What about Donation requests?

[srw19artist56]

What do you do about Donations? I'm new to the framing business, although I've been an artist for 25 years. I've joined my local chamber of commerce for networking & advertising opportunities, and am asked to donate items for different fundraising efforts. Seems like a good oportunity to get my business out there, but
1. What to donate? & 2. What is tax deductable?
As an artist I've donated original paintings over the years for different causes. But for the artist donating art,- only materials are tax deductable.( so theres a limit to how much original art I can practically give away.) How does it work in the framing business.???

Sharon

[JRB]

It seems like a good idea on paper, in the real world it can get out of control very fast.

When I re-located into a very affluent area of San Diego, I had one of the local elementary schools call me for a donation. They had a major fund raiser going, so I donated a framed print for their silent auction. A few days afterwords, another school called and wanted a donation for their fund raiser. Then another, then their classrooms apparently held auctions as well. Then a dance group wanted a donation.

Within a few months of opening we were getting, not requests, but demands, for merchandise and money for uncountable fund raising drives.

It dawned on me that they were going to put me out of business completely if I continued to try and keep all these folks happy.

My decision was simple, no more donations. At first you would have thought I had publicly told the Pope to got to H***. I could not believe the anger I received from these people expecting merchandise and money. The gist of it was, I would never see a dime in sales from them or their friends. That was about six years ago. I don't think I would have received a dime in sales from them anyway.

I now control my donations through an annual budget, based on my profit picture, not on what my profits might be if I donate to their cause.

John

[Cliff Wilson]

I give gift certificates. $25 or $50 depending on the event an how well I think it will draw for the biz.

[Dave]

In my past life selling artist materials, it too got out of hand. I literally received around 300 requests for donations a month and spent an inordinate amount of time responding. It seems that the more you give the more you are expected to give. Getting on people's lists is not necessarily a good thing.

I do believe that we should give back to the communities we serve and that controlled donations can also be good for business and possibly the best advertising.

I formed a "philanthropic committee". It was composed of one person...me. I had a phone system which answered phone calls and directed calls and one of the options was "requests from our philanthropic commitee". When chosen, it stated that all requests must be made in writing at least 30 days prior to the need for a donation and that if you have already received a donation in this calendar year your request would not be approved again this year. It also asked that you not call to find out the status of your request as the "committee" meets once a month and if your request is approved we will contact you. It also said that we favor donations that aid children and the visual arts. Other polite giberish was also included.

Implementing this procedure was phenominally successful in controlling the spiraling give-a-way that was happening. Before strict implementation we had one year where we actually had a loss, but donated over $ 100,000.00 in goods and services.

Now, on a smaller scale which most of us all operate on...we still need to control our philanthropic activities. It is hard to tell someone standing in front of you who thinks you make a half million a year that you can simply not afford to make donations right now.

I would suggest the following:

1.) I still think that the request should be made in writing on the organizations letterhead and a decision should not be expected immediately. I'm sure in the past I've donated thinking it was for a good cause and it actually was not a charitable organization.

2.) Unless you are quite profitable (fat), don't donate cash. Gift certificates are a good idea as they bring people in the door.

3.) Consider donating through your local Rotary, Kiwanis, Knights of Columbus, Lions, Conservation, or other service clubs. I can assure you that the processes used to qualify their charitable activities are extensive and and that all labor is also donated. The members volunteer their services and are not paid.

We all should give back whatever we can from the blessings we have received. However it is quite easy to donate yourself out of business when your heart strings are tugged.

Dave Makielski

[Julia]

Things got out of hand here as well-especially when we joined different networking groups as well as the Chamber. I'm all for contributing to the community but wish to stay in business!
We have two major auctions that we donate to per year-one for a great museum here in Portland and one to a school in our neighborhood. We limit donations to groups involved in the arts and tell people who call that our budget includes only these groups. Yes, they are disappointed, but there is only so much one can do.
Julia

[JbNormandog]

I also do gift certificates for $25.00 on framing only.
This way I get something in the door and they feel like they got something also.

