What’s the deal behind all the chain retail stores soliciting for some charity?
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They take your dollar, donate it, and reap the tax benefits.
Never donate to charity through a business, donate directly to a charity if you want to.
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What’s basically happening is *you* aren’t donating to charity. *You* are voluntarily paying extra for your purchase. The store takes this “bonus profit” and donates it to a charity and receives a tax credit for doing so. The company in turn receives positive PR for being “charitable” and also reduces their tax bill.
If *you* are donating to a charity you’ll get a record back that you can use to claim a deduction on your taxes, if you don’t receive the record you aren’t donating to charity, you are voluntarily paying more money than you need to.
BUT OP – you should check your receipt, I’ve been surprised to see a few retailers actually put the tax record on your receipt so you can claim the benefit, which is a good thing! I think my local big-box pet-store does this if you donate to their local shelter.
Stores like to do so as they gain good will and can advertise that they helped charities out. Charities get free advertising and extra donations. The store does not gain monetarily* from the donation: at best, they would need to claim both the income and deduction for no change in taxes, however they practically will always handle it as a passthrough donation where they claim neither.
The store should have the information available to allow you to deduct the donation yourself, though you may need to specifically request it. Given the current standard deduction in the US, very few people are likely to donate enough for it to matter, however.
Many of the stores have a charity under a very similar name as the store’s name that will be the typical recipient of the donations. For example, McDonalds has the Ronald McDonald House Charities and Albertsons/Safeway/Vons (are three are owned by Albertsons) has the Albertsons Companies Foundation.
* The store is allowed to take a small amount of processing fees for the transaction, which may be in the range of 1-7%. These fees will typically be similar to what would be taken if you make a donation online.
It’s a way for them to virtue signal… if Target gives money to schools, people who care about education will shop there more. If a business plants trees, people who care about the environment will choose to shop there. It’s another way for a business to help define themselves compared to the competition.
First off, it’s not a tax benefit. The donations flow through to the charity on your behalf, and nobody actually gets a tax benefit (at least in Canada, I would assume it’s the same in the US).
The real reason is twofold: first, it’s advertising. Ronald McDonald house is a great example – McDonalds doesn’t get any benefit from your donations at the till, and they for sure don’t make enough in tax benefits to offset the money the put into the Ronald McDonald house. The benefit to McDonalds is the commercials they get to make showing off the good that RMDH does in the community.
There’s also the investment aspect – investors are looking more and more for companies that take an interest in their communities and the issues affecting them. As a large company/chain, your biggest asset is typically your brand, and driving charity contributions are good for your brand.
It is all about public image. They just want to be able to show they are doing something good and are not just profit monsters.
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