As discussed in Chapter 2, it is very difficult, if not impossible, for charity food assistance organizations to acquire sufficient food resources to meet their community’s food aid needs without drawing food from the area’s Food Bank. (Not sure who/where your area’s Food Bank is? See Frequently Asked Questions.)
Food Banks were made possible largely as a result of Congress’s adding Section 170(e)(3) to the U.S. Internal Revenue Code in 1976 in order to provide companies with a tax incentive to donate their useable discards for charitable purposes. Per that section, if a company destroys such products or donates them directly to charity agencies they are able to deduct only the cost of the goods from their taxes, but if they donate the goods to a Food Bank, and the Food Bank adheres to certain requirements, the donor company is able to deduct an amount equal to its costs plus up to 50% of its normal profit. So generally large companies, or companies with large quantities of products to donate, prefer to donate those goods to Food Banks.
Among the rules Food Banks must follow is distributing goods only to organizations of the type described in Section 501(c)(3) of the U.S. Internal Revenue Code. Section 501 lists various types of not-for-profit organizations in 20+ Subsections, each one numbered. Labor Unions are (c)(5)’s, Chambers of Commerce are (c)(6)’s, social and recreation clubs are (c)(7)’s, etc. 501(c)(3) organizations are: churches/synagogues/mosques/temples as well as, in general, nonprofit organizations that (1) have incorporated, (2) have a mission of aiding the needy, and (3) have applied to the U.S. Internal Revenue Service for a determination by the IRS that the organization is exempt from paying Federal taxes as a result of meeting the requirements of Section 501(c)(3).
Confused? If your organization supplies food aid at no charge to needy people, or wishes to provide that service, contact your area’s Food Bank and/or the U.S. Internal Revenue Service for help. They deal with these requirements all the time and can assist you.