When Websites Say "Make A Donation"

[gotabiz]

I've seen websites that say "make a donation to this website". If a website is FOR profit ie operating as an S corp, LLC, etc. how can it ask for donations? Isn't that reserved for charities? I'm asking for two reasons: 1. I do not want to establish a business relationship with a business that is not operating above board. and 2. I'm curious as to the legality of such a thing. BTW, I'm talking about US owned business that are operating in the United States.

[Tubby]

Many sites offer users the means to 'donate' This is usually not compulsory. I would see no reason to suspect this is not above board, and if you deal with a company and wish to say 'a special thank you' make a donation.

Many website operators offer extra services that are basically free. you might make an enquiry about an item and may simply get an email note letting you know where it can be found elsewhere, the company may well have gone out of their way to help. The company might have a user forum where customers can get advise - these things can be expensive to run. . . If A company offers extra free services, why not hang a 'make a donation' sign. . . You could come back next week and another free service will be gone.

Many people make donations. Mostly this is done through pay pal. The Taxman has no problem with counting income from PayPal.

If goodwill and customer satisfaction can keep the costs down, this seems very acceptable. I would simply accept this as evidence that this company often goes a bit further to look after the customer . . (If they did not they probably would not get donations)

[SteveGerencser]

Donations have nothing to do with the for profit status of the receiver, it simply determines whether or not you can deduct that donation on your taxes..

[gotabiz]

Yes, Feydakin, but does the Internal Revenue Service allow a corporation to accept donations?

[wige]

as i have known., IRS doesn't collect tax from free willing donation and gifting.

Sure they do. The IRS defines a gift as the free-willed transfer of money or property to another party without receiving the full value of the property in return. In fact, selling items at a loss may even be considered a gift. (Gift Tax (http://www.irs.gov/businesses/small/article/0,,id=164872,00.html)) Gifts are subject to taxation over a certain amount. For taxation purposes, I believe non-deductible donations, such as those to for-profit organizations, would be considered a gift that the recipient must claim.

Bear in mind, it is your money. You can give it to anyone you want, with few exceptions (Al Queda, North Korea...). There is no law against donating your money to an organization that you believe in or want to support (aforementioned exclusions notwithstanding), and I know of no law (I am not an expert of course) restricting who can solicit donations. However, there are some federal disclosure laws that for profit businesses must abide by when soliciting donations, according to the IRS. Among these are the requirement to state that the donation is not tax deductible.

Also, bear in mind that many for-profit businesses will solicit donations for charities that they support/create/run/etc. For example, McDonald's frequently solicits donations for their non-profit Ronald McDonald House charity. Other companies include charitable work as part of their marketing plan - in addition to selling specially branded products, Microsoft, Dell and other corporations solicit donations for MTV's (RED) charity. In other cases, the business itself operates as a charity, even though it sells products and is considered a for-profit company. For instance, One Laptop Per Child donates a laptop to children in need for every laptop they sell. They also solicit direct donations to fund the program.

[weegillis]

Then we have the good folks who bring us all kinds of free software that has proven time and again to be invaluable, such as NoScript and SpyBot S&D, to name two, who operate for a profit if one can be had, but still depend upon donations to fund their efforts.

[SteveGerencser]

What wige said..

[Clarrie]

Requesting donations is commonplace in the Open Source community - a small company might develop applications or plug-ins for other products.

These are normally released "free" to the community, but the developer (company, partnership, sole trader or whatever) may request a voluntary and discretionary donation to go towards the cost developing and supporting the applications that they've released.

These aren't donations in the charity sense of the term.

[John]

Making a donation is no different than giving a tip for good service.
It is income that will be taxed to the receiver (usually) and if you make the donation, or give a tip, as part of earning a living, then you might be able to claim it as an expense.
It does not really matter what people call it: donation, tip, voluntary fee ...

[Sprouter]

I don't think it's right to ask for donations unless you are providing a free service. I provide a free service on my site and yes I am open to donations. I think it's unethical to ask for donations if you are a business making money, it's kind of like the supermarket checkout lady asking for a donation before swiping your credit card for the groceries.

[lpoulsen]

it's kind of like the supermarket checkout lady asking for a donation before swiping your credit card for the groceries.

It's kind of like the restaurant waiter asking for a donation before swiping ypur credit card for the food bill.

And yes, I think that is kind of icky, but for some reason it has become customary.