Several clearinghouse operations can connect you with nonprofit groups that want what you have. One of the largest is the National Association for the Exchange of Industrial Resources (NAEIR), based in Galesburg, Illinois. NAEIR was founded almost 20 years ago when Norbert C. Smith, a former aircraft parts manufacturer, realized that industry had billions of dollars of useful inventory sitting on warehouse shelves which, more often than not, was scrapped at a loss.
"We take donations from corporations all over the country and distribute them to our members [schools and nonprofit organizations] via catalogs published six times a year," says NAEIR's Jack Zavada. Corporations pay nothing to NAEIR for this service; their only cost is shipping, which is tax-deductible. Establishing the value of the goods donated is the donor's responsibility. "That's between you and the IRS," Zavada says.
Since its founding in 1977, NAEIR has collected more than $800 million worth of donated inventory for distribution to its over 6,100 members in all 50 states and Puerto Rico. The 1995-1996 fiscal year was a record one, with $125 million worth of donated goods received. For more information about donating inventory, call (800) 562-0955.
Another organization to consider is Educational Assistance Ltd. (EAL) in Glen Ellyn, Illinois, which focuses solely on schools. You can make arrangements to ship your inventory directly to the school or send it to EAL. In either case, be sure to let EAL know you want the Section 170 deduction; they'll provide the necessary documentation and structure the donation so you can take the deduction, says Susan Craighead of EAL.
The school is then invoiced for the value of the merchandise. Ninety percent of that amount is designated as a tuition waiver (that is, a scholarship); the remaining 10 percent goes to EAL as a handling fee. You can even have the scholarship awarded in your company name, says Craighead, and get tax deductions plus, in some cases, free publicity.
Over the past 14 years, EAL has awarded over $3 million worth of need-based scholarships to more than 2,000 students through its network of some 150 colleges and universities. For more information, call (630) 690-0010.
Remember, before donating to any group, make sure it's a legitimate 501(c)(3) company (as both EAL and NAEIR are).
By now you should be feeling a little bit more charitable about emptying out your warehouse--especially considering that, as Greif says, "A little planning now could land you a significant tax deduction for this year and as many as five years into the future."