Going to my local Vons Supermarket, I have noticed that in the past year they have not only increased the number of times a year they are collecting for various charities that are seemingly not in any way connected to the store, but are also doing so much more aggressively. A year ago, if they were collecting for breast cancer, they might have a poster up at the door, and when you gave them your rewards card, they might ask you if you wanted to donate a dollar.
Now there is a whole decoration campaign, a person jangling a cup with coins in it loudly asking people to donate, the card automatically asks if you want to donate a dollar when you slide it, to which you have to hit ‘yes’ or ‘no’ to proceed, and then the checker even asks if you want to ‘round up’ and donate your change to the cause. While all this is fine on an occasional basis, the number of charities they do this for seems to be increasing dramatically (or perhaps the aggressiveness is just more obvious). Between the various male and female cancers, muscular dystrophy and other neuro-muscular diseases, the poor and/or homeless, various world tragedies, and generic causes to give to other poor counties and the Red Cross, they have a campaign almost every week.
What surprises me is that the staff of the store is a big part of this process, leading me to wonder, do the stores get a percentage of the money they collect? Is there a tax advantage for them such that the store managers force the employees to do this? Or, am I really just that clueless and this is something the store is doing out of the kindness of their hearts?
I guess my suspicion comes from the fact that a year ago, it wasn’t like this, the number of events they had were fewer, and these stores post giant signs on the outside telling you to ignore solicitors and other people outside their stores that are not sanctioned to be there and that they have no affiliation with the store. Ergo it seems strange to ignore the ‘collect for the homeless’ guy outside the store, while going in and getting bombarded by the store staff asking you to give to essentially the same cause.
That’s especially interesting because Vons and Safeway are part of the same chain of Supermarkets. Did you also notice it rachet up in 2012? While it is annoying, I’d feel like kind of a dick complaining about anyone raising money for a charity.
In many states, a paid fundraiser must register with the state. This would be one way to look it up. For example, WA state offers the following search form: http://sos.wa.gov/charities/search.aspx If you look up the charity in question, any paid fundraisers should be listed in their information.
However, I think most of these companies are NOT getting a cut financially. Nor is it just out of the kindness of their hearts. It’s a way for Vons to say “We raised $10 million for cause X” without actually costing them any money. They get free advertising, press releases, good will, etc. as compensation.
I used to work for Trader Joe’s, and the customers often found the people begging outside annoying. I was told that they had to let everyone do that or no one, they couldn’t pick and choose. It wasn’t clear to me if this was because of a law or fear of litigation.
Here in the UK the way it normally works is that fundraisers don’t technically get a “cut” of any donations, they get a fee per donation from the charity. So if you donate £20 the charity will get that £20, but the fundraiser will get paid £1 or £2 by the charity (for instance).
Yes, it gives the CEO bragging rights with all the other CEOs on the golf course. Just like the United Way donations they extort out of their employees.
I have seen employee bulletin board postings reminding cashiers that their fundraising effort (i.e., asking the customers if they would like to make a donation at the checkout) entitles them the chance to win something like an adult bicycle or a gift card for the most money raised.
So, there is an issue of competition amongst employees.
At the checkout, asking if you would like to make a donation, the money is organized in the collection effort (accounted for and documented).
I also work as a cashier and associate for a local home improvement store and we also aggressively solicit donations for Habitat for Humanity. However, being aggressive is not the same as being pushy or being a beggar. Our clientele are very generous and we are able to joke about it and make conversation. Only once did I get a nasty racial slur about it. And because of that the next customer in line made sure to give a extra donation and made it very clear to all around.
I can assure anybody who thinks that a business is skimming anything from a charity, is wrong! Now perhaps the charity might be dishonest or an individual employee could try to skim off it, but it can quickly be caught and the person(s) dismissed immediately. But not the business as an entity. Besides all donations usually go through the cash register as a transaction and is thus recorded as such.
And as others have said its a great way for a business to get good PR in the community.
What I want to know is do these companies who collect your dollar donations on your behalf turn around and claim a corporate tax deduction for their own benefit?
I was under the impression that the post you quoted was exactly what they were doing, take in hundreds of thousands of dollars in donations then toss it to the charity. That way the store had no real loss of revenue, they just donated what the customers gave them.
It wouldnt really be any benefit because on paper its, took in $100K, donated $100K. Unless there was a way that the donation pool can be isolated from store revenues (i dont see how legally) then it could be donated without ever claiming it as money taken in, which would create a nifty tax benefit to the store because it would look like they just pulled that donation out of their ass.
It definitely sounds like a good way for those charities to incentivize businesses to do that. I know they do so with people that are asking for charity donations on the street, so why not businesses.
No, GAAP would not see this as kosher. You can’t collect money on someone else’s behalf and then call it your income, even if you also show it as an expense. The money collected is held “in trust” and then distributed. The bottom line might be the same, but holding it in trust doesn’t inflate income.
Because donations are made to separate cash boxes or are run through the store’s registers, donations are accounted for with the same level of separate detail as any purchased items.
This is how sales tax is accounted for, by the way - money collected and held in trust for another party - so it’s an extremely common issue in accounting.
Everything said so far makes sense, but what is so special about the past year that has increased the number of charities involved and the aggressiveness of the staff in getting the donations? Is it just a coincidence I’m noticing it more, or are there really more of them and more aggression as I originally suggested? Was there some change in the law, union rules, or other event I am not aware of that racheted up this activity to annoying levels in 2012?
Also so many customers can’t stand the deluge of being bothered to donate at the register and begged for money outside of the stores, I really think these are ONLY for CEO’s to brag about amongst each other (also note that THESE people aren’t the ones who have to bother each and every customer to donate), because they do NOT generate any goodwill for the store amongst the community. Customers constantly complain.
I wouldn’t accept this conclusion unless you can point to surveys or studies that these drives actually hurt the stores. People love to complain, but they don’t always do anything about it.
Another point to consider: When Target and Wal-Mart wanted to open stores in our area, they both pointed to very generous local giving campaigns as a point in their favor. The zoning issue actually went to a public vote, so the fate of those stores was decided by a lot of people who never have (and never will) shop there.
