Monday, December 28, 2009

Help Out Charities With Your Excess Stuff -and Get a Great Tax Break

In my last post I addressed the topic of tax breaks and charitable giving. One of the suggestions made was to donate excess inventory to charity and to take a tax deduction.

In some cases it may be obvious where to donate your excess inventory. Some examples: a small toy store in my town donated toys to the local children's hospital. Contractors and retail stores can donate home improvement goods—furniture, home accessories, building materials and appliances to Habitat ReStores,where they are sold to the public at a fraction of the retail price to help fund the construction of Habitat homes within their communities.

But it is not always so easy or so obvious where to donate your excess inventory or used items. A few years ago I helped my husband find a home for all his used, in great condition, office furniture and equipment. This turned out to be a challenge as we could not find a charity that was interested in taking this perfectly good equipment, even if we delivered it to them. In desperation we were about to rent a truck and take it all to the dump. Fortunately a friend of ours had been volunteering at a very under-funded public school that was thrilled to receive some extra desks and file cabinets. We enlisted my son and his friends to help deliver the furniture in exchange for some pizza and their required high school community service credits.

I wish back then we had known about the organization NAEIR. When a business finds it hard to find a local charity that can use their excess inventory or reusable seconds, there is a quick and easy solution. The National Association for the exchange of Industrial Resources, NAEIR, founded in 1977, has collected more than $1.6 billion of inventory from companies such as Microsoft and Reebok and donated it to churches, schools and non-profits across the country. Small companies can also take advantage of this free service from NAEIR that helps clear warehouse space, recycles good used equipment, saves waste from filling up the landfills, while giving tax benefits to a business.

Here are the specifics of the tax deductions that a business can take when donating goods to a charity:
C corporations may deduct the cost of goods and half the difference between the cost and fair market value, which are allowed to add up to twice the cost.
S corporations, partnerships and sole proprietorships earn a straight cost reduction.

As businesses are looking for more and more ways to contribute to charity and ways to eliminate waste, there seem to be more and more opportunities to find ways to give away extra inventory or equipment. Charities are always searching through postings on Freecycle or Craigslist. Yes, even high school community service groups are getting involved in this idea. Just this week our local high school sponsored a laptop collection drive for a charity.

Please be sure to check out the most current information on tax deductions with your tax advisor.

Sunday, December 20, 2009

Getting Tax Breaks From Your Business Charity

I have been searching for articles about tax advice for business charitable giving, as it is important for every business to understand how their charity affects their tax deductions. I first read this article on and found it on where they have given blanket permission to reprint their articles.

The holidays are a perfect time of year to address this topic as so many businesses are helping out needy causes right before the end of the year and their charity will go towards this year's tax accounting.
The article, "Charitable Contributions and the Tax Benefits" as it comes from a faith based perspective, addresses the question of the true meaning of giving in the context of personal finances. Small business owners will benefit from reading this as it relates to the same issue of taking tax benefits for the business. Whether coming from a religious orientation or not, it is important for any business to asses the underlying values that relate to it's charitable giving program during the holidays and during the the rest of the year as well- and for tax advice about your giving plan, check with your tax advisor at tax time.

There is a tax advantage to giving. I often wonder if people would still give even if there was not a charitable contribution tax deduction? The potentially dangerous outcome is that we might be motivated to give just for the deduction.

December is the Most ‘Profitable’ Month For Non-Profits

December is the make it or break it month.

The primary reason for this that there are groups of donors who have a pocketful of money that they want to unload before the end of the current tax year – December 31st. Because of the financial advantage of giving, people give like crazy before the December 31st deadline. Depending on a person’s income they might even save money on taxes (if you are close to a bracket threshold) by making a contribution.

However, if you start thinking about tax considerations too early in the decision making process, you are likely to allow the tax impact to override doing what is best for God’s kingdom.

How do charitable contributions reduce your tax liability?

When you make a donation to a registered charitable organization you have the opportunity to also reduce your tax liability. Essentially each dollar you donate is not taxable.

Assume you made a $1,000 donation to you church and the church gives you a tax receipt at the end of the year. When you pay taxes you would not need to pay taxes on that $1,000 because it was given to a charity.

