Whether you are advising the business owners who buy insurance products or annuities through your firm, or you are simply looking at a stack of pleas for donations addressed to your firm, there are important factors that you and your clients should consider, to ensure that you and your clients are giving wisely and efficiently.
1. Develop a charitable giving plan.
Charitable giving should be efficiently planned for just as any other business expense. Donations should be built into one’s business plan, especially if the business intends on making regular, recurring donations.
(Related: 20 Most & Least Charitable States)
Although brand awareness and other marketing elements will factor into charitable giving decisions, final decisions should be based on the philanthropic goals of an organization, and the desire to help the greater good.
2. Build in at least one layer of review.
When writing a check or finalizing a business donation, there should always be a checks and balances process, similar to any other major cash outlay. One person should not be responsible for writing and distributing a large company donation without approval of a multi-person team.
3. Think about the tax implications.
While businesses are donating to truly help a cause they believe in, it is ill-advised to do so without taking advantage of the appropriate tax deduction.
Regardless of how the money is donated or in what amount, businesses should maintain proper documentation and retain it for the IRS for a deduction. Proper documentation includes a receipt, cleared check or credit card statement.
If, however, any reward, such as a meal, round of golf, or any other benefit was received as part of the donation, the amount of the deduction must be decreased by the value of the benefit received.