You now have exactly twelve days to make any charitable gifts eligible for a 2018 tax deduction. But since this the is the first year that the 2017 tax changes are in effect, are there important things that have changed? Yes! Here’s a quick recap of some of the more important things that individuals and corporations need to keep in mind.
Often I will be talking to someone about charitable giving, and they will express frustration that, "it's just one thing after another. We keep giving money to treat the symptoms, but never really address the root cause." Or, with more funder jargon, "we only fund transformative projects."
While I understand not wanting to waste precious donations, I usually counter with this analogy: Saying that you don't want to donate to a food pantry because those people just get hungry again tomorrow is just like saying that you want to eliminate emergency rooms because those people will just keep having heart attacks and getting into car accidents.
When making a donation to charity, most companies want their gifts to be used effectively and efficiently. Donations shouldn’t be wasted on unimportant things, but should instead be used to maximize the social impact of a particular cause. So how should a firm measure the impact of their corporate philanthropy?
More specifically, what if small firms gave the same proportion of net income that big firms did? There are many more small businesses than there are large businesses. If we can figure out a way to break through whatever barrier is preventing them from making charitable donations, we can potentially do an awful lot of good.
A few days ago I was in a meeting setting up a new corporate foundation for a small business. When I asked whether or not the firm wanted a way to take online requests, one of the partners said, “Absolutely not. We’ll get bombarded! As it is, I get people calling saying, ‘Hi, I’m [big client]’s cousin, would you sponsor my charity event?’”
In an attempt to “do it the right way” many companies, foundations, and individuals add specific conditions to their charitable donations. But adding restrictions to a gift adds unnecessary complexity, reduces the impact of the gift, and in some cases can turn out to eliminate your tax deduction. In other words, it's generally a bad idea.
Corporate philanthropy doesn’t have to be limited to just writing checks. Charities also appreciate donations of time, skills, inventory and capacity. Of these alternative options, the IRS has given “in-kind” donations of inventory a few complicating wrinkles, so we’ll try to smooth those out for you today.
Throughout Las Vegas, Hugh Anderson is known as a tireless advocate for nonprofits. He has served on numerous boards throughout Southern Nevada. Hugh credits some of his success directly to his charitable activities, but not in the way you might think. We talked to Hugh about his experiences with charity boards, and how that has affected his business.