The Evolution of the Corporate Gift

The first recorded corporate gift dates back to 1883 when John D. Rockefeller gave his employees calendars. By the 1900s companies were handing out branded pens and keychains as fun promotional tokens. In the 1950s business gifts became a bit more creative as company merch expanded to t-shirts and coffee mugs. In more recent years, as businesses started seeing the connection between brand association and customer loyalty, the purpose of corporate gifts began to shift.

Fast forward to our post-pandemic world. Today’s business owners, HR managers, and marketing execs are looking for meaningful corporate gifts to attract, motivate, and retain employees and strengthen relationships with clients. Before you get lost in the virtual vortex Googling deductible business gifts, let’s take a look at the tax implications for your business and your associates.

Choosing Deductible Business Gifts Can Be Taxing

Although corporate gift giving has evolved, the fifty-five year old tax law has not. According to the IRS, organizations can deduct gifts of up to $25 for each individual per tax year. This includes direct gifts given to an employee, or indirect gifts given to the family of an employee or to a client. The law does not account for inflation or the fact that companies want to give something more thoughtful than a holiday ham, service award plaque, or the predictable corporate gift basket.

In fact, let’s take a peek at the cellophane wrapped basket filled with sweet and savory snacks. Gourmet baskets range anywhere between $50 to $200 or more. If you send a gift basket to your clients every year, you can only deduct $25 per basket. You’ll have to absorb the remaining expense as a loss. What’s more, what if some of your employees or clients have food allergies or an aversion to alcohol? Not only are you losing out on tax benefits, but your gift may not be well-received. That is one reason why many companies are embracing retail gift cards so recipients can choose their gift. However, your business associates may not be smiling when tax season rolls around.

Tax Ramifications of Retail Gift Cards

As many companies transitioned to remote and hybrid work models, gift cards became a popular way to show appreciation to employees. They are easy to send and recipients can use them to buy what they want. In a recent survey, gift cards – both physical and digital – account for 37% of all corporate gifts. In fact, more than half of the study participants include gift cards in their corporate gifting programs. The average card value is between $75.00 and $100.00 — much higher than the tax limit. 

Regardless of the amount, traditional gift cards raise a red flag with the IRS. Gift cards are considered cash equivalents and are subject to payroll and income taxes. That’s not exactly the type of end-of-year bonus employees want to receive. For example, if you give your employees a $50 Thanksgiving turkey it is not considered taxable income. Conversely, if you give them a $50 Visa gift card to purchase a holiday turkey, the gift card value is considered taxable income. When you give employees gift cards of any denomination, you must withhold federal, state, and local income taxes and deduct the employee’s share of Social Security and Medicare taxes. Next, you’ll have to pay unemployment tax on these amounts. Then you’ll have the added headache of reporting the taxable payments to the IRS on your quarterly payroll tax report, and the annual income tax report for employees and the Social Security Administration.

Employee Gifts That Impact More Than Your Tax Return

Here’s the good news. There is one type of gift card that is 100% tax deductible for your business and has no negative tax repercussions for you or your employees. TisBest Charity Gift Cards are the best deductible business gifts for employees without the head-spinning tax ramifications. They work just like traditional gift cards, except you decide the donation amount and your employees pay it forward to their favorite charities. Your business writes off 100% of the card value. (You file the deduction, your employees do not.) 

Unlike traditional gift cards, TisBest Charity Gift Cards cannot be redeemed for cash. When you buy TisBest Charity Gift Cards, you’re making a charitable donation to TisBest Philanthropy, a donor-advised fund and IRS approved 501(c)(3) charity. The tax-deductible donation happens when the charity gift cards are purchased, but they can be given and redeemed anytime. At the time of your purchase, you’ll receive an itemized receipt to submit with your corporate tax return. When employees redeem their cards, TisBest will send 100% of the gift card value to the charities of their choice.

Removing the Red Tape from Client and Vendor Gifts

Sending gifts to clients and vendors adds another layer of complexity. First, ask yourself if your gesture will be well-received by all recipients — regardless of religious or cultural beliefs, dietary restrictions, or other personal preferences. Second, even if you find the perfect gift, some organizations, government employees, and C-suite level executives are contractually unable to accept them.

TisBest Charity Gift Cards are the perfect way to show your appreciation to clients and vendors because they are not monetary gifts. The value of the card is a charitable donation. Your client simply enters their gift card code on the TisBest website and designates the receiving charities. Plus, these deductible business gifts are easily trackable, allowing you to gain unique insight about your clients’ values. After clients redeem their cards, your TisBest spend report will update to show which charities they supported. On your next business call you can talk about their charitable giving experience and learn about their affinity for certain causes. It’s a great way to strengthen relationships with your clients without all that red tape.

