Business Food Donations
Access to healthy food during the COVID-19 pandemic has been a significant concern for many. The federal government has incentives in place to encourage businesses with extra food inventory to donate to nonprofit organizations to help with food shortages.
Bill Emerson Good Samaritan Food Donation Act of 1996
The Act states that a person or gleaner (a person who harvests food for free distribution to the needy) shall not be subject to civil or criminal liability arising from the nature, age, packaging or condition of apparently wholesome food or an apparently fit grocery produce that the person or gleaner distributes in good faith to a nonprofit organization for ultimate distribution to needy individuals. It does not provide such protection in instances of gross negligence or intentional harm.
Apparently wholesome food is intended for human consumption that meets all quality and labeling standards imposed by federal, state, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions.
Prior to the Act, states had varied laws that caused many potential donors to hesitate to donate food. The Bill Emerson Good Samaritan Food Donation Act provided consistency for all states to encourage food donation.
Internal Revenue Code 170(e)(3) and CARES Act
The Code allows for tax deductions to all types of businesses that donate apparently wholesome food to a qualified organization. The deduction for wholesome food inventory equals the lesser of (1) basis plus half of the property’s appreciation, or (2) twice the property’s basis if the other requirements are met. The other requirements include the following:
- The use of the food is related to the donee’s tax-exempt purpose;
- The food is not sold or exchanged by the donee for money, property or services;
- The taxpayer (business) receives a written statement from the donee that the use and disposition of the food will be in accordance with items 1 and 2 above; and
- If the food is subject to regulations under the Federal Food, Drug, and Cosmetic Act, as amended, the food must satisfy those regulations for the 180 days prior to and including the date the food is donated.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes a provision that increases the deduction for businesses donating food to 25% of taxable income for 2020. Prior to the implementation of the CARES Act the deduction was limited to 15% of taxable income.
U.S. Federal Food Donation Act of 2008
The purpose of the Act is to encourage executive agencies and contractors of executive agencies to the maximum extent practicable and safe, to donate excess, apparently wholesome food to feed food-insecure people in the United States. The Act requires Federal contracts above $25,000 for the provision, service, or sale of food in the United States, to include a clause that encourages, but does not require, the donation of excess food to nonprofit organizations. The Act also extends the Bill Emerson Good Samaritan Food Donation Act of 1996 to both the government and the contractor when donating food.
If your business has extra food that you would like to donate to a nonprofit in our community, consider the following qualified organizations that provide food banks.
Associated Churches of Fort Wayne and Allen County
Community Harvest Food Bank of Northeast Indiana
Wellspring Interfaith Social Services
Contributed by: Carrie Minnich, CPA, MAcct | Director | DWD CPAs & Advisors
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