[briank]

I find charity auctions to be the perfect place to get rid of items that just aren't selling. I'm not making money off of dusting old product, so I might as well get a tax write-off.

[Baer Charlton]

In a round about way Sharon, the G has answered you question, only in true Grumble fashion....

But as you are new, (and welcome to the Grumble by the way) let me explain.

You have Cost Of Goods (COGs), and you have profit.

IF your COGs are high, you don't pay taxes on them, you only pay tax on the Profit.

So a "tax deductable donation" for a business is actually only an increase of COGs, and a lowering of profit. In other words, you don't need that receipt.

As Dave and JRB found out (as a lot of people find out) there is always a hand looking to reach in your pocket.... don't forget that yours is the only hand that should go there.

We are more than happy to contribute a little to the schools of our "active" customers. And as Brian does, it is a great way to remove old stale merchandize from your walls.

It's amazing how insirational a big white space on your wall can become.

We also pass along old frames and oops mats to schools.

[Ron Eggers]

I set up a charitable budget based on a percentage of the previous year's sales. Contributions would be made to local charities, in the form of goods, services or gift certificates only, until the budget ran out for the year. Then we were done for the year.

The vast majority of the recipients were charitable auction events, but I would also do some framing for United Way instead of making an annual pledge.

And, sure, there are a couple of personal favorites, like the domestic abuse shelter and the Housing Partnership, that manage to escape the budget restrictions each year.

[srw19artist56]

Thanks for helping the new kid on the block with all your Words of Wisdom & experiences!!! I love the Grumble!
:D Sharon

[johnny]

You're right John, if you say yes to one benefit and no to another you have some angry people on your hands - even when they are from the same organization! That always kills me. High school person calls: "We're looking for donations of gift items for the after prom."

"Sorry, but I've already donated to the school art show, booster club, fall sports program, spring sports program, yearbook, mom's club night thingy...

"Yes, but this is the AFTER PROM. We want nice prizes so the kids will want to come and stay safe."

"I really don't have anything a teenager would want."

"The parents will see a list of the donations. There will be a program! We're trying to keep the kids safe."

"Like I said, I've already donated..."

Then they get snippy, cuz, why is THEIR cause not worth as much as the others.

But my absolute favorite is when the kids come in with a parent behind them and ask for FIFTY DOLLARS to help send them on a hockey or wrestling or other school trip. The parent has a clip board and is staring me down while I'm looking at their 10 year old. Fifty dollars!!! There were several of these a while back.

[Jerry Ervin]

I feel pretty much like everyone else has said. Be careful, there are people out there that will bleed you dry.

Here, it is the Chamber of Commerce. I have had many a business owner tell me to stay away.

I know a trophy guy that they are bleeding now.

[JRB]

Johnny, in the 17 & 1800s, the charlatans hid behind God. The bulk of the politicians and fund raisers always managed to get God into their campaigns. Basically it amounted to telling the rubes that not voting or not donating was almost a sin, you don't believe in God. In those days, religion was at the top of most folks list, so it worked.

Starting somewhere in the 1970s, I think, the charlatans discovered children as a great way of raising funds or getting votes. I remember the boiler room operations calling just about weekly selling tickets for the fireman's or policeman's benevolent funds. The pitch was always about sending crippled or disenfranchised children to camp or special sports events etc. If you declined, it was always, " you mean you don't want to help our children?"

The politicians operate much the same way, a vote against them or their program is a vote against " the children". It is amazing to me how they will get "the children" into the most unrelated bills and programs. " The war in Iraq is for "The children". or A new highway proposal will somehow have some connection to children in it.

My all time favorite was a T.V. commercial for Barbara Boxer. They only showed it a couple of times. She was campaigning for re-election and she had a couple of young children beside her. About half way thorough her pitch, I guess the script called for her to put her arm around one of the children. It was hilarious, the look on her face and her hesitation seemed like she was doing the most disgusting thing on earth. Even after she accomplished getting her arm around the kid, she was leaning away from her while she continued her pitch about her love of "the children". After they pulled that blunder, they continued with the same rhetoric in the new ads, just no actual children she might have to touch.

