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.

1 comment:

Tom Bailey said...

Fortunately I did some of these things before year end and now you have given me some notes to have for next year too. I like reading about these ideas and I am thankful for your sharing.

Tom Bailey