Food Donations to Charities

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In 2006, Congress enacted the food donation giving incentive as part of a package of charitable giving incentives included in the Pension Protection Act. This provision, which expired on December 31, 2007, permitted grocery stores, farmers, ranchers, small businesses, and restaurateurs to donate wholesome food for hungry Americans and have the same access as corporations to the enhanced tax deduction for contributions of food inventory.

The provision in the Pension Protection Act extended the section 170(e)(3) deduction for food inventory to all businesses (not just C corporations). The provision extends a deduction equal to the lesser of (i) the taxpayer’s basis plus one-half of the difference between fair market value and basis, and (ii) twice the taxpayer’s basis in the contributed inventory. This incentive was temporarily in effect following passage of the Katrina Emergency Tax Relief Act (Pub. Law 109-73).

It will require an act of Congress to renew the provision. In December 2007, the Senate included a permanent extension of the food inventory giving incentive as part of the Food and Energy Security Act of 2007, H.R. 2419, also known as the Farm Bill. The measure is not in the House version of the bill, and a conference committee of the House and Senate is working to resolve the differences between the two bodies.

Congress could also restore the enhanced charitable deduction for contributions of food inventory as part of an economic stimulus package. In a statement (PDF) to the Senate Finance Committee, IS President and CEO Diana Aviv wrote that “Food banks strive to serve every hungry American who seeks their services.” Further, she stated, “An extension of this giving incentive would have an immediate impact on the lives of persons struggling to get by in a slowing economy, and give essential assistance to the charities that are dedicated to serving their needs.”

We encourage IS members to urge their members of Congress to extend the food donation giving provision. We have provided a sample letter. Note that this letter must be tailored to describe your organization before sending.

Background
The Pension Protection Act of 2006 (Pub. Law 109-280), signed into law on August 17, 2006, includes a number of charitable giving incentives and reforms. The law provided several new tax incentives to encourage greater charitable contributions, including the enhanced charitable deduction for contributions of food inventory. IS has developed a detailed summary (PDF) of the giving incentives and reforms.

Last updated: March 4, 2008