You hear a lot about how “the rich” are using charities to effectively reduce their tax to minimal amounts, among other methods.
On the face of it without digging, it obviously makes people angry and detest the rich. But scratching beneath the surface, I’m not quite sure how exactly they would achieve this? In order to claim the tax back from money donated, you still have to… donate money? Which would still equal more than the money claimed back from tax.
So unless they are actually doing something illegal and funneling money through a charity, claiming tax, and then using that money from the charity to fund purchases not related to the charities mission, how exactly is it benefiting the donor (financially)?
In: Economics
There are other corporate charitable donations that create income. Case in point, Susan Komen Foundation gets a small portion of every purchase of a box of cereal because, let’s say, Cheerios is the corporate sponsor. The cereal company takes the write offs, all while they boost their overall sales of their product and add to their bottom line, from a consumer who perhaps wouldn’t have bought cereal or bought another brand. The consumer wants to support Komen and feel as if they’ve gained some benefit from the transaction other than altruism, because they think they saved money on a product with an already astronomical mark up.
When the drive through at the fast food joint or the gas station attendant asks if you’d like to donate to charity X, they collect your cash, donate it to charity X, and then take the write off. Charitable money laundering. You want to donate to a charity, send it to them direct.
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