The more you donate the more taxes you save. Of course, you will want to consult with your tax advisor to confirm the details of your situation as it is fact dependent.

3 Excellent Tax Strategies That Are Bad For Charities

Keep your contributions for the entire year and then send the check in December.

The advantage is that you get to use that money, invest the money, and get interest on the money for almost twelve months. Then at the last minute you give it away (in December) so that you still get your tax deduction.

I think this strategy highlights a giving approach that is falsely motivated by tax considerations. Throughout the year, the charity also had uses for that money. Many charities are desperate for contributions and by getting a few extra pennies of your dollars you may be significantly hindering their ability to do good work.

Charity Reminder: It is better to put the needs of a charity above your ability to squeeze a few extra pennies out of your giving

Don’t make personal contributions to people because it is not tax deductible.

If you give $200 dollars to a family to buy groceries you cannot deduct that from your taxes.

The savvy tax advisor might suggest you make that contribution to a registered charity instead so you can get a donation receipt. The problem, once again, is that you are in the presence of a legitimate need (perhaps providentially arranged by God) and yet you dismiss that need because it is not a wise tax decision.

Charity Reminder: When you see a financial need, that need should supersede your desire to get a tax deduction.

Withhold your giving this year because it was a low income year and save it for next year when you will make more money.

Here again, the motivation to give is more about yourself than the charity. In fact, when you delay giving one year, it is quite possible that it might be hard for you to start giving again. It is important to weigh the spiritual impact of a decision – even if it has an apparent monetary benefit.

Charity Reminder: Giving is about blessing others and developing a healthy giving heart, it is not primarily about tax deductions.

Legitimate Charitable Giving Tax Considerations:

Giving is a blessing. Giving helps others. And, if on top of everything you can get a tax deduction, I think you should – it’s part of what’s involved in good stewardship. Since we seek tax efficient investing portfolios we should also seek to minimize a tax liability when giving. Ultimately, as you save on taxes you will in turn be in a position to give more in the future.

  • Depending on the car, you might be better off financially donating a car instead of selling the car.
  • Donate items that have appreciated significantly – stocks or real estate for example. This action saves you a lot of taxes and allows the charity to receive a larger contribution.
  • Charitable gift annuities
  • Request a charitable contribution receipt when you make a donation. To receive a receipt does not mean that the receipt motivated your giving. It simply is a wise action for a financial steward to be wise with every contribution.
  • Mileage tax deduction for volunteer work.
  • Setting up a charity in order to offer charitable contribution receipts to donors. You may need to adjust or structure your work in order to be able to legitimately receive charitable contributions. It would be wise to properly register your organization so you can offer contribution receipts.

4 Ways To Keep Giving Motives Pure

This post is not an encouragement to ignore tax considerations. It is, however, a reminder that at times our concern to do the most fiscally conservative action might hinder a legitimate giving opportunity. We want to be sure we keep the first things first and the last things last. The tax consideration should fall at the end of your giving decisions.

Step One: Consider the Biblical Teachings On Giving

There is a lot of discussion on the topic of the tithe and giving. Must I give 10%? Is 10% a starting place for giving? I’d encourage you to start with the topic of . Thought not biblically mandated I am a fan of the graduated tithe.

Step Two: Consider Your Internal Spiritual Need to Give

I think giving is a matter of the heart. Money and possessions have a sticky attribute – they try to cling and stick to you. The best way to rid yourself from a lust of stuff is to give it away. Giving produces healthy spiritual fruit.

Step Three: Consider the needs/the work of a charity

Once you have decided that you need to give as a spiritual discipline then you need to decide where you should give your money. Of course, the church is a great place to start with your giving. You might also want to consider organizations that are directly involved in things you are passionate about.

Step Four: Consider the Related Tax Consequences

The tax consideration should always come last. You know you need to give. You know when and how you should give. I believe it is only at this point you should start to think about how to minimize your tax liability though some giving strategies.

Would you still give even if there was not a charitable contribution tax deduction? When it comes to giving, do the ends justify the means? How do you know when tax considerations are taking priority over spiritual needs?

