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There are a number of tax benefits of social entrepreneurship, depending upon the legal structure of your organization.
Unless you are legally structured as a nonprofit, you will have to pay taxes on your earnings. Yet for-profit social enterprises can reduce their liability with several strategies. First of all, if you own a for-profit business and want to make a donation that will benefit your local community, it will probably not qualify as a tax deduction unless you donate to a qualified 501 c(3) organization. Also, the IRS treats cash and property donations differently.
Cash donations can be deducted at full value, while property donations are valued at fair market value (FMV) for tax purposes. Also, the IRS may tax large donations according to capital gains rules, so in the case of contributions which are over $500 it’s wise to consult with a tax adviser first.
