Friday, October 29, 2004
Controversy is brewing in the blogosphere over Starbucks' use of the tax code to justify its refusal to donate coffee to U.S. troops in Iraq. After a U.S. Marine sergeant organized a chain email campaign criticising the company, Starbucks blamed the tax code:
I would like to take this opportunity to clarify Starbucks policy regarding charitable contributions. We are able to donate to nonprofit organizations that are designated as public charities under § 501(c) (3) of the IRS Code, including public libraries and schools. The U.S. military or individual military personnel do not qualify as a public charity.
However, on an individual level, many Starbucks partners have collected and shipped numerous pounds of Starbucks coffee overseas. Starbucks partners receive one pound of free coffee each week as an employee benefit (known as "partner mark-out"). Many of our partners have elected to send their weekly mark-out of coffee to members of the military or military families, and related organizations.
This explanation is a bunch of hooey. Nothing prevents Starbucks from donating coffee to non-§ 501(c)(3) groups; they merely would be denied a charitable deduction for such contributions. In any case, § 170(c)(1) expressly authorizes a charitable deduction for a contribution or gift to "the United States . . . if the contribution or gift is made for exclusively public purposes." Providing the U.S. military with coffee for the troops undoubtedly is "for exclusively public purposes." And of course there are many charitable groups who can receive contributions on behalf of U.S. military personnel. (Starbucks itself is a corporate sponsor of the U.S. Marine Corps' Toys for Tots program.) See IRS Publication 526. For more information, see here, here, and here. (Thanks to reader David Radulski for the tip.)
Nov. 11, 2004 Update: See here.