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Roedel Parsons Blache Fontana Balhoff & McCollister, A Law Corporation

4 questions businesses should ask before making donations

Requests for charitable donations: they come in all shapes and sizes. From fundraising letters to door-to-door solicitations, your Louisiana business is bound to encounter them. However, here are four questions to ask before writing out a check:

Is it really a recognized charity?

One way to confirm authenticity is to check with the IRS about the organization’s tax-exempt status. Most genuine charities are categorized as tax exempt under section 501(c)(3) of the federal tax code. The Better Business Bureau (BBB) also maintains a list of reputable charities and provides tips for giving wisely.

Can the donation wait?

High-pressure pleas for financial aid that insist you must give immediately may or may not be on the up-and-up. It is true that some charitable causes are time-sensitive – such as ones that provide relief for natural disaster victims – but most organizations will not insist that a donation must be made right away.

What percentage of the proceeds will actually go to charity?

If you or your company receives something of value in exchange for a contribution, the total amount that goes to charitable causes (and therefore the amount that is tax deductible) may decrease. This is often the case with fundraising dinners and similar events. In addition, it is wise to confirm with the charity ahead of time about how much of the proceeds will go to any particular cause.

Can you advertise your giving?

It can be an effective marketing strategy to offer products or services to customers with the understanding that part of your business profits will go to a certain charity. However, before you start using that charity’s name in your advertising, it is best to get permission (in writing) from the nonprofit in question.

Taking a moment to consider these types of questions can help you avoid making unwise contributions. In some cases, it may even help safeguard your business against the necessity of fraud-related litigation. On the flip side, investigating the relative merits of various charities can help your company make the most significant impact possible on behalf of those in need.

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