Why businesses love raising money for charity

[blake 3:17]

Why businesses love raising money for charity

By: Ken Gallinger Ethically speaking columnist, Published on Sun Aug 11 2013

Often, when we go into a store, the cashier asks us to donate a small amount to a worthy cause. No doubt the money goes where it should. But I wonder about the ethics of these companies. Do they get a tax deduction for these donations?

I’ve received this question several times; there’s obviously suspicion that a scam is happening. If so, neither the Canada Revenue Agency nor accountants I consulted seem to know how it would work, short of outright theft by the company involved.

According to Philippe Brideau, spokesperson for CRA, “A registered charity can only issue an official donation receipt to the actual donor, the individual or organization that made the gift. If a lump sum is donated without detailed (individual) donor information, the charity will not be able to issue any receipt.”
Businesses collecting small donations should track them separately from general revenue, and submit them, in full to the designated charity. The charity issues no tax receipt. Sometimes, businesses “match” donor dollars with funds of their own; in those cases they get a receipt, but only for the portion they funded themselves. So, as long as no one cheats, there is no direct financial advantage to the business.
Where the business benefits, however, is in goodwill generated. In this regard, these programs have great “bang for the buck.” Businesses are forever being asked to support worthy causes. By running a program like this, businesses appear to be supporting a cause, but it costs little or none of their own money. The donations come from you, but the business gets the glory. Photo op: “John’s Jalopies presents a cheque for $3,000 to the local hospital.” Except it’s not actually John’s money — it’s the sum of the $5 donations customers gave when they got their oil changed.
Where this gets really complicated, though, is when a business runs an event “with proceeds to charity.” “Proceeds,” it turns out, is a weasel word. From a technical accounting perspective, the proceeds of a sale are the amount of money received. So if Joe’s Java sells a coffee for $1.50, and advertises that proceeds go to the local school, he should, technically, give the school the whole buck-and-a-half.
That’s not, however, how the word is frequently used. More often, the charity gets the “profit,” not the proceeds. So Joe deducts the cost of coffee beans, cup, cream and sugar — and gives the school a buck. But he might also deduct the wages of the kid who poured it, even a portion of his rent and hydro bill. So the school now gets a dime. Because you got a coffee and that dime came from his profits, Joe gets a receipt — and so long as it’s a profitable business, he deducts 100 per cent of that dime for tax purposes.
In summary, if a reputable business asks you to give an extra dollar for Sick Kids, the hospital likely gets the money and the business gets brownie points. If someone runs a bake sale with “proceeds” to your favourite cause, the charity is better off if you write them a cheque, get the receipt yourself, and stay on your diet.

[liberlict]

The Bill & Melinda Gates Foundation (B&MGF or the Gates Foundation) is the largest transparently operated[4] private foundation in the world, founded by Bill and Melinda Gates. It is "driven by the interests and passions of the Gates family".[5] The primary aims of the foundation are, globally, to enhance healthcare and reduce extreme poverty, and in America, to expand educational opportunities and access to information technology. The foundation, based in Seattle, Washington, is controlled by its three trustees: Bill Gates, Melinda Gates and Warren Buffett. Other principal officers include Co-Chair William H. Gates, Sr. and Chief Executive Officer Jeff Raikes.

It had an endowment of US$36.2 billion as of 30 September 2012.[3] The scale of the foundation and the way it seeks to apply business techniques to giving makes it one of the leaders in the philanthrocapitalism revolution in global philanthropy,[6] though the foundation itself notes that the philanthropic role has limitations.[5] In 2007, its founders were ranked as the second most generous philanthropists in America.[7] A 2013 Bloomberg report stated that, as of May 16, 2013, Bill Gates had donated US$28 billion to the foundation.[8]

Maybe bourgeois guilt.

[danyboy27]

Maybe bourgeois guilt.

It if was really the case all they would have to do is to transform their buisnesses into cooperatives and they are clearly not doing that.

Has blake said earlier, its mainly a mix of PR and financial perks combined.
It also probably give the owners some sense of gratification of doing so.

[liberlict]

For a philantrocapitalist, the best approach would probably be to not commit commercial suicide by organizing a corp. as a commune, but just exploit the richer poor (by hiring engineers and computer scientists as laborers), and give all that surplus value to the really poor (like those in the East-African drought).

[RedCeltic]

Charity has long been used as a crutch to support the failing economic system of Capitalism. This, in the past, had mainly been undertaken by religious institutions. For example in Ireland, at the same time that the Catholic Church had been telling the Irish not to revolt and be content with the oppression, content with being second class citizens in their own homeland, they were giving out food and blankets. Not to make their situation any better mind you, but just enough so they felt they've done their "christian" duty.

Welfare, can also be thought of in the same way. here in the United States, the democrats constantly defend welfare while republicans rally around the cry that the evil democrats are creating a "culture of dependency" and that its (gasp) socialism!

Liberals love to use people like Bill Gates as poster children for their claim that capitalism can be "good" and all we need to do is have a few generous people like Bill Gates and Bono from U2... sing a few songs and we'll all be fine.

In the end, what saved the Irish was for them to rise up, despite the Catholic Church's "charity" and in the end it will only be rising up that will save the working class. What the GOP does not realize about us Socialists, is that we are also against people laying about collecting money they didn't work for... it's just that we have a better understanding of who that is.