Research shows that consumers put their dollars where their hearts are. Did you know that:
- Almost 66 percent (two-thirds) of consumers are willing to pay more for services and products that come from companies that are committed to social good?
- Studies show that community involvement entices consumers to shop in-store?
- Four-out-of-five consumers expect companies to continue improving their Corporate Social Responsibility (CSR) efforts?
Regardless of the product or service you offer, the benefits of supporting local businesses and non-profits far exceed the costs.
Charitable giving helps you save on your tax bill
In addition to fostering consumer loyalty, charitable giving offers small businesses a way to save on their taxes. Although the return on your investment isn’t exactly dollar-for-dollar, it can often reduce your tax bill by roughly .25 cents per dollar, which is still an excellent perk for doing good in your community!
Just like a standard personal deduction, every single dollar you donate to a charity becomes a deduction on your taxes. Small businesses have many options when it comes to making donations, as all of the following are acceptable forms of contributions:
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- Cash donations,
- In-kind donations (gifts of property or equipment), and
- Travel expenses incurred while supporting a local nonprofit through charitable work.
To ensure you receive a deduction for your small business’s year-end contribution, be sure you’re aware of some common missteps people often make:
Donations must be made in the calendar year: For this tax year, this means that your contribution must be made between January 1, 2018 and December 31, 2018. If, like many people, you wait until the last week of December to make a donation, just be sure to receive a detailed receipt that includes that correct 2018 date on it.
The recipient must be a 501(c)(3) organization: Not all donations are tax deductible. To qualify, the gift your company makes must be given to a charity that the IRS has designated as a 501(c)(3) organization. If you’re not sure if the organization you are working with qualifies, use this IRS search tool to find out.
You can’t donate time you or your employees spent volunteering: If you or your employees volunteered for a charitable organization this year, you unfortunately cannot deduct the hours you spent volunteering, even if it was for a nonprofit.
You can’t receive anything for your gift: Let’s say you donate office furniture to a local nonprofit. Your small business cannot receive anything in exchange for the office furniture you donated.
You’ll need a receipt: Be sure to get a receipt for any donations you make. This will make your life easy come tax time. On the receipt, include the date you made the donation, the amount the donation is worth, the type of donation you made (cash or in-kind), and a note that no goods or services were received in exchange for your gift.
Looking for the perfect organization to give to this calendar year?
Our mission at CPP Connect is to help connect small businesses with local nonprofit organizations to help build commerce and communities through social responsibility. Join us in our movement toward good!
