If you’re a small business owner wondering how to claim a charitable contribution deduction for business, understanding the rules can be crucial. Profits are important, yes. But most small business owners want to do good in the world, too. And, if we’re being honest, they also don’t want to miss out on a good tax deduction. Unfortunately, for sole proprietors, partnerships, limited liability companies (LLCs), and S corporations (also known as pass-through businesses), charitable contributions aren’t always the tax-saving strategy they expect.

That’s because when your business donates to a charity, the contribution flows through to your personal tax return. And here’s the catch: it only benefits you if you itemize deductions. Since the standard deduction has become the default for most taxpayers (it’s $15,000 for single people and $30,000 for married couples filing jointly in 2025), that generous donation might not make a dent in your tax bill.

But don’t worry; there’s a strategy for that.

Shift Charitable Contributions to Advertising Expense

Here’s the idea: rather than making a straight-up charitable contribution, your business can sponsor, promote, or support a cause as part of a marketing initiative. This shift turns the outlay into a bona fide business expense, which is deductible regardless of whether you itemize.

Let’s say your business donates $5,000 to a local food bank. If you write a check with no strings attached, that’s a personal charitable deduction. But if you partner with the food bank, feature their logo on your website, promote the partnership on social media, and run a campaign like “10% of July sales go to fight hunger,” then you’ve created a marketing effort that just happens to do some good.

In IRS terms? You’re not donating; you’re advertising.

And yes, that makes a big difference come tax time.

But is that actually allowed?

Yes, and we’ve got the receipts. Treas. Reg. §1.162-15 states:

“A payment or transfer to or for the use of an entity described in section 170(c) that bears a direct relationship to the taxpayer’s trade or business and that is made with a reasonable expectation of financial return commensurate with the amount of the payment or transfer may constitute an allowable deduction as a trade or business expense rather than a charitable contribution deduction under section 170”

To put that in plain English, according to the Internal Revenue Service, advertising is deductible when it’s reasonably related to your business. That means:

• You’re promoting your company name or brand
• You’re building goodwill in the community
• There’s a clear business purpose behind the promotion

You don’t have to be sneaky about it; just be strategic. If your support of a cause includes your logo, a mention on your website, and is part of a public-facing campaign, then it’s not just philanthropy; it’s PR.

You can check out how we do this ourselves at Countless on our Why Us page.

Do Charitable Contributions Really Matter?

Charitable giving is great for the soul, but it doesn’t always do much for your bottom line.

When you give money to charity, there are two potential ways to deduct it:

• As a charitable contribution on your individual tax return
• As an expense on a business tax return

Only C corporations can deduct charitable contributions directly against corporate income. And the tax deduction is limited to up to 10% of taxable income, with the excess carried forward for five years. That’s relatively straightforward.

But for pass-through entities like sole proprietors, partnerships, LLCs, and S corporations, the situation is very different. Charitable deductions flow through to the individual owner’s tax return as itemized deductions. And since the standard deduction is now so high (thanks to the Tax Cuts and Jobs Act of 2017), most taxpayers don’t itemize. That means the charitable deduction essentially vanishes for tax purposes.

In contrast, business deductions like advertising or promotion expenses sit “above the line.” That means it reduces your adjusted gross income (AGI), which in turn lowers your taxable income and, potentially, self-employment tax as well. And since many tax credits and other deductions have AGI limits, reducing that number can unlock even more benefits.

So, reclassifying your charitable contribution as a marketing expense isn’t just a paperwork tweak. It could be a serious tax-saver. Instead of simply donating, treat the payment as an advertising or promotional expense. Then you ensure your generosity also delivers a tax benefit.

It’s a win-win: support causes you care about, and deduct the full amount through your business.

Key Tips to Make Charitable Donations Tax Deductible

Shifting charitable contributions into business deductions isn’t just a matter of recording them to a different account in your books. You need to document your efforts and be clear in your messaging. Here’s how to do it right:

• Make it public. Include your charitable commitment on your company website, in press releases, email campaigns, and marketing materials. If you’ve made a pledge (like Pledge 1%), display it proudly.
• Tie it to a promotion. Want to run a campaign like “We’re donating 30% of profits this month to wildfire relief”? Awesome. Just make sure you’re advertising it clearly on your platforms and can prove it later if needed.
• Keep the receipts. Maintain records of all related marketing materials, ad spend, and promotional content. If you ever face an IRS audit, this documentation shows you weren’t just being generous. You were hoping that supporting qualified organizations would attract new customers and lead to increased revenue.
• Don’t forget about noncash donations. Noncash charitable contributions can also count as advertising and promotion expenses. For example, say you own a restaurant and donate the food for a qualifying organization’s fundraising event. In exchange, the charitable organization includes your logo in its program, posts a link to your website on its emails, and acknowledges your support at the event. You can deduct the fair market value of the food and any supplies you purchased to provide the donation.

Need Help with the Charitable Contribution Deduction?

At Countless, we help clients make the most of every dollar they spend, including the ones that do good in the world. If you’re running a values-based business and want to be sure you’re getting the tax treatment you deserve, we’re here for you.

Reach out to our team to learn how we can help you turn your charitable giving into a smart business strategy.