If you have been to any grocery store lately, you’ve been asked if you would like to round up your purchase to support a cause or charity that the establishment supports. Most people find the question harmless. But what happens to your generous donation and who benefits from the cash collected? The answer might surprise you.
A donation roundup is an easy and increasingly common way to give to charity. The idea behind the donation roundup is a simple one. The point of sale gives the total amount of the bill to the customer. The cashier then asks if the customer wants to round up to the next dollar amount to benefit a given charity.
The small donations go to some great causes that are desperate for any cash to help those in need. The opportunity to take your change and help is one of the best ways to impact a cause without having to change your day. But as more companies ask about taking your hard-earned money, the practice is becoming a little concerning for some who find it annoying to be asked all the time.
Checkout charity generates millions of dollars for organizations all over the country. But how can the consumer protect their donation and benefit from it?
To begin with, keep in mind that there are two ways charities can benefit from point-of-sale donations. The first is when the store donates a share of its sales. That type of donation is deductible by the business but not by its customers.
The second way is where customers add something to their bill at the register with the extra amount going to charity. Customers can claim those amounts donated as deductions on their individual income tax return, though almost nobody ever does.
Even with a receipt, more than nine out of ten taxpayers will not deduct this — or any other — charitable donation from their federal taxable income. That’s because they don’t itemize their deductions.
“I sometimes will offer my change as a donation, but I never thought to claim that on my taxes,” Jerome from Virginia said. “Most of the time, I don’t pay attention to the amount I’m giving. I just don’t want the change.”
To donate at the point of sale, a corporation (for example, a retailer) must engage in a co-venture with a nonprofit charitable organization. In that arrangement — often registered under state law — the corporation gives a percentage of its sales to a designated charity.
Corporations can deduct charitable gifts up to ten percent of their taxable income each year. But some think corporations are dodging taxes when they reduce their taxable income by contributing to charities.
“I find it irritating every time I go to check out and I’m asked about a tip or donation,” John from New Jersey said. “I would like to keep my hard-earned income for myself. I need a donation.”
The majority sentiment among most consumers is the fact that they themselves are struggling to make ends meet. Inflation and the cost of living have risen so fast over the last four years that people are offended when being asked to give.
“We are a two-income family, and we’re still trying to find ways to pay for our lifestyle,” Brenda in DC said. “So, to ask us to donate every single time we go to check out is getting frustrating. I can’t even go to a fast-food place without being asked.”
Retailers feel like they’re doing good business by asking the round-up question. Rounding up at the register can benefit corporations in several ways, including:
- Improved reputation
Rounding up can help a company’s brand image and reputation by showing a commitment to social issues.
- Increased customer loyalty
Customers may be more loyal to businesses that give back.
- Consistent donations
Rounding up can provide a steady stream of donations for charities, without much work or expense for the company.
- Collaboration
Rounding up can create opportunities for businesses and charities to work together through marketing, events, and partnerships.
- Cost-free
Round-up donations are cost-free for the retailer because the customer makes the entire payment.
Americans increasingly feel like they’re being defrauded in all aspects of life. The checkout process now feels like a pressure point of whether customers care about their fellow man.
“It sometimes feels like I am a bad person if I don’t want to round up,” Cindy from Cleveland said. “The way the cashier asks the question sometimes feels like pressure to give my money away.”
There is no real answer that one should follow when it comes to giving a donation. If you feel like you want to give, then do it. The charity will appreciate the donation no matter who gets the write-off. If you feel like you are being pressured to round up your purchase when at the checkout or drive-thru, then resist the offer and don’t provide the donation.
As society reaches a new normal on what is offensive and normal, Americans will have to grapple with the fact that some things are here to stay. The question of offering a tip to the cashier who did nothing to earn a tip. The question of whether you should provide your change as a donation. The constant phone calls to your cell asking about things you don’t want to buy.
Money, or how to extract it from you, has become part of our daily navigation. Americans are being asked, at all levels, to part with their income for reasons beyond their control. While some have become risk-averse by simply not venturing out, others are fighting back by resisting the ask to round up or not.
Whatever you decide, it’s your money. Spend it the way you want.