I am very hesitant and suspicious about anything that uses children to get my vote or my money.

John

[Baer Charlton]

John, a friend of mine sent me a mpeg of that ad.... I laughed so hard I wet myself.
Boxer & Feinstein the more they are together, the more they look alike.... :D

If it's for the children, it's got my support:t:
http://img.photobucket.com/albums/v337/BaerMPF/MouseSheep01E.jpg
[b]VOTE FOR ME "CUTEST UNDER THE RUG". :D

[JRB]

One third of all property taxes in California is for education, that was voted in many years ago. One half of all lottery proceeds is for education in California. Those two items combined amount to literally many billions of dollars per year, I would guess at more than one billion dollars per school, per year.

Have you EVER seen a local election that did not have at least three propositions on it to raise money for schools?

Every election in San Diego has the same proposition on it, money to repair our aging school buildings, with a guarantee that all of the money will be used for school building repairs, not for administration. Every election for the last four, the proposition has won. In the last election they did not even bother to make new commercials, they used the exact same ones from the previous election, that had already won voter approval. I think we are being taken for a ride by the powers that be.

I think I will open a framing business called "Framing For Our Children". I think it will be almost as successful as the rug merchant who is "Going out of business", perhaps even more.

Heck, if I went public enough, I would probably be able to get a few million in government grants.

John

[Baer Charlton]

I think you're on to something there John. Now throw in a little ol' time religion....

and I think we will have a very successfull national chain franchise church of the square corner for the kids.

Read an article about the senate bill in Arizona that would require the state to spend 65% of their school funding directly in the school room. If it passes, they will lower their classroom size to 22 students, and they will have to hire 4,800 teachers.

If it was implemented in California, just the LA Unified School District would have to hire 11,980 new teachers, and can 3,640 administrators.

Oregon would end up having to hire 9,750 new teachers and do away with over 2,000 admin jobs.
AND we would end up with a teacher/student ratio of 1/20.

[John Ranes II, CPF, GCF]

Originally posted by srw19artist56:
...What is tax deductable?...Sharon,

You've received a load of information on how to handle and creatively support community efforts, but to answer your question above, you need to realize that the "tax deduction" has already been taken.

When you (A business entity), paid for the labor, the materials to produce a framed item, you took those deductions as a cost in producting the product.....You can't deduct them again!.

If you give the item away, think of this as selling the item with a 100% discount.

BTW -- This is an early IRS audit question that agents will ask to see if you understand the basics. :D

John

[Rosalyn]

For my first 'request' I gave a matted,framed print of a field of sunflowers that I took myself. Thought -- good advertising, shows everything I do. The lady that bought it at a silent auction (probaby paid 5 bucks for it) said if I ever did more prints representing the State of Kansas she'd be interested. (I thought -- not at silent auction prices)

Then I decided on gift certificates for framing services. I've given away at least five in the last four years and have never had one used yet. graemlins/shrug.gif

Every year the Chamber of Commerce holds a First Baby of the Year 'contest'. Every year I gave a free setting and free 8x10. Could be used for the baby alone or the whole family. They were NEVER redeemed. graemlins/shrug.gif graemlins/shrug.gif That one I don't understand at all. That's a good chunk of change. Go figure...

Now I just tell them no because it's a waste of time and effort.

[Baer Charlton]

Rosalyn, If you print out a Gift Cert, on you computer, it costs about 25 cents (with a little color). It might even take about an hour to whip one up in Word or Publisher or something. Save it.

Keep printing it. That $25 cert, gives you exposure that you couldn't otherwise buy for 25 cents.

If they redeem it. Great. If they don't, your name is out there, and all for 25 cents.

[D_Derbonne]

I donate gift certificates toward custom framing services with an expiration date.
I generally give them about 3 months to cash them in after the date of the charitable event.

It doesn't cost anything unless they are cashed in and then it is business through the door.