The reason they ask for donations is because they can pool the donations together, say they’re donating, and then get a tax write off. They are just trying to make free money.
This is a commonly repeated myth but it isn’t true. Nobody gets a tax write off in point-of-sale fundraising. Charities ask stores to do it because it’s one of the most efficient and effective ways for a charity to raise money. Chairty events are costly, and asking people on the street gets a lot of rejection. Stores agree to do it because they get to run ads saying they helped raise millions for charity and the charity will usually shout them out as well.
I work for a retailer and have been loosely involved in a project like that a few years ago.
Basically, it felt like it was mostly a very inexpensive way for the company to get everyone involved feel good about themselves. The free advertising was definitely an argument to get the higher-ups on board, but my impression was that it was kinda secondary compared to the kinda fake good conscience it gave everyone.
There was definitely no tax breaks for that initiative though, so at least in my country that is indeed a myth
EDIT: You also get to say in your annual report to the shareholders that the company helped raise x millions euros to charities at no cos, which in turn makes them feel good about themselves without impacting their profits.
They still take credit for it like you said.
I’ve always been curious how the money gets to the charity. Does the corporation put the donations into an account and collect interest on it before they give it to the charity?
And who pays the cc fees? And do they have an agreement with the cc provider for a kickback? There are so many hands involved with simple monetary transactions most people wouldn’t believe it.
Charity is profitable.
Damn, I didn’t know I was duped. I do wonder how this holds up in countries other than the US.
Don’t forget the press release they can also make saying how nice they are for donating, too…
You should delete your misinformation.
Remember that none of the people working there have any say in the matter either, and are most likely struggling themselves. The system was made broken.
I never take out my frustration on the employees, but one time I did mutter, I’m still waiting for someone… any one …to give me something for free.
Oh man I feel ya.
I wasn’t going to comment initially but, thinking again, I will.
According to what I was once explained, the scheme runs like this.
a) organization X starts a fund raising campaign
This alone can be deducted as an expense, as any amount of hours can be attributed to planning, preparing, etc, the entire thing.
As this time as no profitable end, it can be deducted.
b) You donate. But now it’s their money.
Your money is siphoned to a separate bank account or just tallied and earmarked as for charitable purpouses but this does not mean the entity needs to hand it over immediatly.
That money is held within the company’s vaults, figure of expression, and, as such, counts towards the overall financial assets of the company.
It still needs to be handed to the end recipient but until it does it can be used to leverage loans and be invested into short term investment products, like overnight deposits (with hundreds of thousands or even millions it does gain interest overnight).
c) the money gets donated eventually but not by you
Eventually, all that money gets handed over but it is now their money, not yours. And as such, they get the tax deduction. And, again, with hundreds of thousands to millions in donations, the deduction gets very high.
This deduction, on your expense, goes towards clearing more of their profits.
Want to do something good?
Volunteer. Help your neighbour. With your own efforts, actions and work. Don’t hand over money.
As mentioned in other comments - the tax deduction thing is not true. It is true, however, that they can '‘donate’ the funds to a charitable foundation that is run by the same people as the company (i.e. they are on the board of the charity as well as being C-suite execs of the company) thereby creating a slush fund disguised as charity that may only need to actually use 5% for charitable activities.
A national supermarket chain has its own foundation and sometimes runs fund rallies for it, which they collect through their store front.
What I stated comes from an explanation I was once given by an accountant. It works (or worked, hopefully) like that here, Portugal.
And as such, they get the tax deduction.
This part, at least, is not correct. (explanation at apnews.com, alternate snopes link)
I don’t doubt your word. I paraphrased the explanation an accountant in my country (Portugal) gave me. It may work differently in other places and I sincerely hope so.
whoever explained their “explainer” doesn’t know taxes
Why do they never offer to match donations? I’d probably consider it if they did.
Because you’re giving them money that they then donate and claim as their own. It’s a way to get around actually donating money from their profits, while making it look like they’re donating a ton for the tax write off.
That’s not how it works, at all. Businesses can’t claim donations they collect on behalf of a charity as a deduction.
Never donate at the cash register. It’s a tax deduction scam.
Donate to a real non-profit instead of blood sucking corporations.
Fuck big corporations using “charity” to pull tax avoidance scams. Why the fuck would I donate through you when I can go for a charity not associated to a corporation?
I have an idea, if you donate ten times the amount I donated from your profits, then I will donate through you. Otherwise you can fuck off.
The purpose of these is that the company gets to deduct charitable donations from its revenue before taxation. Even if you are in a position to give you probably shouldn’t use this method.
If they’ll actually open their own wallet in e.g. a fund matching program, there might be net benefit, but don’t do it just to help companies avoid their fair share of taxes.This isn’t correct.
If they get an extra million in these donations, they can deduct that extra million. It’s a net zero improvement. It does not help them at all financially.
But it’s free good will and they can advertise that THEY donated a bunch. It’s just to make them look good.
They can’t actually deduct a penny from it.
You’re wrong. Companies that collect donations on behalf of a charity can’t deduct a single penny of it.
Congrats, you understand that the government taxing them and using the money to fix social problems will work infinitely better than charity ever has.
20 bucks is a fucking crazy auto request.
My grocery stores sometimes ask me to round my payment up to the nearest dollar and donate the change to various places.
(and they can fuck off sorry)
They likely do donate and this is a way for them to make that money back.
It’s not. Literally the only benefit the business gets is bragging rights.
THIS IS PURELY A METHOD OF AVOIDING TAXES.Never donate to charities through one of these big companies. If you want to donate, then do so directly.
Anything else just helps the corporation wash their image by gathering money and then donating to whichever cause.
They do so and also take all of that money off of their taxable requirement.Edit: was wrong.
