How Paying It Forward Can Help Your Small Business

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Charity is a big business, and it’s growing more than ever. According to Forbes, the top 50 philanthropists donated $14.1 billion in 2018, which was a 1.5 billion increase from the prior year. Collectively, their foundations have distributed more than $173 billion in their lifetime. Small businesses can’t really hold a candle to the massive donations of multimillion- or multibillion-dollar corporations, but every business can find ways to pay it forward.

According to research, millennials have largely driven the idea of paying it forward. About 70% of this age group report that they’d be willing to spend more on brands that help a cause. This isn’t just some tiny market. Millennials represent $2.45 trillion dollars of spending power.

Nonetheless, paying it forward doesn’t just benefit your small business financially. Acts of kindness benefit the entire community, especially when a few good deeds can trigger an entire chain. Learn how — and why — you should adapt a pay-it-forward model in your small business.

What Is Paying It Forward?

Paying it forward is charity that has a ripple effect. The idea is that someone did something nice for you, but instead of returning the favor, you do something nice for someone else, who in turn does something nice for someone else. It’s a chain of good deeds. Some companies are founded with a pay-it-forward business model, and others run campaigns from time to time, but all businesses should consider giving back.

For example, TOMS launched its business as a veritable pay-it-forward foundation. For each shoe it sold, it would donate a pair to someone in need. Since it launched its One for One campaign, it has donated over 100 million pairs of shoes and expanded its business model beyond footwear. The company now gives away $1 for every $3 it makes.

Gratitude Has Some Serious Health Benefits

Paying it forward is a way to show gratitude, and embracing this particular emotion has some serious health benefits that can greatly improve your workplace morale and productivity. Research has shown that gratitude:

  • Improves physical health: Those who experience gratitude report feeling healthier than other people and have less aches and pains. They’re also more prone to exercise and keep up with regular doctor checkups.

  • Improves psychological health: Gratitude is known to reduce toxic emotions like envy, resentment, aggression, regret, depression and frustration. These emotions are productivity and employee-retention killers. Happy employees lead to a happy, productive workplace.

  • Enhances empathy: Increased empathy can help employees connect with each other and your consumers. If you can relate to your customers' emotions, you’ll be able to better serve their needs.

  • Increases resilience: Practicing gratitude has been known to reduce stress and increase mental resilience. The latter is an important skill for entrepreneurs who are launching startups, which are always a little risky, and they often endure major hurdles in the first few years.

  • Raises self-esteem: High self-esteem is the mark of a great team leader who can confidently push the team’s projects toward success. Paying it forward is a physical display of gratitude, which has been proven to strengthen feelings of self-esteem.

Creates a Harmonious Company Culture

Flatly put: Paying it forward is just a good thing to do because it helps people, but businesses are usually interested in some sort of bottom line. If anything, research has shown that paying it forward to your employees through specific employee-based campaigns can help foster a more collaborative workplace and boost workplace morale, both of which can increase productivity (i.e., you make more money because your employees are doing more efficient work). What’s the science behind it?

A study done on MBA students and outlined in Harvard Business Review supported the hypothesis that those who receive more help are more willing to help others. Additionally, it also found the opposite: that people are more willing to help others who help others. Basically, cooperation incites more cooperation, and you can enact a companywide pay-it-forward model by:

  • Creating a peer-to-peer bonus system: Google has adopted this method, where employees can reward helpful colleagues with token payments. This encourages small acts of kindness that often fly under the radar of managers. For example, an employee may give $175 to a coworker who helped save them hours on a project. The request gets pushed through an internal server and approved by a manager.

  • Having an “employee of the month” award: This type of award should be given to an employee who goes above and beyond the call of duty to help others, but employees should only be able to be nominated by other coworkers. This encourages all team members to think about how they can help others and fosters a collaborative team environment.

  • Holding a companywide pay-it-forward day: This is something that’s easy to promote internally and fosters a positive work environment through repeated kind actions. Never underestimate the power of boosting company morale.

  • Having a pay-it-forward challenge: You can have departments or teams compete against each other in a pay-it-forward challenge. The winners are rewarded with a large contribution to their chosen cause, which helps the greater community.

  • Hosting an employee appreciation day: Your business is built on the backs of your employees’ hard work, so hosting an employee appreciation day can help them feel important and can introduce a culture of paying it forward.

Additionally, you don’t have to adopt any sort of major program to pay it forward to your employees. You can simply create a culture that rewards that sort of kindness through small actions, like buying a particularly helpful team coffee or catering an in-office lunch when a collaborative project succeeds.