Deductible Business Gifts Exempt from the $25 Limit

Whether you buy a $25 dollar card or $2,500 dollars worth of cards, TisBest Charity Gift Cards are 100% tax-deductible for your business and are not subject to tax withholding for your employees or clients. That means you can send as many cards in any denomination as often as you like. TisBest Charity Gift Cards are the best deductible business gifts to:

• Congratulate an employee for a job well done
• Motivate your team with a unique team-building gift
• Welcome new employees
• Thank your clients for contributing to your company’s success
• Spread holiday cheer
• Give to prospective customers at trade shows

In addition to the recognition, you’ll be giving them the opportunity to support the causes that are near and dear to their hearts. Plus, regulated industries can rest assured as charity gift cards are FINRA-compliant. It’s a gift that will make your employees, clients, your compliance officer, and your CFO happy.

One Donation, One Receipt, Multiple Charities

Rather than donating to individual charities on your associates’ behalf, you can support all of their varied favorite charities in one transaction through TisBest. TisBest Philanthropy is a 501(c)(3) registered charity under EIN 20-8630809. When you purchase TisBest Charity Gift Cards for employees and clients you’ll receive one receipt for your total donation. In turn, your gift card recipients pay their card value forward to any of the 1.8 million U.S.-registered 501(c)(3) organizations on the TisBest website. You can rest assured that your donation will benefit reputable charities – all while remaining anonymous to the receiving organizations.

Redefine Corporate Gifting

Before we head into the holiday season — the most popular time of the year for corporate gifts — consider the tax ramifications for you and your associates. You could spend hours scouring the internet for deductible business gifts and consulting a tax professional – or simply join us on the mission to #RedefineGifting with meaningful gifts that give back.

Order Your TisBest Charity Gift Card Today! You know your clients and employees best. We’re here to help you connect with them. Contact our sales team today at 206-501-3005 or sales@tisbest.org and we’ll design a custom-branded TisBest Charity Gift Card for you. Or create your own in just a few easy steps!

The post Deductible Business Gifts That Pay Forward and Give Back appeared first on TisBest.

With Giving Tuesday occurring this week, did you know that there are 1.6 million tax-exempt organizations in the United States?
That number represents a lot of people striving to create a better world. From Civil Rights charities, organizations that help the homeless population, faith-based nonprofits, environmental initiatives, and more, there is no shortage of 501(c)(3) nonprofits to which Americans can donate their money and time. 
In fact, Americans wrote off $449.64 billion in charitable donations in 2019. Wow! 

Where Are You Donating This Giving Tuesday?

With Giving Tuesday and the end of the year approaching quickly, you’re likely considering a charitable donation toward an organization you care about. Or, perhaps you’re new to charitable giving and hoping to discover which nonprofits best reflect your individual moral compass.
With so many options in the United States, it’s wise to ask several important questions before donating money to a charitable organization.
If you need help deciding where to donate, TisBest is here to help with some decision criteria.

1. How Far Will My Giving Tuesday Dollar Go?

Healthy charities demonstrate transparency. You should be able to find information on an organization’s website regarding all costs and financials from each fiscal year. If you can’t find it online, ask for it.
Keep in mind that all nonprofit organizations have overhead costs. This may include salaries for employees, rent and insurance on office space, and more. That being said, the charity you donate to hopefully strives to keep their overhead costs low in order to spend more funds on their cause.
Before donating, find out how far your dollar will go by researching or asking what percent of each dollar goes toward overhead costs. Organizations that have more financial efficiency and sustainability are more likely to achieve their mission in the long run. 

2. Can My Giving Tuesday Donation be a Tax Deduction, and Does That Matter to Me?

There are lots of tax exempt charities out there, as we mentioned above. But let’s unpack the deductible type versus organizations to which donations do not qualify for tax deductions. How the organization is registered with the IRS and whether a donation can possibly result in a tax write-off are separate questions from whether your individual taxes will benefit from the donation. Here is a great breakdown on what deduction level it takes to itemize. Bottom line: even if the charity qualifies as deductible, everyone doesn’t benefit from writing off their charitable donations.

“Giving Tuesday” does not have to mean “Tax-deductible Tuesday”

When it comes to charitable donations qualifying for deductions, often this tax deductible designation is used as a litmus test for whether a charity is legitimate. And most of the charity listings on the internet will rely on the IRS 501c3 designation to source their list. There are a handful of reasons why some legitimate nonprofits are not included. 
For example, there are younger or smaller charities out there with lower overhead — think “startup scrappy” — which may be very impactful but simply do not have 501c3 status yet. In fact, when the IRS was restructured in 2017 it caused long delays for even those nonprofits that had filed for their federal status. 
In other cases, entirely legitimate, tax exempt charity organizations could have different IRS designation types like a 501c4, which indicates the donation is not deductible. There are over 150,000 501c4 nonprofits that often strive to bring systemic impact on a major issue you care about through political channels like lobbying. 

Helpful Resources for Charitable Tax Deductions

However, if you are considering this donation part of your annual income tax strategy, you should confirm before donating whether or not donations to an organization are tax deductible. If you aren’t sure, check the charity’s website for its Employer Identification Number (EIN) number and look it up on Charity Navigator to confirm the status.
And oftentimes, major nonprofit organizations will have separate arms or funds that are not 501c3. That’s also something to be aware of as you make your donation. Charity Navigator has compiled an additional list of considerations regarding the tax benefits of giving here.

