How Should I Donate Business Sales to Charity?
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I'm an artist who plans to start a website where I will donate partial proceeds of the sales of my work to various charities on a permanent basis. What is the best system is to do this? Should the partial proceeds be transferred to each charity on a weekly, monthly or quarterly basis? Will the relationship be different with each charity? Also, how can I be transparent to my customers? Will they request proof of their donation and, if so, how do I go about doing this? Will the donation be a tax write-off for the customer, or for my business?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.
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