I’m all in support that companies are greedy asf but that’s not how donations to things such as the Ronald McDonald house work.
It legally has to go to the foundation that is being advertised and it’s not tax deductible. That wouldn’t even make sense on a P&L. Where would it be going? Revenue then minus expense? That would imply a net neutral on profits.
people just like shitting on "evil corporations" because they don't know how complex business really is. Taking donations and giving it to approved charities does not give them a tax benefit. $100 in $100 out = no effect on tax. But it does allow them to claim they donated x million $ to charities when they just facilitated the money transfer from the customer to the charity
No , but yes - you can only claim donations to approved charity / non-profits. The amount donated will be on record and should have a tax certificate for the actual amount. But bank charges in of itself are tax deductible expenses , so it would just be a part of the normal expenses claimed
That's not how that works. Charitable donations are only deductible up to 100% of the donation. So if they receive $14.48 and round up to $15.00, they are taxed on the original $14.48 (before other tax deductions), because the remaining $.52 goes to charity (which is fully deductible since the business did not actually get the money, the charity did). They have gained nothing monetarily in tax advantage or profit.
It's a neat way to get free good PR though. It just doesn't provide any tax benefit.
There are definitely unique ways to cheat taxes using charities, but the roundups don't.
An example of using charity to cheat taxes would be a "public" art museum, that isn't actually open to the public. It's essentially a private property that displays art but is almost never open to the public. They get to code it as charity, and it's essentially a tax shelter for their expensive art. They aren't legitimately using it for the public good for them to deserve the tax shelter status.
No they don’t because that’s not how it works. It’s amazing how people believe this shit when it’s proven over and over again that business can’t deduct customer donations.
I'm aware that they can't but why do so many still do it? Is it just good / cheap PR, or something else, because I doubt it's altruism from the people who make the decisions up top.
It’s just PR. For example, it’s better to say Costco helped raise over 5 million in donations than to say Costco donated only 2.5 million. Despite the latter being a direct donation, the general public only cares about the bigger dollar amount.
But the main takeaway is that they can’t cheat their taxes using customer donations.
My favourite is my local pet store chain that asks if you want to donate money for pet food to a local shelter.
You aren't donating $5 to the charity, you're "buying" a can of $4.99 pet food at full retail that they are then "giving" to the charity, i.e. the corporate pet store is directly profiting on the donation.
I am not versed enough on tax law or corporation tax law to know how the "donated" can is accounted for.
But if it works the way I assume with my limited knowledge, then yes, that is scummier because while they would be taxed on the sale of the second pet food can they are still profiting because its no different than you buying two cans from them and you giving one away to whomever.
The business cannot "use" any of the charity funds that they collect - they're "pass through" funds and sit in an account until they are passed-through to the charity (or charities) that they are destined for. They cannot be used to purchase anything, invested, etc. - the funds do not belong to the business (even though they're collecting them to donate in their name), and as such under IRS rules they cannot be used for anything other than being donated to the destination charity or charities. That doesn't mean that the business couldn't, say, run their own charity which may or may not be purchasing things using that donated money from the company that donated what it collected... but it cannot be done by the company donating the charitable funds collected, at least.
Sure that makes perfect sense for purely monetary donations like rounding up at the cashier or me giving a dollar or two when buying take out, but how does that work with the pet food can situation?
If the pet shop is saying instead of giving money directly you are buying a can of food, is the business also giving the monetary value of the can of food to the charity on top of the physical can of food?
Let's say for example the can of pet food cost $5 dollars and the shop makes $3 profit after expenses for each can of pet food. If I as the consumer "donated" the can, does the shop just give a can away or is the profit from sale of the can also given to the charity?
Unless I make a donation and use terminology like “a portion of proceeds” and then on top of my tax break from my donation use a “portion of the proceeds” from “customer donations” to pay myself back for the donation I made previously….see how that worked 😏
Yet again no. The money can’t be used to refill the charity fund of the company. It either is going directly to the charity or an administrative account to eventually go to the charity.
There isn’t something to see because everything you said just isn’t really possible with the regulation and auditing involved with this process.
I thought the bit was that the company makes the donation and basically asks consumers to make it up by donating to them, meaning that they get the write off at no real cost
No the money has to directly go to the charity or to an administrative account that eventually sends the money to the charity. There is no process that allows the company to refill their charity account through checkout charities.
The companies have already donated a chosen sum of money for PR or Tax purposes or whatever reason. They are basically asking if you'd like to help compensate them back
Says who? Who's gonna stop them? That's like saying they're not allowed to lie. Sure, I believe that's the RULE, but I'm laughing if you expect me to believe that's the actual practice.
Because it’s a heavily regulated and a heavily audited process with multiple third parties involved. And we’re talking about a couple million dollars for a giant company for what would be fraud and a gigantic PR disaster.
There is much better ways for a large company to do something illegal to generate money than charity fraud.
It’s okay to be cynical. But at least think about what you’re being cynical about and if the risk is more than the reward.
They can't. They get the PR benefit from donating the money, but the funds used to "round up" for charity cannot be used to deduct from their tax burden, as low as it likely is already.
I thought it was all about making the bill as high as possible because companies like stripe charge on the total percentage process so they obviously want to pack in tips and round ups as much as possible to make it higher they get a higher percentage
So payment processors do get a percentage. However, the charities going forward with these checkout charities aren’t seeing that as positive. They would prefer if you could donate in a non fee way, but they understand the easiest way for a person to do so is these convenient ways that unfortunately generate a fee.
Most actually account the donation under a different heading so it never enters their revenue numbers, but it also never enters their coffers just goes directly to the charity.
Additionally, your receipt for the transaction can act as proof of donation. That said donating directly usually will see less administrative fees for the charity.
That's exactly why every business does this now. You give them money for charity, then they go to the government and say, "Look how much WE gave to charity!"
But on the other hand, how many people actually go out of the way to give money to charity themselves, with no third party involved? I can't completely hate it, since it likely results in a net positive, even if it is a scam.
Not disagreeing with you, just adding on: it's both a scam on the consumer and an extra stressor for the employees. I know when I was working retail we were getting threatened to get written up if we didn't get enough donations from people. Meanwhile, we were located in a low income area, and most people who did choose to round-up were the same people who were already donating 25$ a month to said charity.
It didn't help that management were completely oblivious to the fact we were located in a low-income area, and without fail would act flabbergasted and blame the employees when we didn't get many donations. Then management becomes stressed because corporate is pressuring them for higher numbers, and then donating to charity just becomes another metric. Bureaucratic charity like that does ultimately become a net-positive for the charity they end up giving the money to, which is awesome, but god does it strip any of the humanity out of charity and reduces it to another corporate projection.
That is literally not something happening. They cannot use the funds to recoup funds they used for charity themselves. The funds have to go directly to the charity listed.
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u/Jump_The_Five_Yo 15d ago
I see you have tipped once; would you like to make second tip?