3. What is the Underlying Issue and Does the Charity’s Mission Address it?

Most, if not all, charities are well-intentioned. 
However, as explained in the book When Helping Hurts: How to Alleviate Poverty Without Hurting the Poor and Yourself by Steve Corbett and Brian Fikkert, many charities do more harm than good by failing to consider the complexities of the larger issue in their efforts. 
A tangible example of good intentions actually hurting a local economy is told in the story of a Rwandan egg farmer who relied on his daily egg sales for income. When a well-meaning American church began sending free eggs to the community, the farmer was no longer able to make a living. The demand for his supply had disappeared overnight. 
Likewise, the Netflix film Poverty, Inc. examines problems within the multibillion-dollar poverty industry and urges viewers to ask how they may be part of the problem. It talks about having a mind for the poor versus just having a heart for the poor. Check out the trailer for this documentary.
With regards to complex foreign issues in particular, novelist Teju Cole eloquently personifies this controversial sentiment in a 2012 Atlantic article: 

“His good heart does not always allow him to think constellationally. He does not connect the dots or see the patterns of power behind the isolated “disasters.” All he sees are hungry mouths, and he, in his own advocacy-by-journalism way, is putting food in those mouths as fast as he can. All he sees is need, and he sees no need to reason out the need for the need.”

Diligence is the Key

But many charities truly do strive to improve systemic issues, empower people, and help them recognize their inherent dignity. This is why donors must critically examine the effect of a nonprofit’s work in a community. Supporting an organization certainly feels good — but the impact always extends far beyond that feeling. Dig in and do the research. Make sure the organization’s mission is one you believe in. As Cole puts it, ”If we are going to interfere in the lives of others, a little due diligence is a minimum requirement.”

4. What Are This Charity’s Accomplishments and Long-term Goals?

Before making a contribution, find out what milestones the nonprofit in question has already reached in its mission and what long-lasting impact it plans to make in the world. Questions to ask may include:

• What results have you already seen through your efforts?
• What are the organization’s goals for the next year, five years, and ten years? 
• Do you have a plan in place to accomplish those goals?
• What kind of results will my donation help with?
• How do you report progress to supporters and donors?

This will give you insight as to whether or not this charity is a good fit for your donation. If they can’t communicate a defined, actionable plan, it may not be worth partnering with financially. 

5. What Is This Organization’s Charity Navigator Score?

Charity Navigator is a helpful tool that uses a Rating Methodology on all nonprofits in the United States.
The goal of Charity Navigator’s system is to help generous people like yourself donate with confidence to effective and transparent organizations. 
You can search for any charity on the website to see its score, discover new organizations by topic, view Top Ten lists, and more.
Curious about which charities have perfect scores? Here are just a few of them:

All Hands and Hearts Smart Response

Mission: All Hands and Hearts effectively and efficiently addresses the immediate and long-term needs of communities impacted by natural disasters. We communicate directly with local leaders and community members and then deploy our unique model of engaging volunteers to enable direct impact, helping to build safer, more resilient schools, homes, and infrastructure.
Through community and volunteer engagement, we focus on helping families recover faster after natural disasters using our Smart Response strategy. In doing so, we strengthen both our volunteers and the communities in which we serve.
Visit the website | See Charity Navigator Score

Equal Justice Initiative

Mission: EJI is committed to ending mass incarceration and excessive punishment in the United States, to challenging racial and economic injustice, and to protecting basic human rights for the most vulnerable people in American society.
Visit the website | See Charity Navigator Score

WildAid

Mission: WildAid’s mission is to end the illegal wildlife trade in our lifetimes. WildAid works to reduce the demand for illegal wildlife products and to promote energy conservation, via global public awareness campaigns. WildAid also strives to create model field conservation programs and to strengthen marine protected areas around the world.
Visit the website | See Charity Navigator Score

ProPublica

Mission: Founded in 2007, ProPublica is an independent, nonprofit newsroom that produces investigative journalism in the public interest. Our work focuses exclusively on truly important stories, stories with “moral force.” We do this by producing journalism that shines a light on exploitation of the weak by the strong and on the failures of those with power to vindicate the trust placed in them. In the best traditions of American journalism in the public service, we seek to stimulate positive change. We uncover unsavory practices in order to stimulate reform. We do this in an entirely non-partisan and non-ideological manner, adhering to the strictest standards of journalistic impartiality.
Visit the website | See Charity Navigator Score

Ready to Create a Better World?

Of the millions of organizations, which ones resonate with you? 
By asking the right questions and finding an organization that is the right fit for your values, you’ll feel the true impact of partnering with a world-changing charity. 
Finally, to truly help create a better world, we encourage you to consider a lifetime of giving — not just a once-a-year donation.

See the Charities TisBest Partners With

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