What It Is
A charitable donation is a tangible gift, such as money, goods, or services, to a public or private nonprofit organization.
Why It Matters
Charitable donations can help an organization improve its bottom line, increase company morale, and strengthen community relations. Charitable donations to eligible non-profits are tax deductible. They can reduce a business’s taxable income while supporting a worthy cause.
First, choose a legitimate charitable organization to which you would like to donate.
Unfortunately, many “phony” charities exist today. Some may have achieved tax exempt status with the IRS, but their use of funds is far from philanthropic. The IRS Form 990, Return of Organization Exempt from Income Tax, provides detailed financial and operational information about listed non-profits. Donors can request a copy of a charity’s most recent 990, either from the charity itself or at www.guidestar.org.
The following charity watchdog groups provide charity ratings to help you identify legitimate charities:
When making a donation, remember that your gift of cash or goods must meet certain criteria in order to be tax-deductible. These vary depending on the recipient, as well as the type and value of the donation. For advice on getting the maximum tax benefits when making charitable contributions, see this AllBusiness article on tax tips for charitable donations, and this About.com article on tax deductions.
To take your organization’s charitable donating further, try matching the donations that your employees give.
Human resource departments usually manage gift matching programs by providing employees with gift matching forms. Employee donors send these forms to charities along with their donations. The forms generally provide step-by-step instructions for securing the matching funds.
The Committee Encouraging Corporate Philanthropy, an international forum of business leaders who focus on corporate philanthropy, publishes a comprehensive study of corporate giving each year titled Giving in Numbers.
Charitable organization/charity: An incorporated or non-incorporated tax exempt body which (1) is created and operated for charitable purposes, (2) employs all its resources to those charitable activities that are under its direct control, (3) does not distribute any part of the income generated for the benefit of any trustee, member, or other private individual, and (4) does not contribute to or associate with political organizations.
In-kind donations: Donations of goods and services rather than money. This type of charitable donation can include almost anything. Examples include food, automobiles, printer paper, silent auction items, meeting spaces, and consulting services.