Charitable giving: Uncovering hidden benefits

| Print |  Email
Monday, May 01, 2006

by Greg Chaillé, president, Oregon Community Foundation

Whether your business has an established plan for charitable giving or is just getting started, it is important to know how much of the philanthropic contributions your business makes can be deducted for tax purposes.

It can be daunting to navigate the complex tax structure for charitable giving. For instance, because the IRS treats business expenses differently from charitable contributions, it is essential that you are precise about the deductions you claim.

The following information applicable to Oregon businesses is based on contributions made to 501(c)(3) corporations and does not cover all types of charitable giving.

Business Structure Who Receives Deduction Allowable Deduction
C corporation Corporation Up to 10% of a business’s pre-tax profit in the year of the donations. Contributions over 10% can be carried over for five years.
S corporation Individual owner(s) Up to 50% an of individual’s adjusted gross income in the year of the donations. There is usually a five-year carryover.
Partnership Individual owners Up to 50% of an individual’s adjusted gross income in the year of the donations. There is usually a five-year carryover.
Sole proprietorship Individual owner Up to 50% of an individual’s adjusted gross income in the year of the donations. There is usually a five-year carryover.


The next chart summarizes IRS regulations for deductions. For greater detail on the regulations that are specifically applicable to Oregon and your organization or business, you must consult your tax adviser.

Type of contribution Charitable deductions Business expenses
Direct cash donation Yes. However, if you receive any benefit in return, you must subtract the value of that benefit from the amount of your deduction. No.
Cash given to employees to donate to charities of their choice Yes. No.
Sponsorship Yes, if not directly related to business. Yes, if directly related to business.
Purchase of ad in nonprofit publication Yes, if you don’t expect to earn at least the cost of the ad as a result of its publication. Yes, if you expect to earn at least the cost of the ad as a result of its publication.
In-kind gifts of products Yes, for the value of your costs, not market value. However, inventory donations by C corporations to benefit the ill, the needy or infants, and gifts of scientific equipment used for research may be eligible for higher-value deductions. No. Be sure not to deduct your costs as both a business expense and a charitable contribution.
Depreciable property Yes. Fair market value less prior depreciation. No.
Stock Yes, of both C and S corporations. Deductions can be made for fair market value if held by the donor for more than one year. No.


— Greg Chaillé, president, Oregon Community Foundation, www.ocfl.org.
The Oregon Community Foundation offers advice on the tax benefits of setting up a business or family foundation and provides guidance for charitable giving.
 

More Articles

Reader Input: School Choice

September 2015
Thursday, August 20, 2015

Which of the following would be most effective in reducing the cost of operating a public university in Oregon?


Read more...

Loose Talk

July/August 2015
Friday, July 10, 2015
BY AMY MILSHTEIN

When gossip crosses the line.


Read more...

Reader Input: Rx for Health Care

July/August 2015
Wednesday, July 15, 2015

We asked readers how Obamacare has impacted their business.


Read more...

Brain Storm

July/August 2015
Monday, July 13, 2015
BY CAMILLE GRIGSBY-ROCCA

Can the brave new world of neurotechnology help an OHSU surgeon find a cure for obesity?


Read more...

5 questions for ImpactFlow CEO Tyler Foreman

The Latest
Thursday, August 13, 2015
impactflowthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

Portland-based startup ImpactFlow recently announced a $5.7 million funding round. CEO and co-founder Tyler Foreman talks about matching businesses with nonprofits, his time at Intel and the changing face of philanthropy.


Read more...

Department of Self-Promotion

Linda Baker
Tuesday, August 04, 2015

061715-awards1Oregon Business wins journalism awards.


Read more...

Is there life beyond Reed?

September 2015
Wednesday, August 19, 2015
BY GARY THILL | PHOTOS BY JASON E. KAPLAN

A storied institution climbs down from the ivory tower.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS