We know that ecommerce donations help your brand do good and look good. They also drive sales (even better than discounts do) and wow customers. But, tapping into these benefits can create quite a bit of work on the back end, especially when it comes to tax compliance, where the stakes are high and the risks are real.
Why Compliance Is Crucial
All charitable giving in the U.S. is governed and closely monitored by the Internal Revenue Service (IRS). There is significant responsibility in handling charitable donations and many moving parts that must be accounted for with clear reporting and no discrepancies.
Liability isn’t the only reason to prioritize compliance. Also consider your brand’s reputation and trust with customers. When a customer donates through your website, they expect that the funds will be routed quickly and reliably to their charity of choice. Are you able to offer an official tax receipt at their request?
3 Key Questions to Ask
Here are the main donation compliance considerations and how we address them at ChangeUp, the only donation software certified by Salesforce Commerce Cloud and licensed by Mastercard.
1. Are the charities legitimate 501c3s registered with the IRS? – We work hand-in-hand with a service that executes rigorous vetting of charities, which includes their formal registration of incorporation documents and verified IRS-issued EIN number. Further, our partnership with the Southern Poverty Law Center allows us to ban any 501c3s deemed to be “bad actors,” ensuring that only charities of the highest integrity are eligible to receive donations.
2. Is your software partner able to provide a tax compliant receipt to any user who requests one, even if the donation is as small as one penny? – We store all donation transaction IDs and share them with you in a monthly report. This gives us the ability to instantly issue a formal tax receipt to any customer for any amount, from 1 penny to $100k, which is vitally important for your finance team to share with the IRS if and when it is requested.
3. Is the Donor Advised Fund (DAF) that ultimately processes the donations on your behalf SOC 1 SSAE 18 Type 1 and Type 2 compliant? These two reports relate to internal controls and customer data. Our DAF partner works with many Fortune 500 companies and processes over $2.50 billion in corporate and workplace donations globally in 2021 alone. They have maintained SOC Type 1 and Type 2 attestation from independent audits for eight straight years.
Let’s Put Your Legal Team at Ease
Compliance is a lot of work and adding another major, ongoing responsibility to your internal team’s plate may not be realistic. That’s why ChangeUp has all the systems, processes and controls in place to streamline compliance as part of our all-in-one donation technology. It’s more efficient and cost-effective to let us take care of compliance for you—not to mention, it’ll bring some much-needed peace of mind in knowing your brand is being protected from the inside out. Schedule your demo with ChangeUp today!
