In a viral TikTok video, an advertising expert says he doesn’t donate to charity through large corporations because the company uses the money to offset their taxes. He’s wrong.
In the video, Nick Prisco (@nick.prisco) urges people not to donate to charity when checking out at a company. He falsely claims that the company has already made the donation, and they get their money back from customers.
He alleges that if a company donates a million dollars, they write off the amount from their taxable income and then have the customer replenish that money also tax-free.
“If you think for one second these giant companies actually care about donating to any cause, you are sadly mistaken,” Prisco says. “They’re just doing it to look good.”
Prisco adds that the only time people should donate through a company is when it’s a small business and a percentage of sales goes to charity since you can make the argument that you’re purchasing something and are contributing to a good cause at the same time.
The video has more than 360,000 views and over 1,200 comments as of Thursday morning. Many commenters were also misinformed and largely agreed with Prisco’s take.
@nick.prisco PLEASE keep this in mind #nickprisco ♬ original sound – Nick Prisco
The claims in Prisco’s video were debunked by a USA Today article that referenced several tax experts.
There are two ways companies can raise money for charity at checkout: either by donating a portion of their earnings or by collecting customer donations, according to the article.
When a company donates a percent of its earnings, it is eligible for up to a 10% deduction on its pretax income. When doing this, companies must register in a “co-venture” with the government.
However, when customers donate at checkout, the company essentially acts as a collector or middle person. They cannot make any tax claims on this money since it comes from customers, not the company.
“A company (or an individual) can only claim a tax deduction from income,” Renu Zaretsky, a writer for the Urban-Brookings Tax Policy Center in Washington, D.C., told USA Today. “A company cannot recognize a charitable donation made at a cash register by a customer as income, because no transaction (exchange of a good or service for money) occurred.”
Many people don’t know that in these scenarios, the customer is the only one who can claim a deduction on the donation using their receipt—but this is not a common practice for most people.
The Urban-Brookings Tax Policy Center stated that this type of misinformation that primarily reaches young people hurts charities and the public’s understanding of tax policies. In 2018 alone, companies raised more than $486 million from these checkout campaigns, according to an Engaged for Good report.
The Daily Dot reached out to Prisco for comment via email.