Tuesday, December 15, 2009

Responding To Employee Charity Requests With Grace

A friend of mine told me of a recent holiday collection drive that the employees at her company wanted to implement for a local food pantry. The small company that she worked for responded that they could not authorize the drive because it would appear as favoritism of one charity over another. What they did do was to allow the employees to bring in their own collection boxes, as it would not appear as being company sanctioned.

Since I do not know all the facts, such as whether the company has a charity giving plan, how they choose which charities to give to, and how they engage their employees in their charitable giving, I cannot make any comments on their decision. But this case points out the importance of a company to include in any planning of their philanthropy the very important issue of employee engagement. This broad issue must also address how to respond to specific requests from the employees to support their favorite charities. In addition, the plan should address how a company should respond with flexibility and grace, to the immediate and urgent causes that employees wish to support, not only during the holidays but at other times of disasters or crises.

Responding to employees caring about the world during especially difficult times, will help them feel supported and will motivate and engage them in participating in the long term philanthropy program of the company-another subject to be covered in the future.

Wednesday, December 9, 2009

reBlog from Craig: Welcome to the social giving network

I found this fascinating quote today:

According to a 2009 Cone Communications survey, 85 percent of Americans say they have a more positive image of a product or company when it supports a cause they care about.  More than half (52 percent) of Americans feel companies should maintain their level of financial support of causes and nonprofit organizations. Twenty-six percent of consumers revealed they continue to have high philanthropic expectations for companies, despite the current economic crisis; and they expect companies to give even more.Craig, Welcome to the social giving network, Dec 2009

You should read the whole article.

Monday, December 7, 2009

The Glow of Gift Giving

Thanks to Jan Bergman of Venderberg Communications for sending this on about glassybaby. I look forward to hearing from more businesses about their philanthropic endeavors.

(December 1, 2009)--Need a shopping trip without the accompanying guilt trip? Seattle-based glassybaby continues its emphasis on giving during the holiday season, making choosing from their more than 400 colors (with names such as Angel, Molten and Rudolph) the only choice to make when shopping for the holidays. All five glassybaby stores will give 10% of their proceeds to local cancer care organizations. In New York City proceeds go to Memorial Sloan-Kettering Cancer Center through December 31.

glassbaby New York 555 Hudson St.
The company, glassybaby, makes and sells decorative glass cups to be used for votives, vases, containers, and many other purposes. Cancer survivor and founder Lee Rhodes has made it her personal goal to donate to those now walking in her same path. To date, glassybaby has given more than $300,000 to charity, and owner Lee Rhodes’ goal is to earmark 10% of all glassybaby sales to charity by the end of 2010.

“Part of the reason I started growing this company was to be able to donate back to the very people that helped me during my darkest times,” says Rhodes. “glassybaby is a vessel for giving.”

About glassybaby:
glassybaby were born in 1998 when founder Lee Rhodes was in her third round of battle with a rare form of lung cancer. Lee found serenity in a small, tough, colorful glass vessel made by a family member for whom she had purchased glass-blowing lessons as a Christmas gift. When Lee’s recovery progressed, she started making these glass vessels on her own, which she called “glassybaby”. She opened her first glassybaby store and studio in Seattle in 2003. Today, there are 5 retail locations, more than 70 employees and a dedicated legion of followers.

More about glassybaby…
Most votive candleholders are indistinguishable, but the hand-blown ones from Glassybaby, in Seattle, which have developed a loyal following, stand out for two reasons. First is the compelling back story: Glassybaby was born after Lee Rhodes, a mother of three, learned she had lung cancer in 1998. To relieve her husband’s stress, she bought him glass blowing lessons and he began to make votives, which she later started selling. Second is how great they look: they come in more than 300 deep colors, in a gently rounded form that enhances the appearance of the flame.
(New York Times)

“One of the most exciting designers in the area is Lee Rhodes, who has a cult following for her handblown votives, which double as drinking glasses or bud vases and come in a crayon-box range of shades. They are on display at glassybaby, a 5,700-square-foot boutique-slash-studio where visitors can watch the elegant vessels being made. Rhodes, who is a cancer survivor, also produces a Goodwill line; proceeds support local and national organizations.”
(Travel & Leisure)

