Nov 23, 2022
You know the feeling: you’re at the checkout of the supermarket or a big-box store and you're prompted, either by the clerk or the point of sale system, to donate a few dollars to a certain charity. And although giving a few bucks isn’t a huge ask, you wonder, ‘Where does that money actually go?’
The question of whether retailers benefit from your charity donations isn’t new — the answer is that they don’t, really. But if you’re donating at the checkout you might be missing out on a benefit yourself.
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And with the prevalence of these types of campaigns growing, in-store and online, it’s worth knowing how you could benefit.
How much do charities count on this money?
Point-of-sale fundraisers can be huge money-makers for charities.
More than $600 million was raised during 76 different point-of-sale campaigns in 2020, according to a study by Engage for Good, which works for social impact at the corporate level. The organization conducts the study on charity checkout campaigns biannually.
The 2020 amounts raised were an increase of 24% from what was raised through these campaigns in 2018.
Some charities depend a lot on these types of campaigns, others not quite as much, says David Hessekiel, president of Engage for Good.
“Children's Miracle Network Hospitals is one of the leading charities that have these programs and they have numerous companies with which they work,” says Hessekiel. “And I would say that this is a very important revenue stream for them. For most other charities you know, it's a portion of what they make.”
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'Small asks' are on the rise
Part of the reason for the growth is that the "asks" in these campaigns are usually quite small: a couple dollars, or even a few cents just from rounding up to the nearest dollar.
“These are all small asks, and nice things to be able to do and there's a certain amount of human connection to be able to be helpful,” says Hessekiel.
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And more and more businesses are taking on the challenge of raising funds, from retailers to restaurants and even online merchants.
Hessekiel doesn’t have any data on how many more online merchants are getting involved or how much is being raised through these new efforts, but he expects a significant increase when this year’s survey is released.
“It's consistent with what we saw during the pandemic, which was a huge increase in online shopping … that's for large merchants, as well as small Shopify-type merchants or merchants on Etsy or … eBay. There has been great growth in that channel of giving.”
Sorting out who gets the deduction
The individual ask might be small, but that adds up pretty quickly and many of these campaigns raise more than a million dollars.
And while many people question whether a retailer gets a big tax deduction off the donations of customers, the answer is it depends.
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If you shop at a store that says it’s giving 10% of its proceeds that day to charity, then the store will get the deduction.
But if you’re giving a few dollars at the checkout, keep your receipt, says Howard Gleckman, a senior fellow at The Urban Brookings Tax Policy Center.
“It's your deduction to take, the store doesn't get any deduction,” says Gleckman.
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The big question is whether it’s worth it
Come tax time, you could take that receipt to your accountant to be included in your charitable giving. Although most people don’t end up using them, Gleckman says.
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“The problem is that because so many tax filers now take the standard deduction, you really don't benefit from it,” Gleckman says.
The standard deduction is often larger than the itemized deductions taxpayers could otherwise claim, so most opt for the former.
“We calculate that about 91% of households take the standard deduction and do not take a charitable deduction,” Gleckman says.
In 2021, the standard deduction was $12,550, so a few dollars may not go a long way in getting your charitable deductions higher than that. But if you are a big giver, it could be worth asking your accountant to itemize your donations.
“If you make a point of sale contribution … it's your contribution, it's your deduction, but the vast majority of people won't benefit from it,” says Gleckman. “But to get to the point of the internet rumor: your retailer won't benefit from it, either.”
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Lauren Bird was a former reporter for Moneywise.com. Before writing about personal finance Lauren reported and produced for CBC and BBC Radio. Her work has also appeared in The Atlantic.
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