Lesson 2-9: Rounding Up And Donations
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LESSON SUMMARY
The practice of rounding up purchases for charity, where customers are asked to donate the spare change to charitable organizations, has gained traction among businesses. This initiative not only raises significant funds—reported to exceed $749 million in 2022 alone—but also serves as a marketing strategy for companies to enhance their corporate social responsibility (CSR) image. While the act of rounding up seems altruistic, it raises questions regarding transparency and the actual benefits for charities versus corporate interests. Many customers willingly participate, finding it easier to donate small amounts, yet concerns about donation fatigue and skepticism about the destination of their contributions persist.
Videos and articles highlight the mechanics of these campaigns, clarifying that customers, not retailers, receive the tax benefits from their donations. Retailers act merely as facilitators, collecting and transferring funds to charities. However, the lack of legal requirements for businesses to disclose the amounts raised can lead to skepticism among consumers. Transparency is crucial for maintaining trust, as customers want to know how funds are allocated and whether their contributions truly impact charitable causes. By providing clear information about fundraising efforts and partnering with reputable organizations, businesses can foster goodwill and encourage more meaningful contributions from consumers.
The practice of rounding up purchases for charity, where customers are asked to donate the spare change to charitable organizations, has gained traction among businesses. This initiative not only raises significant funds—reported to exceed $749 million in 2022 alone—but also serves as a marketing strategy for companies to enhance their corporate social responsibility (CSR) image. While the act of rounding up seems altruistic, it raises questions regarding transparency and the actual benefits for charities versus corporate interests. Many customers willingly participate, finding it easier to donate small amounts, yet concerns about donation fatigue and skepticism about the destination of their contributions persist.
Videos and articles highlight the mechanics of these campaigns, clarifying that customers, not retailers, receive the tax benefits from their donations. Retailers act merely as facilitators, collecting and transferring funds to charities. However, the lack of legal requirements for businesses to disclose the amounts raised can lead to skepticism among consumers. Transparency is crucial for maintaining trust, as customers want to know how funds are allocated and whether their contributions truly impact charitable causes. By providing clear information about fundraising efforts and partnering with reputable organizations, businesses can foster goodwill and encourage more meaningful contributions from consumers.
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Do Now: How does giving to charity affect how much you are required to pay in taxes each year?
People and companies receive tax breaks through charitable giving by deducting their donations from their taxable income. In the U.S., individuals who itemize their deductions can claim donations to qualified 501(c)(3) organizations, reducing their overall taxable income and, consequently, their tax liability. The IRS typically allows deductions for cash donations, as well as for non-cash contributions like property, stocks, or other assets, often requiring proper documentation such as receipts or appraisals for high-value gifts. Additionally, certain contributions, like donating appreciated stock instead of cash, can provide extra benefits by avoiding capital gains taxes while still qualifying for a deduction.
For businesses, charitable contributions can also be deducted as a business expense if they are directly related to the company’s operations and made to eligible organizations. Some corporations, like C-corporations, can deduct charitable contributions up to a specific percentage of their taxable income, while pass-through entities (such as S-corporations and partnerships) pass these deductions to individual owners. Companies may also receive indirect tax benefits by structuring donations through donor-advised funds, sponsorships, or cause-related marketing, which can enhance their brand reputation while reducing taxable income.
For businesses, charitable contributions can also be deducted as a business expense if they are directly related to the company’s operations and made to eligible organizations. Some corporations, like C-corporations, can deduct charitable contributions up to a specific percentage of their taxable income, while pass-through entities (such as S-corporations and partnerships) pass these deductions to individual owners. Companies may also receive indirect tax benefits by structuring donations through donor-advised funds, sponsorships, or cause-related marketing, which can enhance their brand reputation while reducing taxable income.
