If you're one of the owners of an S corporation, you have limited options for donating to charity. An S corporation, like a sole proprietorship or partnership, can make charitable contributions but can't subtract donations from business income. C corporations are the only business structure that can donate to charity and claim it as a business expense.

Personal Income

Suppose you and three partners have set up your business as an S corporation, with each of you holding 25 percent of the stock and reporting 25 percent of income and expenses on Schedule C. If you give $10,000 to a local charitable group, each of you can claim $2,500. Unlike a regular business expense, you can't deduct this from your business income. Instead, you have to claim it as an itemized deduction on Schedule A.

Doing Business

The most effective S corporation strategy is to give the charity something deductible as a business expense. If, say, your company donates $500 to the local ballet company, that's a personal charitable expense. If the company buys a $500 ad in the program for the next production, that's an advertising expense. You and your partners can divide up the $500 in expenses and subtract it from your share of corporate income.

Your Community

Sponsoring a sports team or getting your name on a building -- the My Corporation Cancer Center, say -- can also count as a business deduction. By getting your name out there, you're building goodwill in the community, which is valid business spending. It has to be something that does promote you, though: just donating to cancer research isn't a business expense in itself. Paying to support efforts by your local trade groups or the Chamber of Commerce can usually be justified as a business expense.

What to Give

If you and your fellow owners decide to make an outright donation, it may seem more cost-effective to give material -- donated services, food from your restaurant, discounted inventory -- rather than cash. However, the IRS has limits on what you can write off for non-cash donations. With inventory, for example, you can only deduct the purchase price or, if it's dropped in value, the market value. Contributing professional services isn't deductible at all. It may take some serious thought to decide which contribution works out best for you.