“I can’t resist these handblown votives. amazing piece of art to warm the soul…”
(Sunset Magazine)

“Lending themselves well to any number of functions, each Glassybaby spreads warmth to a room whether lit or not…Their stores maintain the same conscientious ethos that lies at the heart of the Glassybaby brand: to live in harmony with the earth and goodwill for all. From ‘bag cleansing’ to donating a portion of sales to various cancer research and support organizations, their efforts shine as brightly as their votives.“

For more information on glassybaby, including photos, please go to

Tuesday, December 1, 2009

Thinking Outside of the Bin for Your Holiday Drives

Every year Christmas seems to arrive earlier and earlier, with holiday decorations hung up right after Halloween and Christmas music piped into stores and restaurants before Thanksgiving. And this year it seems that holiday food and clothing drives arrived earlier than ever having multiplied to extraordinary proportions. For good reason, the numbers of hungry and homeless have swelled to record numbers.

Yet, as I walk down the main street of my town I see collection bins almost on every street corner or in front of every business and I find myself pondering how many times will I continue to buy more bags of cans and cereal boxes, or dig up more warm coats to drop off in the bins?

It is impressive to see so many businesses and organizations supporting the local food pantries and homeless shelters. Presumably the benefit of so many bins is to increase public awareness resulting in an increase in average contributions and also to attract new givers. But will putting out a collection bins in front of every store and in the halls of every organization reach a saturation point where "givers" will reach "bin burnout"?

What this notion of "bin burnout" suggests is that businesses are going to need more creative strategies for attracting donations for their holiday drives. By brainstorming for new ideas, businesses both large and small can engage and inspire employees, customers and clients in making a difference this holiday season.

Here are some examples to get you started:

Matching programs: Stop and Shop Supermarket Company hopes to raise an additional $1 million dollars for local hunger relief organizations through Food for Friends, where they will match the first $500 raised by each store.

Buy an extra: Borders Books in Kingston, Rhode Island is asking customers at the register if they would like to purchase a book, craft kit or stuffed panda to donate to an Arc family in need.

Send an inspiring gift: Mediaspace Solutions, a Norwalk, Conn-based newspaper and online advertising service has a program called Giving Thanks where they send out food-drive starter kits to clients and partners around the country, instead fo the usual holiday gifts. The starter kits included items, such as stuffing, dried cranberries, pumpkin bread mix and hot chocolate, with the hope that recipient would add their own donations. The agency also compiled and included a list of local food banks compiled through its newspaper partners.

Creative engagement and partnering: Last year, General Mills used its marketing expertise to help hunger. By partnering with the tv show, NBC's "The Biggest Loser" they involved viewers a "Pound For Pound Challenge." For every pound that was pledged to lose, General Mills funded one pound of groceries to a food bank.

Host a competition:In Des Moines, Iowa, the Goodrell School is hosting a food drive competition. The class with the most donations win a free breakfast, donated by Burger King.

Last year a Silicon Valley high tech firm hosted a collected food tower competition amongst it's divisions.

Host something fun and educational:
Customers who donated food at a furniture store in South Carolina, got to participate in a free bow making and gift wrapping workshop.

KFOG radio station, in the San Francisco Bay Area is hosting a benefit concert to benefit the Marine's Toys for Tots.

Give a discount or extra service. In my local area, stores and services are offering discounts or free serices to customers when they bring in food, clothing or toys.

Toyota in the Bay Area is offering a $20.00 discount towards a customers next service for a new unwrapped toy for the Toys for Tots Program.

Okay not a business-but a great idea. A library district runs a "Food for No Fines" food drive in Adams County, Colorado.

Raise money instead-did you know that for every dollar donated to a food bank as much as $12.00 of food can be be bought or made.

Several large high tech corporations in Silicon Valley such as: Applied Materials, Fairchild SemiConductor, PG&E and others, are sponsors of the annual Turkey Trot in San Jose, supporting the Second Harvest Food Bank.

Proceeds from KFOG Radio's "Live from the Archives 16" CD's benefit the 7 Bay Area Food Banks.

Stop and think what more you can do with your holiday drives. It will give people more reason and more opportunity to donate to these very needy causes.