Considerations in Corporate Giving

Summary

Canada's businesses claimed just over $1 billion in charitable donations in 2003. Some charitable and nonprofit organizations benefit more from corporate donations than others, and certain types of organizations are more attractive to corporate donors. Only 20% of Canada's 161,000 charitable and nonprofit organizations reported that they received corporate donations, grants, or sponsorships in 2003. There are several reasons for this: companies lack information about the needs and potential of charitable and nonprofit organizations and the possibilities for corporate support and partnerships; many nonprofits lack the organizational capacity to negotiate and build effective partnerships with the private sector; and the accountability and reporting requirements of many corporations may make it difficult for smaller charities and nonprofits to manage the administrative aspects of partnering with businesses, which may make financially well-resourced organizations more attractive to corporate funders. This article addresses certain tax aspects of corporate giving, specifically, the tax aspects of giving that are specific to corporations as opposed to individual donors. It is not intended to be an exhaustive review of the tax rules governing donations by corporations but rather discusses and highlights the tax aspects of charitable giving that are relevant to corporations and to those who provide tax planning opportunities for corporations and their shareholders.