I’ve seen large corporations brag about donating large sums of money to charity.
Are donations collected at checkout (E.G Checking out at Publix and the cashier asks “Would you like to donate to cancer research?”) included in those sums?
Are donations collected used for tax benefits of the corporation?
In: Economics
If they take in $1M in donations, they can claim $1M in write-offs only if they also claim an extra $1M in income. Or they can choose to not do either and it is the same either way.
[edit] Just to be specific, what I typed was essentially, “they get no tax benefit either way”.
$1M in revenue with a $1M write-off is $0 taxes due.
$0M in revenue with a $0M write-off is $0 taxes due.
Whether it is claimed or not does not provide a financial benefit to the company.
yes; the company makes the donation so they get the tax break. the money still goes to charity; likely more than usual since many homes do not otherwise make donations so its a net positive for everyone
[deleted]
There is no “tax break” on corporate charitable donations. It’s just treated like any other business expense like marketing or payroll.
And any donations collected at the register are tax neutral, since the money collected has to be either accounted for as revenue (which is then offset by the donation), or its accounted for directly into a fund for the recipient (in the latter case, it may still be deductible to the donor).
Donations collected at the point of sale are not considered donations by the company. The company is merely collecting it, in the same way they do with sales taxes.
And if you’re at the grocery store, and they have a bin to collect stuff for food banks, don’t bother. It’s better to donate cash so the food bank can purchase what they need from distributors at wholesale prices.
If you put in a can of soup that you paid $1 for, that won’t go as far as donating a dollar to the food bank who can buy 2 or 3 cans of soup (if that’s what they need – they may need toilet paper, for instance)
To answer your first question. Maybe. It is likely disclosed where they get that number form.
To answer your second question, no.
The other commenters are incorrect, they do not get any tax benefit from it. They get marketing and increase customer goodwill. They might include these numbers in their bragging, but only if they don’t claim to have “given” the money themselves. They might say “raised” if they’re talking about it. Pay attention to how they word it.
Donations do not provide tax benefits to the store that collects the donations. The donation is a pass-thru. If, as some posts claim, the store gets the write-off (expense), they would also have to record the income (receipt of funds). One dollar in minus one dollar out equals zero. It’s basic accounting…
It’s a charitable effort at best and a PR stunt at worse.
I always figured best case they get to look good by collecting and donating a lot of money. Worst case they use it to increase their profits or reduce their taxes somehow.
[removed]
No, businesses CANNOT deduct pass-through donations like those collected at registers. If they match, they could deduct the matching amount that comes directly from the company, but not the amount collected from customers on their behalf.
Latest Answers