Philanthropy as a Business Model? Dancing Deer Baking Co. has made philanthropy an integral part of its business -- and it's still coming out on top.

It's almost impossible to make a purchase these days without being asked to contribute to a charitable cause. Whether it's saving the rain forests, helping to find a cure for a disease or providing relief for a natural disaster, businesses are in lockstep with charities. And why not? In 2009, Americans donated more than $300 billion to philanthropic efforts, according to the Giving USA Foundation and its research partner, the Center on Philanthropy at Indiana University.

But while this strategy has proven to work for big businesses -- just look at high-profile examples like the Gap's "INSPI(RED)" campaign -- does it make sense for your small business to partner with a charitable organization?

Case study: Dancing Deer Baking Co.
For Boston-based "Cool Runnings"enterprise Dancing Deer Baking Co., the answer was "yes" from day one. Since the doors to the bakery opened in 1994, requests have poured in for donations of its all-natural gourmet cookies, cakes and pastries. "We never stopped saying yes," said former CEO Trish Karter. "I wanted to do something that was really about having philanthropy in the core of our business."

But early on, Karter realized that her small company couldn't say yes to everyone and still make a profit. So she set out to find ways to take Dancing Deer's success to the next level -- and share the wealth, so to speak.

"I thought that we could be more focused in our philanthropy," said Karter. "We could make a bigger impact."

Making a local impact
Having local involvement and being invested in the community are often critical components for a company's success. "Businesses should be thinking of building their community," said Barbara Findlay Schenck, a Business on Main contributor and author of "Small Business Marketing for Dummies." "When you support your community, your business is healthier."

For Dancing Deer, this meant partnering with nonprofit organization One Family to create the Sweet Home Project. Dancing Deer donates 35 percent of the retail price of all Sweet Home goodies and gifts toward One Family's goal of helping homeless families move out of poverty. Specifically, the money supports scholarships that help homeless women complete their education.

"At the end of the day, we were selling cakes and cookies to wealthy people," Karter said. "I felt there was a lovely artistic karmic balance in paying attention to the other side of that equation and to people that didn't have those privileges."

Beyond baked goods
Dancing Deer's philanthropic efforts also provided an outlet for employees and consumers to connect with the company beyond just cakes and cookies. "At a basic business profitability level," said Karter, "you're going to create a better brand and a better company if you give people something higher to aspire to than just turning a positive cash flow."

A byproduct of Dancing Deer's charitable giving has been improved marketing that pays dividends in customer loyalty. "The relationships with our customers are enhanced because they understand that we care about something more than just making money off the cookies we sell them," Karter said. "There's nothing wrong with making money. But it's nice to add something else bigger and better to it."

Once involved in philanthropic endeavors, businesses shouldn't be shy about their efforts. "The true definition of public relations is to do good things and broadcast it," said Schenck. "You have the right to have some publicity, because that way you're helping the charity again."

Any company is capable of creating a culture of philanthropy. The key is incorporating it into the DNA of an organization. For Dancing Deer, this means creating a filter that says, "I'm doing the best thing that I can for my employees, for my shareholders and for the community I live in," Karter said. "If you put all of your behaviors through that filter, you'll make different choices, and they won't necessarily be harder choices."