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How a Charitable Giving Strategy Can Help Your Business

There are many ways to participate in Corporate Philanthropy. This post discusses the benefits of drafting a Corporate Philanthropy strategic plan.

For many businesses, charitable giving is an integral part of their culture and mission. Such businesses take corporate philanthropy very seriously, whether this takes the form of donating money or volunteering time and resources to support causes and charitable organizations they believe in.
 
Businesses and corporations donated nearly $21.09 billion to charitable causes in 2019, according to the National Philanthropic Trust. This was a 13.4% increase from 2018. About 32% of this money went to religious organizations, 19.2% went to educational institutions and 25.7% went to sport, cultural or arts organizations.
 
Giving by corporations has risen at a fast rate — increasing in nearly every sector in 2019. Americans gave $449.64 billion, which is a 5.1% increase from 2018. Philanthropy News Digest reported median contributions grew by 7% between 2017 and 2019.

 

Use Your Imagination

The ways your business can give back to your community and support charitable causes are limited only by your imagination. For example, some shoe retailers give a discount on a new pair shoes if customers bring in their old shoes, which are then donated to the homeless. And a number of businesses, like grocery stores and fast food restaurants, are helping raise funds for charitable organizations by asking customers at the point of sale if they want to donate to the charity.

 
The best way to make sure your charitable giving efforts are as successful as your for-profit business endeavors is to draft a corporate philanthropy strategic plan. This plan will set guidelines and parameters for how different kinds of corporate resources will be allocated to different charitable causes. For example, what percentage of your philanthropic efforts will consist of cash donations; donations of merchandise, inventory and equipment; and donations of time and energy on the part of your employees and yourself.
 
Keep in mind that making cash and property donations also can yield tax benefits for your business. However, strict IRS rules govern the deductibility of cash and property.
 
In general, such donations are deductible if they are made to qualified charitable organizations as defined by the IRS. Often referred to as 501(c)(3) organizations, these generally include most religious, scientific, educational and charitable groups. If you’re not sure, you can ask to see proof of the organization’s 501(c)(3) status.
 

 

Five Charitable Contribution Tips

Here are five tips to remember when making business charitable contributions:

 
1. If you make a contribution (whether in cash or property) of $250 or more, ask the charity for a written acknowledgement or receipt. It should include the amount of the cash donation or a description of the property, and whether or not you received any goods or services in exchange.
 
2. If you did receive tangible goods or services in exchange for your donation, you must subtract the fair market value from your donation to arrive at your deduction amount.
 
3. When donating merchandise, inventory and equipment, the amount of your deduction is calculated by determining the property’s current fair market value, or what it would fetch in the open marketplace.
 
4. Consider donating appreciated property (such as stock or securities) instead of cash if you can. When you do this, you can deduct the property’s fair market value at the time you make the donation, rather than deducting what you paid for it. You also will avoid paying capital gains taxes on the property’s appreciation.
 
5. Getting your employees involved in corporate philanthropy is great for building company culture. Try organizing company-wide volunteer events — for example, at the local homeless shelter or food bank. Or consider giving employees one or two days of paid vacation per year that they can use to volunteer at whatever qualified charity they want to support.
 
Refer to IRS Publication 526 for more details on the tax rules and regulations that govern charitable contribution deductions.
 
For more helpful information on running your business, visit Cadence Bank Fresh Insights.

 

 

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

 


 



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