Most companies feel obliged to help charitable organizations and other well-wishing foundations. However, the number of donation requests to respond to can be overwhelming, and sometimes its difficult to choose which cause to support. Corporates get pressure from different stakeholders, including the staff, government, competitors, shareholders and suppliers. Everyone seems to have their preferred charity, something that hampers most companies to donate. Giving can mean an advantage to your business if it’s done in the right way. Here are few ideas on how to manage and leverage your charitable donations.
Money Donations
The two ways you can donate money to an eligible charity is either in cash or a check. If your donations are in exchange for goods or services, make sure you’ve deducted the cost of these commodities from your donation. The remaining amount is what you can write off.
When doing cash donations, it’s important to have every transaction on paper. Even the smallest of contributions have to be supported by a receipt, credit card statement, bank statement, payroll deduction record or any written documentation from the charity with the specific date and amount in question. Remember for donations exceeding $250; you’ll be required to have a receipt, charity statement or similar documentation showing the value of the item and how much has been written off.
Items
Most foundations accept a range of charitable donations such as clothing donations, furniture, vehicles among other assets. You can deduct the amount of these items on your tax return. To do this, you need to include a Noncash Charitable Contributions form with your tax returns if the deducted value for all noncash gift exceeds $500.
For items that worth $500 or more, you need an appraiser to assess the donation. The appraiser must conform to the codes and requirements established by the Internal Revenue Service. Tax deductions, however, doesn’t apply to every single charitable donation, particularly if the item you want to donate is damaged. You may need to send a picture of your item to verify it’s in good condition.
Making item donations is a clever way for organizations to leverage their charitable contributions. For instance, if you decide to give away stock as donations, you won’t pay any tax on the stock’s appreciation, but you are allowed to subtract the donated items total value.
Volunteer work
Other than giving away tangible donations, you can decide to volunteer your services to a charity. Like cash and items donations, which are tax-deductible, volunteer work is also deductible provided you’ve acquired expenses in the process. For instance, if you organize a fundraising event towards helping a charity, you can deduct the cost incurred in organizing the event.
Consolidate your donations
Another way to max out your charitable contributions is by bundling donations. This reduces the overall taxable income and helps you to meet your standard deduction limit. However, this may not be the best option to leverage contributions as it may force you to enter a higher tax bracket than you’d have been with individual donations. Therefore, you need to understand the standard deduction for each to see if it’ll be viable to bundle donations.
Implementing these strategies can help your business maximize its contribution effort in meeting community needs. When you want to get involved in charity donations, ensure you understand how leveraging works to get the best out of it.
