Giving back isn’t just good for the world, it’s good for business.
As a small business owner, charitable giving allows you to support causes you care about, foster goodwill in your community, strengthen your brand’s values, and receive meaningful tax deductions. Whether it’s donating products, providing services, or giving cash, strategic philanthropy can offer tangible financial and reputational benefits.
Here’s how charitable giving can positively impact your company—and what you need to know to do it right.
Donate Goods or Inventory
Donating excess or unsellable inventory is a smart way to clear out space, avoid waste, and support those in need. As long as the donation is made to a qualified nonprofit and is substantiated with proper documentation, the fair market value (FMV) of your goods is generally tax-deductible.
Example:
Let’s say you own a retail clothing shop in Seattle. You purchased bulk items that didn’t sell. Instead of letting them sit in storage or marking them down to pennies, you donate the clothing to a local shelter or Goodwill. If the donation exceeds $250 in value, the organization should provide a written acknowledgment—which you’ll need for your records and tax filing.
Other product donation examples include:
- Scrap or excess materials from manufacturing
- Unsold or imperfect goods that don’t meet your commercial standards
- Perishable food from restaurants, grocers, or farmers that would otherwise go to waste
In all cases, make sure the donation is properly valued, recorded, and supported by receipts or acknowledgment letters from the nonprofit.
Donate Your Professional Services
Donating your time and expertise to nonprofit events or community efforts is a powerful way to build relationships and reinforce your brand’s mission.
For example, if you’re a Seattle-based accountant and you offer free tax prep services at a local financial literacy fair, you’re making a tangible difference in your community. While your time or services are not directly deductible, the materials, supplies, and out-of-pocket expenses associated with providing those services can be.
Always keep clear records of what you spent and get documentation from the hosting organization. These events often come with marketing or media exposure, helping amplify your community presence—another benefit that isn’t taxed but certainly adds value.
Make Cash Contributions
Cash donations are the most straightforward way to give—and they’re easy to track for tax purposes. Any single contribution over $250 requires a receipt or written acknowledgment from the organization to be deductible.
You can also establish planned giving, where your business donates a set amount monthly, quarterly, or annually. This approach helps you manage your cash flow while consistently supporting causes that align with your mission.
These contributions can be tied to specific fundraising campaigns or pledges (e.g., a gala or matching donations), and they often help establish long-term relationships with community partners.
Charitable Giving Builds Your Brand
Modern consumers and clients pay attention to a company’s values—and where they invest their resources. Contributing to your community shows that your business stands for something greater than profit. It builds trust, supports local development, and positions your company as a leader with heart.
From employee volunteer opportunities to social media campaigns spotlighting your charitable efforts, giving back can help boost morale, retention, and customer loyalty.
Don’t Forget the Tax Rules
To ensure your donations are deductible:
- Donate to qualified 501(c)(3) organizations
- Maintain written records and receipts, especially for contributions over $250
- Record the fair market value of donated goods and document how it was determined
- Track materials and out-of-pocket costs when donating services
Tax rules around charitable giving can vary depending on your business structure (S Corp, LLC, or sole proprietor), so it’s wise to consult with a tax advisor to maximize your deductions and stay compliant.
Final Thought
Charitable giving isn’t just philanthropy—it’s smart business. You strengthen your local community, deepen your brand identity, and potentially reduce your tax bill all at once. Whether you’re donating inventory, offering services, or writing checks, every act of giving has the potential to create lasting value.
Have questions about how to deduct charitable contributions?
Huddleston Tax CPAs in Seattle specializes in helping small businesses across the Pacific Northwest align their giving strategies with their financial goals. Let’s make your generosity count—on your books and in your community.
Photo by Markus Winkler on Unsplash