So McD’s asks you, when you pay, to round up the cost of your order for charity. My question is this: I’m giving the money to McD’s, not the charity. Am I then helping them get a bigger tax deduction for corporate giving? So my 18 cents they match means they get credit for a 36 cent charitable gift?
In: Economics
The mind boggles of why anyone would donate their money to a charity chosen by someone else. Do people not understand how simple it is to start a charity that funnels most of the money back into your own pocket?
Others have sufficiently answered your question and I learned some things, but I just want to add this to the post:
The Ronald McDonald house does great work for terminally I’ll kids and their families. It’s one of the only corporate charity organizations that I actually respect. There’s a Ronald McDonald camp here in Idaho at this beautiful mountain lake called McCall lake, and they truly provide a good and wholesome experience for some of the people in society that need/deserve extra love since it’s so hard to find positive things in life when your kid has a death date. Say what you will about corporations and their shitty roles in society, but the Ronald McDonald foundation is a good force. I recommend reading up on them.
No. Businesses making donations write off the donations as a business expense, just like cost of goods sold, wages, rent, etc.
Let’s say you buy a Big Mac meal costing $15.20 (incl. 15% sales tax) and you round up to $16.00 and give the difference to charity. Let’s say it costs $9.25 (excl. tax) to make your Big Mac meal.
Therefore:
$ 1.98 is passed on to the government in sales tax
$ 9.25 is the cost of ingredients and overheads.
$ 0.80 is donated to charity.
$ 3.17 is the profit made.
With the donations, the business is assessed for tax on the $3.17 profit. They don’t receive any additional tax credits for the donations made.
>So my 18 cents they match means they get credit for a 36 cent charitable gift?
No, for two reasons.
1. Even *if* they did get to do the tax deduction, they’d pass on the 18 cents and take an 18 cent deductionm not 36. With a corporate tax rate of ~21% in USA, that might come to nearly 4 cents saved on their tax bill.
2. However, they can’t even do that! Because, to my udnerstanding, you are the one giving charity, so you can claim the deduction, not them. However, it probably isn’t worth your time to compile those receipts and add up 18 cents donated here, and 83 cents donated another day, etc etc, to get some tiny fraction back in taxes.
I’d appreciate it if Fast Food places STOP asking me for my donations. Looking at you PANDA!
I’m going to add that 99% of the time the answer is no. But, there are instances where companies try to profit from their “in-house” charity. I have heard a lot of good things about Ronald McDonald House. But there is this one bookstore chain in Canada called Indigo.
What they do is solicit donations for their charity providing books to schools (which is not tax deductible to Indigo) but they give grants to school and require they buy from indigo at retail price. Essentially profiting from the donations.
https://www.cbc.ca/amp/1.2963923
tldr: no, they do not benefit in any way from you donating except maybe some PR for “trying to help charity”
But, on the other hand, ***you*** can deduct those donations from your taxes
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