Different people, groups and businesses work with nonprofit organizations for a variety of reasons, with some getting more personally involved than others. Individuals might write a check or donate time to a charity that’s near and dear to their values, while corporations often donate to organizations that get them publicity. Whatever their reasons, those who donate to charity usually consider the nonprofit’s role in improving society.
Donations come in a variety of forms. They can include cash, personal goods found in garages, basements and attics, unskilled labor, excess commercial inventory or food items, or professional business services. Not all donations are tax-deductible. If you donate to a nonprofit organization that does not have a 501(c) status, you can still do good for your community, but you won’t receive a write off. For example, a local nonprofit that does not take in or disburse large amounts of money might incorporate as a state nonprofit but not apply for federal tax-exempt status. A trade association is a nonprofit, but not a charity. If you give money and specify what it must be used for, rather than donate it to the tax-exempt organization’s general fund, you might not be able to claim a tax deduction. In addition, the donation of time or skills is not deductible.
Many people donate money, advice, services, goods or time to nonprofits. Those who donate time or goods usually do so to local charities, writing checks or making online donations to national organizations. In addition to money, individuals volunteer their non-skilled time, such as helping to clean up parks and trails, working as parking attendants or ushers at events, and helping set up and take down equipment at functions. People also donate their expertise, offering accounting, IT, graphic design, coaching or website development skills.
Some nonprofits are set up to donate money to other nonprofits. Foundations often solicit money or use the annual interest earned from an endowment to give grants to other groups doing charitable work. Some foundations have a broad mission, while others might be limited in scope. For example, a foundation might award grants only to organizations involved in youth programs, the arts or environmental efforts.
Some government agencies give grants to nonprofits for a variety of reasons. The agencies have specific guidelines and those who receive funding must fill out forms, go through a review process and submit follow-up documentation after the money is used. Government grants often help groups involved in youth sports and education, health care, medical research and urban renewal.
Businesses often donate to nonprofits to fulfill any social responsibility mandate they have and to generate positive goodwill and publicity. In some cases, the business will donate money to a nonprofit’s general fund, touting the donation in public relations campaigns. In others situations, corporations purchase sponsorships that include having the company’s name, logo, link and other benefits used in the charity’s brochures, on its website and at its events. If a nonprofit is not a 501(c) that provides a tax write-off to donors, corporations can deduct the value of the money given as a marketing expense. Some corporations give more money than they get in marketing value, usually doing so when they can write off the difference in the amounts as a donation.
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