Charitable donations questions

In My Humble Opinion
1

It’s the time of year when we make our charitable contributions. (Yes, I know many/most charities would rather we give monthly. Too bad. They know they’ll get extra near the end of the year – learn to budget, dammit.)

At any rate, many charities let us know that our contribution will be doubled or tripled through a matching gift. Typically the entity will match up to a certain amount. That is, they will match the total of contributions up to a certain total amount. Is this really how it works? I assume it’s a marketing ploy. If the entity will match up to $1,000,000, and the organization gets only $800,000 in donations, will the entity typically give the full million anyway?

Does the match typically apply to only cash gifts? Our financial advisors have told us several times that for tax purposes it’s better to give shares of stock. If we give stock will the value of the stock be matched?

(OK, I know we’re not giving so much it will make much of a difference to the charity. But I’d still like know if they might be better off if we gave cash.)

2

That’s entirely, 100% up the them. A company I know donated $1, up to $10,000, for each bottle of juice they sold (they produce juice that’s sold nationwide). I was talking to one of the higher-ups there and, I don’t remember what I asked, but he mentioned that it didn’t matter how many bottles they actually sold since the company made the $10,000 donation already.

Those are more questions that I can’t imagine it’s possible for anyone but them to answer.

Better for who? Better for what? Best tax advantage for you? For them? Most money actually making it to the charity?

3

Well, you will be able (potentially) to give 15% more $$$ in appreciated stock than if you gave cash, so I’m sure they’d prefer that. All of the organizations we give to are savvy about stock donations.

4

I’m not sure I follow this. Can you further explain?

I want to give a ten thousand dollar gift to Charity ABC. I have an account that contains both stocks and cash. If I give ABC $10k in cash, then they have $10k in cash. If I give them $10k worth of stocks, then they have $10k worth of stocks.

Now, if I give ABC $10k worth of stocks, I save myself paying capital gains tax later when I would have eventually sold the stock.

But either way, ISTM that ABC has received a gift worth $10k?

5

Just that if you have stock that is very appreciated you can either give $10k in stock or $8500 in cash after selling and paying LTCG. Admittedly it’s unlikely you hold stock that is that appreciated, but your advisor is going to pick the stock that has the highest CG I presume.

6

OK. You are assuming that I would first sell the stock and then donate the cash, rather than choosing between the stock and cash already on hand.

Thanks.

7

If the company is selling (say) one million bottles a year but is messaging that they donate $1 per bottle sold and put the “up to $10,0000 in the fine print, that’s really deceptive. Customers think that by buying that $6 juice they are donating $1 to the charity, but that is only true on January 1-3. For the rest of the year, the $6 goes straight to the company. This is unfortunately a very common practice, and ethical charities will not lend their voice to them.

8

If you have large unrealized gains in stocks it really might make a lot of sense to donate the stock rather than cash. I mean if we are talking about large donations (say $5000 or more).

We (as a family) donate in cash almost all the time, except when we were endowing a scholarship in our parents’ names. Then we had a tax practitioner (CPA & EA) set it up so that we each donated (say) $50k in stock to the school, in which our basis was $20k. We deducted the $50k on our tax returns and did not pay tax on the $30k gain.

We (my employer) can donate saleable product to food banks or other charities and deduct a marked up value. Say we buy turkeys at $20 each and normally sell them at $30. We can donate a thousand turkeys that cost us $20,000, but deduct $25,000 on our tax return.

9

I was hoping I could find a picture of the bottle, but IIRC, it wasn’t at all deceptive. Again, IIRC, it stated right on the bottle what they were donating and how much would be matched.
I did find, what I believe to be, an announcement on facebook about what they’re doing. Interestingly, you could consider this a marketing ploy since, even if no one bought a single bottle, the charity already got the money or at least the ‘matched’ part of it.

Come to think of it, I wonder if some charities that team up with brands to do something like require the business to make the donation, or at least a significant part of it, up front. That makes sure there’s never any question about whether or not the donation was actually made.

Also, in this case, the charity was Make-a-Wish. I don’t recall hearing about any ethics issues with them, but it’s not something I’m really paying attention to. They seem to be pretty well liked.

The post on facebook states

Calypso is working with Wisconsin Retailers throughout the state to establish the “Make-A-Wish Lemonade Stand”. With each bottle sold this year, Calypso will make a donation to Make-A-Wish Wisconsin guaranteeing a minimum of $50,000 towards their efforts. They kicked off their contributions last night at Wish Night with an initial gift of $25,000.

That’s vaguer than what I recall it saying on the bottle itself, but again, I don’t recall them hiding behind any fine print.

And looking some more, I did find a bottle, but not a good enough picture to see what it says at the bottom. But I do see, what appears to be “$50,000” on the bottom line.

10

This is very different than what you described.earlier. Much more vague,

11

To answer your first question – it depends. Sometime matches are true matches and whoever is providing the matching funds will only give the amount to be matched. So in your scenario, the organization would only get $800,000 in matching funds. This is how employer matching gift programs run, and there are other third parties that provided this type of match.

In other situations, the match is more of a challenge grant where the person or organization providing the match will still give the full amount (or may have already made the gift). What often happens in these situations is that your specific gift may direct the matching funds to a specific program at the organization. For example, I could provide (theoretically) a challenge of up to $100,000 to a college that will match donations, and if one donor gifts $10,000 to the English department and one donor gives $10,000 to the Math department, each department would get an additional $10,000 from the challenge fund. If no one else gave, the remaining $80,000 would go to wherever I specified.

For your questions about cash versus stock, I’ve never seen a match that wouldn’t match both.