What a difficult time this is! Many day-to-day business activities have been put on hold due to the coronavirus outbreak. But in order to assist not-for-profit organizations, there is something positive paint and coatings manufacturers and retailers can accomplish during this lull: cull your inventory, clean your warehouse or stockroom, and donate those unwanted goods to a gifts-in-kind organization.
Incoming donations have dropped sharply in recent weeks, while the need for goods only rises. A gifts-in-kind organization can redistribute your:
- Obsolete items
- Factory seconds
- Out-of-season stock
Donations are tax deductible up to twice their cost. Gift-in-kind donations will benefit your bottom line and really assist people in need, while positioning your business for brighter days ahead.
It’s no secret that corporate social responsibility (CSR) programs are good for business as well as communities. They improve employee engagement, increase customer loyalty and elevate corporate brands. But while most companies build their CSR programs around monetary donations and employee volunteerism, there is another form of giving that many overlook - namely, making in-kind product donations.
The Business Benefits of In-Kind Giving
In addition to adding another facet to your CSR program, donating excess inventory offers a number of tangible benefits, including:
1. It’s an Easy Way to Move Unwanted Stock
Whether you currently discount, liquidate or auction your non-selling merchandise, it undoubtedly takes a certain amount of time and labor, while yielding a poor ROI. Done right, making in-kind donations can be fast and easy (no negotiating with liquidators, no creating online auctions) and it makes better financial sense, too.
2. It’s Tax Deductible, Times Two!
Product donations are tax deductible. Better yet, your company may be eligible for a tax deduction up to twice the cost of the merchandise you donate. According to a little-known section of tax code, IRC Section 170(e) (3), C Corp tax deductions equal the cost of donated inventory, plus half the difference between the cost and fair market-selling price, not to exceed twice the cost.
For example, if your product cost $10 and you sell it for $30, the difference is $20. Half of $20 is $10. $10 (product cost) + $10 (half the difference) = a $20 tax deduction. $20 does not exceed twice the product cost, so it’s allowed.
3. It Keeps Your Warehouse Up to Date
Every square foot of wasted warehouse space costs you money, every day. According to studies, the real cost of holding onto stale inventory exceeds its cost value. Each time you donate outdated stock, you free-up valuable warehouse space for more profitable products.
4. It Protects Your Brand Value
Discounting and liquidating your products lessen their value and detracts from your brand. But a smart gift-in-kind organization will use a careful allocation system to ensure products are distributed thinly across a tightly-closed market. Your products retain their value, while your brand receives CSR recognition. It’s a win/win!
How to Find a Nonprofit Partner
Businesses can always seek out local nonprofits to partner with, but finding the right fit - a group or groups that can use all you have to offer - can be a full-time job in itself.
An easier approach is to donate to a gifts-in-kind organization. These groups are licensed 501(c)(3) nonprofits that collect all types of unwanted merchandise from corporations, then redistribute it to member nonprofits - i.e., charities, churches and schools - that request it. Some of the most in-demand products are office and school supplies, cleaning products, personal care items, electronics, clothing and toys.
How do you choose a quality gifts-in-kind organization? Look for one that:
- Is an accredited charity through the BBB.
- Accepts donations of nearly any kind at nearly any time.
- Provides proper tax documentation of every donation for your records.
How Gifts-in-Kind Programs Work
After you choose a gifts-in-kind organization to work with, simply make a phone call or send an email indicating what items you want to donate.
Once the organization approves your donation, they will send you shipping instructions. Then, you simply ship your items to a designated location, where it will be sorted and made available to member nonprofits.
You should be able to make donations at any time. You may decide to donate quarterly, between seasons or whenever your warehouse demands it.
After each donation, you’ll receive tax documentation for your records. Gifts-in-kind donating makes terrific content for your company newsletter because it adds another dimension to your CSR program.
Giving Is the Right Thing to Do
Beyond benefiting your CSR program, in-kind giving allows you to put your merchandise into the hands of needy people during these trying times who can genuinely use it, while helping worthy nonprofits deliver on their mission. You care enough to develop a CSR program…why not do even more good with your unwanted goods?
For more information, call 800-562-0955.