I always hear how corporations only donate to write off on their taxes. But how does that make sense? They don’t keep the money, it’s gone – they’ve given it away.
Does the government say “if you donate x amount of money, we will reduce your tax rate by x percentage”? This is the only explanation that makes sense to me, but from what I’ve read that’s not the case.
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They do it to grow sales and/or make customers feel better about spending money with them. They want customers to feel better about shopping at Target because they give money to schools, or buying from whatever brand because they donate to a cause the consumer feels is important. Also, when companies offer an amount per sale, or percentage of sales/profits, it hopes that the incentive will drive sales in addition to helping the cause, ie. if $1 for every box of Teddy Graham sold goes to protect bear habitats, then the hope is that more people will buy Teddy Grahams because of the donation. It’s a win/win situation, where the company gets more sales and a worthy cause raises more money.
There may be some tax benefits to donating, too, but it’s not the primary driver for the company to donate.
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