How is it possible to give to charity “for the tax write offs”? I see that you don’t pay 30~40% tax on the amount you donated, but you no longer have 100% of the amount so surely you’re worse off.
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People don’t donate money just to receive a tax break. That’s just something that cynical people say to dismiss the charitable contributions of the wealthy. The exceptions are some of the foundations that are really just fronts to pay off their friends and political allies.
Well, for starters, people tend to think a lot more highly of you if you give a bunch of money to charity. So, that money doesn’t just disappear. And, there can be other indirect benefits. If you like the opera, helping to keep the opera open with donations is a lot cheaper than buying lots of opera tickets, thanks to the write-off. Maybe you’ll even get your name put on a building. ~~For big companies, this benefit mainly comes in the form of cheap advertising~~. *(Not correct… just regular-cost advertising with some warm fuzzies baked in.)* Basically, it’s a 30-40% discount on money you were already going to spend, anyway.
Also, corruption: People like… I don’t know… “Ronald Grump” and “Felon Husk” run corrupt charities that often just give the money back to them or their families. Running a charity could be an easy way for your Cousin Ed to have a 6-figure job doing basically nothing, you know?
“Fine Art” is big one. You buy a sh*tty painting for $10,000. Then, the painting *magically* goes up in value to $15,000,000. You graciously donate the painting to a museum. Ta-Da!
I’m sure there are other strategic tricks I’m not aware of, too.
You have the right idea, but there’s a big exception.
Things that have very subjective value, like art, can work to one’s favor this way. Museums for example, don’t have much of an incentive to disagree if you claim a piece of art you’re donating is worth several times what you could actually sell it for. So if you donate art with an inflated value, you could donate a painting that would sell for $50,000 and claim it’s worth $250,000. If you make a large income, this can be more profitable than selling it.
You give money to a charity and that charity uses it to *operate.* Depending on the size of the charity money is also spend on pay for employees, rent, utilities, etc…
Some companies also run charities under a seperate legal entity. (Not necessarily with bad intentions.)
If those companies give to their own charities, they ensure operational costs of the charity while simultaneaously reducing tax for the for profit company So it is a win-win situation.
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