How Should I Donate Business Sales to Charity?
Enter the Project Grow Challenge presented by Entrepreneur and Canon USA for a chance to win up to $25,000 in funding for your business. Deadline is Sept. 15 2015. Click here to enter.If you plan to include charitable contributions as a regular part of your business model, you will want to be "transparent" regarding three important issues: Identity, amount and frequency.
First, which charities are you choosing and why? Do they have a connection to your business? For example, are you giving money to programs that help artists get established or that provide arts instruction in grade schools? The closer you can tie the charity to your business purpose, the stronger and more effective it can be as a marketing tool for you.
Beyond that, the amount and frequency of the donations are up to you. However, if you promise on your website that, for example, 10 percent of each purchase will go to charity, then you want to make sure you can commit to that. If you give different amounts to different charities, it makes it more difficult to ensure good record-keeping and systematization. The same goes for frequency. You can choose how often you want to make these donations.
Generally, if a customer buys a piece of artwork and then you remit a portion of the proceeds to charity, you are the one who is entitled to the tax deduction. The customer can get the proverbial "pat on the back" for having purchased art through a socially conscious artist.
Allowing the customer to receive the tax write-off involves a more complicated arrangement, where you may need to form a separate entity for the purpose of passing through the customer's charitable donation. To do that, you will want to speak to an attorney and an accountant familiar with not-for-profit enterprises.
Related: When Small-Business Philanthropy Goes Wrong
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