Checklist Of What You Need To Do Today To Get 100%
DO NOW:
1.) Participate in Do Now. (Actively participate, you are facing the discussion, not turned away from the discussion, phones are always away at all times in class)
Independent Practice:
2.) Read or listen to textbook Chapter 1-1 (Pages 4-10)
3.) Complete Quizzes:
Lesson 1-1 Quiz A (On Schoology)
Lesson 1-1 Quiz B (On Schoology)
Lesson 1-1 Quiz C (On Schoology)
4.) Complete
1.) Participate in Do Now. (Actively participate, you are facing the discussion, not turned away from the discussion, phones are always away at all times in class)
Independent Practice:
2.) Read or listen to textbook Chapter 1-1 (Pages 4-10)
3.) Complete Quizzes:
Lesson 1-1 Quiz A (On Schoology)
Lesson 1-1 Quiz B (On Schoology)
Lesson 1-1 Quiz C (On Schoology)
4.) Complete
Rounding Up In Images: What It Is, How It's Done, Why It's Done & Who Benefits.
Image 1: Jack Is the customer. Mary is the cashier. They are in a restaurant called Burger World and Jack ordered a hamburger and is trying to pay for it.
Image 2: Mary asks Jack if he wants to round up for charity.
Image 3: Jack sees a prompt on the screen that would give the remaining 50 cents to charity.
Image 4: Jack was curious so he asks where the money goes.
Image 5: Mary tells Jack that its a charity that benefits children.
Image 6: Jack wonders to himself if this is a scam. He knows that if individuals or companies give to charity they get a tax write off.
The Ethics of Rounding Up: Altruism or Corporate Self-Interest?
In recent years, many businesses have adopted the practice of asking customers to “round up” their purchases to the nearest dollar, with the additional cents going toward charitable causes. While this initiative appears to be an act of corporate kindness, a deeper examination reveals a complex interplay of generosity, marketing strategy, and financial benefits for businesses. The question remains: Is rounding up truly a benevolent practice, or does it serve a company's bottom line more than the charities it supports?
One thing is for sure, it has become a standard practice to ask people to round up for charity. Vox reported, "in 2022, 77 of the most successful of these initiatives raised more than $749 million, more than double the amount raised in 2012". According to estimates from the sources below, billions of dollars per year has been collectively generated from rounding up over the past few years.
One thing is for sure, it has become a standard practice to ask people to round up for charity. Vox reported, "in 2022, 77 of the most successful of these initiatives raised more than $749 million, more than double the amount raised in 2012". According to estimates from the sources below, billions of dollars per year has been collectively generated from rounding up over the past few years.
Chart: Rounding up at the register has become a billion dollar per year transaction.
NBC News Report: Round Up Investigation (3:24)
VIDEO SUMMARY
The video discusses the growing trend of consumers opting to donate small amounts to charities by rounding up their bills at the register, which has accumulated significant funds over the years, including over $6 million in 2020 alone. It features insights from Tom Rafa, a CPA specializing in charities, who clarifies that the donor, not the retailer, receives the tax deduction for these donations. Dana, a director at Walgreens, emphasizes that 100% of donations collected at the point of sale go directly to charitable partners. The video also highlights the impressive amounts raised by major retailers, such as CVS and Walmart, for various charitable causes. Viewers are advised to verify the legitimacy of charities using resources like Give.org, Charity Navigator, and the IRS website, ultimately encouraging a culture of giving through accessible donation options at stores.
The video discusses the growing trend of consumers opting to donate small amounts to charities by rounding up their bills at the register, which has accumulated significant funds over the years, including over $6 million in 2020 alone. It features insights from Tom Rafa, a CPA specializing in charities, who clarifies that the donor, not the retailer, receives the tax deduction for these donations. Dana, a director at Walgreens, emphasizes that 100% of donations collected at the point of sale go directly to charitable partners. The video also highlights the impressive amounts raised by major retailers, such as CVS and Walmart, for various charitable causes. Viewers are advised to verify the legitimacy of charities using resources like Give.org, Charity Navigator, and the IRS website, ultimately encouraging a culture of giving through accessible donation options at stores.
Now Read Or Listen To The Vox Article.
Directions: The link to the article is below the image. Be sure to read this. Quiz questions will come from this article.
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Pros and Cons of Businesses Asking Customers to Round Up at Checkout
Pros
Cons
Ultimately, a well-executed round-up program can be a powerful tool for businesses to demonstrate social responsibility and connect with their customers. However, it requires careful implementation to avoid potential drawbacks such as customer frustration, transparency concerns, and brand reputation risks.
