You can’t deduct the value of services donated to nonprofits. Not sure your friend is as knowledgeable as stated. Outside accounting is expensive and the IRS standard is to start doing it once your donations hit $2,000,000/year, which we haven’t hit yet. Also, SIAI recently passed an IRS audit.
Fifteen seconds of Googling resulted in Deloitte’s pro-bono service, which is done for CSR and employee morale rather than tax avoidance. Requests need to originate with Deloitte personnel- I know a friend who works there who might be interested in LW, but it’d be a while before I’d be comfortable asking him to recommend SI. It’s a big enough company that it’s likely that there are some HPMOR or LW fans that work there.
“Applications for a contribution of pro bono professional services must be made by Deloitte personnel. To be considered for a pro bono engagement, a nonprofit organization (NPO) with a 501c3 tax status must have an existing relationship with Deloitte through financial support, volunteerism, Deloitte personnel serving on its Board of Directors or Trustees, or a partner, principal or director (PPD) sponsor (advocate for the duration of the engagement). External applications for this program are not accepted. Organizations that do not currently have a relationship with Deloitte are welcome to introduce themselves to the Deloitte Community Involvement Leader in their region, in the long term interest of developing one.”
Deloitte is requiring a very significant investment from its employees before offering pro bono services. Nonetheless, I have significant connections there and would be willing to explore this option with them.
You might want to pm this directly to lukeprog to make sure that he sees this comment. Since you replied to Vaniver, he may have not seen it, and this seems important enough to merit the effort.
In California, a non-profit is required to hire a CPA audit once donations hit $2m/yr, which SI hasn’t hit yet. That’s the way in which outside accounting is “IRS standard” after $2m/yr.
SI is in the process of passing an IRS audit for the year 2010.
Eliezer is right: RobertLumley’s friend is mistaken:
can the value of your time and services while providing pro bono legal services qualify as a charitable contribution that is deductible from gross income on your federal tax return? Unfortunately, in a word, nope.
According to IRS Publication 526, “you cannot deduct the value of your time or services, including blood donations to the Red Cross or to blood banks, and the value of income lost while you work as an unpaid volunteer for a qualified organization.”
He may be referring to the practice of being paid for work, then giving it back as a tax-deductible charitable donation.
My understanding is that you can also deduct expenses you incur while working for a non-profit—admittedly not something I can see applying to accounting. There’s also cause marketing, but that’s getting a bit further afield.
“the big four accounting firms often do pro bono work because it can be a tax write-off” doesn’t sound much like “being paid for work, then giving it back as a tax-deductible charitable donation”.
In talking to him, I think he may have just known they do pro bono work and assumed it was because of taxes. Given Vaniver’s comment, this seems pretty likely to me. He did say that the request usually has to originate from inside the company, which is consistent with that comment.
You can’t deduct the value of services donated to nonprofits. Not sure your friend is as knowledgeable as stated. Outside accounting is expensive and the IRS standard is to start doing it once your donations hit $2,000,000/year, which we haven’t hit yet. Also, SIAI recently passed an IRS audit.
Fifteen seconds of Googling resulted in Deloitte’s pro-bono service, which is done for CSR and employee morale rather than tax avoidance. Requests need to originate with Deloitte personnel- I know a friend who works there who might be interested in LW, but it’d be a while before I’d be comfortable asking him to recommend SI. It’s a big enough company that it’s likely that there are some HPMOR or LW fans that work there.
Interesting!
“Applications for a contribution of pro bono professional services must be made by Deloitte personnel. To be considered for a pro bono engagement, a nonprofit organization (NPO) with a 501c3 tax status must have an existing relationship with Deloitte through financial support, volunteerism, Deloitte personnel serving on its Board of Directors or Trustees, or a partner, principal or director (PPD) sponsor (advocate for the duration of the engagement). External applications for this program are not accepted. Organizations that do not currently have a relationship with Deloitte are welcome to introduce themselves to the Deloitte Community Involvement Leader in their region, in the long term interest of developing one.”
Deloitte is requiring a very significant investment from its employees before offering pro bono services. Nonetheless, I have significant connections there and would be willing to explore this option with them.
You might want to pm this directly to lukeprog to make sure that he sees this comment. Since you replied to Vaniver, he may have not seen it, and this seems important enough to merit the effort.
Thanks for the excellent idea! I did in fact email Lukeprog personally to let him know. :)
Thanks. As I said, this is something on our to-do list, but I didn’t know about Deloitte in particular.
Clarifications:
In California, a non-profit is required to hire a CPA audit once donations hit $2m/yr, which SI hasn’t hit yet. That’s the way in which outside accounting is “IRS standard” after $2m/yr.
SI is in the process of passing an IRS audit for the year 2010.
Eliezer is right: RobertLumley’s friend is mistaken:
He may be referring to the practice of being paid for work, then giving it back as a tax-deductible charitable donation. My understanding is that you can also deduct expenses you incur while working for a non-profit—admittedly not something I can see applying to accounting. There’s also cause marketing, but that’s getting a bit further afield.
In the one instance of a non-profit getting accounting work done that I know of, the non-profit paid and then received an equal donation. Magic.
This is exactly equivalent to not paying, which is precisely the IRS rationale for why donated services aren’t directly deductible.
“the big four accounting firms often do pro bono work because it can be a tax write-off” doesn’t sound much like “being paid for work, then giving it back as a tax-deductible charitable donation”.
In talking to him, I think he may have just known they do pro bono work and assumed it was because of taxes. Given Vaniver’s comment, this seems pretty likely to me. He did say that the request usually has to originate from inside the company, which is consistent with that comment.
Ah. That would make more sense.