Time for a warehouse reorganization? Consider in-kind donation for excess inventory

Warehouse experts will tell you that a good warehouse reorganization improves efficiency, optimizes shelf space and enhances safety, among other benefits. It also lets you spot non-value-added items that you will want to get rid of.

A reorganization is hard enough without having to deal with the logistics of discarding unwanted inventory. A donation of excess or unneeded inventory to a nonprofit gifts in-kind organization could be the answer. When companies donate their stock ?to a gifts-in-kind organization, they don’t have to spend ?valuable staff time identifying deserving charities and working out logistics.

In-kind donations – or product philanthropy – helps nonprofit community organizations, schools and churches while generating a handsome tax deduction for a regular C Corporation.

About product philanthropy

Gifts-in-kind organizations are nonprofits that collect new product donations and then turn them over to qualified nonprofits. Basically, they do the legwork for you. They accept an array of overstocked items, whether it’s a truckload or a few cartons and ensure those items go to qualified 501(c)3 nonprofits.

For example, NAEIR gives away $100 million a year to schools, churches and other nonprofits, enabling them to stretch their budgets in an era of soaring inflation. Since its founding, NAEIR has received donations from more than 8,000 U.S. corporations and distributed more than $3 billion in products.

A reputable in-kind donation organization will not only give you a full accounting of how your donation was used; it ensures that merchandise doesn’t end up on the open market where its brand can be damaged. Or in a landfill.?

All that and a tax deduction, too

In these challenging times, an in-kind donation may benefit the bottom line as well. Section 170(e)(3) of the Internal Revenue Code states that when Regular C corporations donate inventory to qualified nonprofits, they can receive a tax deduction equal to?up to twice the cost of the donated products.?

For example, if a product costs $10 and retails for $30, the difference is $20. Half of $20 is $10. So, $10 (product cost) plus $10 (half the difference) equals a $20 deduction. As $20 does not exceed twice the product cost, it is an allowable deduction.

Best of all, a company has the satisfaction of knowing it has helped a school or nonprofit better serve its students or members. In addition, the positive feedback generated by such generosity can burnish a company’s reputation.

If spring-cleaning time is warehouse-reorganization time for your company, an in-kind donation should be top-of-mind as you identify excess or unwanted inventory.