Matching Gifts by Companies

Many companies will match the charitable gifts made by their employees. In some instances, the matching gift program involves contributions by the company’s customers. For example, a utility company may allow customers to overpay their bills each month, with the overpayment being forwarded to a charity that helps needy individuals pay their utility bills. Customers are entitled to deduct the amount of the overpayments as charitable gifts; the utility is not required to include the overpayments in gross income (Rev. Rul. 85-184, 1985-2 C.B. 84). The utility is not entitled to a charitable deduction for the overpayments forwarded to charity, but may claim a deduction for any matching funds it contributes (PLR 9335022).

The IRS also permitted a deduction for a company that matched employee gifts of marketable securities and payments of life insurance premiums where charity was the owner and irrevocable beneficiary of the policy (PLR 9513017).  Where a donor’s gift of $250 or more is matched by his or her employer, the charity is required to supply written substantiation to both parties. If the employee receives goods and services from charity based on the value of the entire gift, the employer’s substantiation may indicate that no goods or services were received in return, while the value of the return benefit is indicated on the employee’s substantiation [Reg. §1.170A-13(f)(17)].

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