Increases Business While Improving the Community

Customers have a thing for companies that give back or pay it forward. According to Inc., about 85% of consumers prefer businesses that give to charities about which they care. Getting your consumers involved in a pay-it-forward campaign can create a sense of community within your brand that leads to customer loyalty, and it doesn’t have to be costly.

For example, in 2014, Airbnb led a $1 million pay-it-forward campaign, which was just a small fraction of the company’s then $1.5 billion valuation. As part of the #OneLessStranger campaign, it gifted 100,000 customers with $10 to spend on a “unique act of kindness,” like buying supplies for homeless shelters or planting flowers in a community garden. The ultimate goal was to connect strangers, which supports the company’s overall mission of building a global community through home shares.

Of course, customers love free stuff, but that’s not the only way you can pay it forward to your community and your consumer base. You can:

  • Offer free knowledge: Regardless of the industry, your business is an expert in your field. You can pay it forward to the greater community by offering your expertise. This can be in the form of a podcast, e-book, YouTube video or even just your blog. You win bonus points for shareable content that will help raise your brand’s profile while spreading positivity.

  • Host a pay-it-forward day for customers: This should reward consumers for performing acts of service within their community.

  •  Host a clean-up day: This improves community parks and public areas.

  • Create a scholarship: College is costly, and scholarships can reward community members while easing the burden of student loans.

  • Create or donate to a foundation: Consumers are more willing to spend big on businesses that back a cause. Your cause should best align with your consumers’ and employees’ passions. For example, Utah-based tech company Brixio donated to the Livestrong Foundation after several employees had loved ones diagnosed with cancer.

  • Donate leftover products: Your products and services are valuable to your community. Consider donating leftover stock to those in need or offering free services to underprivileged members of your local community who may not be able to afford it otherwise. The latter costs you virtually nothing but time.

Increases the Strength of Business Relationships

Since we already know that research has proven that people want to help those who help them, you can strengthen bonds with your vendors and business partners through paying it forward. This is particularly important during a crisis when these businesses may be hit the hardest.

For example, during the novel coronavirus outbreak, various record labels, music magazines and music-related organizations have been paying it forward to musicians after tours and events were canceled en masse because of social-distancing restrictions and lockdowns. One nonprofit, MusiCares, racked up millions of dollars in donations for musician relief from companies like Amazon Music, Facebook, SiriusXM, Pandora and the Recording Academy.

Paying it forward doesn’t have to be a sprawling effort. There are small ways you can work with vendors and business partners on this journey, including:

  • Hosting a vendor or partner appreciation day — a little thanks goes a long way

  • Making a charitable donation and encouraging vendors and like-minded businesses to do the same

  • Giving referrals to other businesses — passing them more business not only helps those looking for a vendor but it’s the ultimate thank you to theirs. The right recommendation can open new doors.

Making the Most of a Pay-It-Forward Campaign

The more people your pay-it-forward campaign reaches, the more it will help your community and your business. This is why it’s important to enact a solid PR strategy. The most viral pay-it-forward campaigns use a hashtag to encourage customers to share their acts of service. This is the type of promotion that basically pays for itself; you get free advertising, and your community gets a pat on the back for doing something awesome to help.

If your campaign is largely run on the ground rather than the internet (an increasingly uncommon occurrence in 2020), you may want to create T-shirts or swag for your employees and other participants to wear. These help create the feeling of a team, which actually serves as a covert motivator that doesn’t just help a community — it builds a community. Think about it: Who didn’t wear a Livestrong bracelet in the early ‘00s?

Avoid Pay-It-Forward Pitfalls

When you’re dealing with the internet, sometimes things have a tendency to run wild. This is particularly true of any campaign that involves user-submitted material. For example, in 2012, McDonald’s attempted to boost its profile by encouraging users to share heartwarming experiences at its restaurants, but it completely backfired when consumers used the opportunity to air complaints, and animal-rights activists rallied against fast-food chains for alleged harmful and inhumane farm practices. Don’t be like McDonald's; leave small room for error.

It’s also important to make any task you ask your customers to perform simple and easy. KIND Bars found this out the hard way when it launched a pay-it-forward campaign asking consumers to give an orange to someone who provides them with emotional or physical nourishment. Only 1,200 people participated, largely because the act was too specific. They later shifted the campaign, asking customers to write a thank-you note to someone who protects them, and had more than 30,000 participants.

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About the Author

Mariel Loveland is a small business owner, content strategist and writer from New Jersey. Throughout her career, she's worked with numerous startups creating content to help small business owners bridge the gap between technology and sales. Her work has been featured in publications like Business Insider and Vice.