- Boosts Corporate Social Responsibility (CSR) Image
Asking customers to round up for charity enhances a company’s reputation as a socially responsible business. Customers increasingly prefer to shop at businesses that support causes they care about, making round-up programs an easy way to align with charitable giving. A strong CSR strategy can help build customer loyalty and differentiate a brand from competitors. - Encourages Small but Meaningful Contributions
Many customers find it easy to donate small amounts, especially when it's just a few cents or less than a dollar. Unlike larger donations, which may require careful financial consideration, rounding up is a painless way for customers to contribute to a cause. Over time, these small donations accumulate into significant charitable funds without placing a heavy burden on individual donors. - Enhances Customer Engagement
Round-up programs create an interactive experience at checkout, prompting customers to feel involved in giving back. This engagement can foster a sense of goodwill and increase the likelihood of repeat business. Customers who feel they are contributing to a positive impact may associate those positive emotions with the brand, leading to long-term brand affinity. - Minimal Cost for Businesses
Unlike traditional corporate donations that require allocating a portion of company profits, round-up programs primarily rely on customer contributions. The business acts as a facilitator rather than the sole donor, making it a cost-effective way to support charitable initiatives while still gaining recognition for its participation.
Cons
- Customer Fatigue and Frustration
If customers are constantly asked to donate, especially at multiple retailers in a single shopping trip, they may experience donation fatigue. Some might feel pressured or guilty if they choose not to donate, which could lead to a negative shopping experience. Over time, frequent requests for donations may make customers resentful, reducing their willingness to contribute. - Perception of Corporate Greed
Some consumers are skeptical about where their donations go and may question why a company is asking for customer donations instead of donating directly. If businesses fail to provide transparency about how the funds are used, customers may view the round-up program as an attempt to offload charitable giving onto consumers rather than making meaningful contributions themselves. - Potential Checkout Delays
In high-traffic retail environments, round-up requests can slow down the checkout process. Customers who need to think about their decision, ask for more details, or engage in conversation with the cashier may cause delays, frustrating those in line. This issue is especially relevant in businesses that prioritize quick transactions, such as grocery stores and fast-food establishments. - Requires Trust and Transparency
Businesses must clearly communicate how the donated funds will be used and which organizations will benefit. Without transparency, customers may assume the company is profiting from the donations or that the funds are not making a meaningful impact. To maintain trust, businesses should provide updates on fundraising achievements, disclose administrative costs (if any), and ensure partnerships with reputable charities.
Ultimately, a well-executed round-up program can be a powerful tool for businesses to demonstrate social responsibility and connect with their customers. However, it requires careful implementation to avoid potential drawbacks such as customer frustration, transparency concerns, and brand reputation risks.
Higher Level Question
Task: Formulate a perspective on whether you believe rounding up is primarily an altruistic act or a marketing strategy for businesses.
Length: 3 paragraphs
I recommend that you use the following structure (Please note that you don't have to answer every single point, you can. pick and choose):
Paragraph 1: Describe the growth in rounding up. In 2010 it was in very few places but now it seems that every company is asking its customers to round up.
Paragraph 2: How do round-up donation programs benefit businesses, consumers, and charities? How can you be sure that your donation gets to charities? Can you really be sure?
Paragraph 3: Share your perspective. Is rounding up an altruistic act? Is rounding up a marketing strategy? Do you think that it is fueled by corporate greed (tax write off)
Length: 3 paragraphs
I recommend that you use the following structure (Please note that you don't have to answer every single point, you can. pick and choose):
Paragraph 1: Describe the growth in rounding up. In 2010 it was in very few places but now it seems that every company is asking its customers to round up.
Paragraph 2: How do round-up donation programs benefit businesses, consumers, and charities? How can you be sure that your donation gets to charities? Can you really be sure?
Paragraph 3: Share your perspective. Is rounding up an altruistic act? Is rounding up a marketing strategy? Do you think that it is fueled by corporate greed (tax write off)