Tax treatments

The beneficiary (only gifts to eligible organizations are deductible), the way the facility is set up, and the sort of property you select to contribute all play a role in the tax benefits of a charitable contribution. Cash, company assets, or investments—all diverse sorts of property—offer various tax benefits and disadvantages:


As indicated above, even small cash gifts should be supported by a receipt from the organization or a bank record (such as a canceled check or statement). Cash donations are straightforward.


You can write off travel expenses and any costs associated with volunteering. Volunteer time, however, is not tax deductible.

Tangible real estate

Anything can be donated, including used clothing, furniture, and automobiles. According to IRS tax regulations, gifts of used clothing and home items must be “good” or better. You may deduct the lesser amount you paid for the item or its current reasonable worth if it is unrelated to the charity’s objective. Old garments contributed to the Salvation Army are an example of property linked to the charity’s mission that is typically fully deductible based on its current reasonable value. Although some charities will offer advice, you must finally decide the matter for tax purposes.

Short-term capital assets and regular income properties

Assets like inventory held for sale by a firm, donor-created art, or manufactured goods you generated are typically considered ordinary income property. Additionally, any short-term capital assets kept for less than a year, such as investments like stocks, are likewise regarded as regular income property.

The IRS limits how much you can deduct to the fair market value less the amount of ordinary income or short-term capital gain that would have been realized if the donating assets had been sold on the day of the contribution. In other words, your deduction will often be restricted to the asset’s cost basis.