Corporate Generosity: How to Record Charitable Gifts in QuickBooks

Author: Joan Koehne |

Blog by Prosperity Bookkeeping LLC

Simple acts of kindness contribute to a more positive, optimistic, and happier community. Many companies set a budget for charitable giving at the start of the year. Philanthropy serves a number of purposes – most importantly, to positively impact the community. At Prosperity Bookkeeping, we support causes in a wide range of areas, including ending poverty (Circles USA - can you spot me in the video?), inclusivity (myTeam Triumph), appreciation for the arts (The Art Garage), and so many more.

Benefits of Charitable Giving

Companies benefit in many ways from donating to charities. First, donations support the mission of the nonprofits that you, your employees, and your customers care about. Second, employees feel good about working for an organization that gives back, so charitable giving is a vital part of the corporate culture. Third, when you give a charitable donation, you affiliate your company with the recipient, opening new avenues for collaboration. And don’t forget, giving to charity is good PR. So, consider sharing donation photos and information on social media, newsletters, and other marketing platforms. From a marketing standpoint, this is a two-way relationship. The charity can also publicize your charitable support, giving your organization recognition and credibility.

Charitable Tax Deductions

Lastly, charitable donations may qualify for a tax deduction, although the 2017 Tax Cuts and Job Act makes it harder to claim these gifts as tax deductions. Your tax adviser can provide the best financial advice regarding a charitable donation. One quick tip: Make sure the charity is registered with the Internal Revenue Service as a 501(c)(3) organization. The IRS offers a Tax Exempt Search Tool to confirm tax-exempt status.

Forms of Charitable Donations

You can choose a variety of ways to give to charity:

  • Donate Cash
  • Donate products, equipment, or services
  • Volunteer at a nonprofit organization
  • Sponsor a team or an event
  • Coordinate a charity drive to collect books, toys, food, or other nonperishable items

Recording Donations in QuickBooks

For the integrity of your bookkeeping, you need to record charitable donations in your chart of accounts. Recording a cash donation in QuickBooks is different than recording a donation of products or services. When you donate cash, you can establish the recipient the same way you do for a vendor. When you make the donation, record it as a payment in an expense account dedicated specifically to tax-deductible donations. If you don’t have an expense account for charitable giving, select Add New from the dropdown list in the Account column to create a designated account for charitable contributions.

QuickBooks recommends the following five steps to record a product and services donation:

  • Create an invoice for the products or services you donated.
  • Create an account for charitable contributions.
  • Create a product/service item called Charitable Contributions.
  • Issue a credit memo to the customer.
  • Verify the credit memo was applied to the invoice.

Generosity Never Goes Out of Style

Charitable giving provides nonprofits with the much-needed funds and support to carry out their mission of helping the community. By making a charitable donation, companies give back to the communities that help keep them afloat. Philanthropy supports the causes you love, builds relationships with nonprofit partners, and distinguishes your business from the competition. Generosity never goes out of style. After all, it’s more blessed to give than receive (Acts 20:35).

Contact Prosperity Bookkeeping

For more business finance tips and professional bookkeeping services, contact Prosperity Bookkeeping. From our office in Green Bay, Wisconsin, we provide virtual bookkeeping, payroll, and accounting services for clients throughout the U.S. We make bookkeeping manageable for small businesses.

About the Author: Once a mild-mannered reporter and editor, Joan Koehne took on the persona of her alter ego, Wonder Writer, to launch Writer to the Rescue, the content writing division of Packerland Websites. Wonder Writer is “saving the world one word at a time” with power-packed content marketing for digital and traditional media outlets.