multiple companies, such as Apple and Nike, singled out one product as a "red" product. The profits from that item were donated to help HIV/AIDs research.

Product spotlights can help highlight certain products during different times of year to give customers a reason to buy.

Another transaction donation option is the checkout method. At checkout, you can invite your customers to participate in your social impact efforts by adding a small amount to their bill total. One popular use case is the "round up" method, where customers are asked to round their purchase up to the nearest dollar (or other currency) amount.

Giving customers an option of more than one nonprofit to support can help them feel more active in their giving.

1% Upon A Signed Deal

Businesses that work with other businesses (B2B) can also do a form of transaction donations. Some members pledge to donate 1% of proceeds when they sign a new deal or client. This method can motivate employees and demonstrate your commitment to giving back.

You could ask your customer or client which nonprofit that they’d like to donate that money to. This offer can strengthen an existing or new relationship, or prompt action on a stalled communication.

Employee Match Program

To engage employees, you can also consider an employee match program. This means that, for every donation your employee makes to a certified nonprofit organization, you send an equal donation as well (up to a certain amount).

This strategy works well for companies that want to empower individuals to choose their own causes. We recommend pooling aside a certain amount of money (ex. 1% of net or gross profits) for employee match use. It's also important to limit the amount that you will match per employee.

One Last Tip? Establish a Giving Cadence

The important thing is to establish a cadence. Whether you donate once a year, once a quarter, or at another interval, you want to make sure that your business donates on a regular basis. That way, it becomes part of your business’s rhythm vs. something that you actively have to think about each time.

Additional Resources

Playbooks are a Pledge 1% Member resource. Not a Member yet? Take the Pledge today for full access to the Pledge 1% tools & resources.

Tell Us About Your Program!

How do you use money to support your nonprofit causes? Do you have an interesting way to add donations to your business model? Or do you have a question on how to apply these principles to your company? Let us know in the comments below!

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