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Here’s a Better Way to Get Rid of Dead Inventory




Donating unsold inventory to charity can be
both financially and spiritually rewarding.

If you’re an eyewear retailer or manufacturer, one of your great challenges is disposing of dead inventory. Chances are, you’re discounting it — labor-intensive work that yields little profit. Good news: There’s a better way.  

Have you considered donating it to charity? Product Philanthropy or Gifts-In-Kind Donations are fast and easy. They’re financially advantageous too, thanks to a little-known tax break.

Tax Deductible   

Under IRC Section 170(e) (3) of the tax code, when C Corps donates inventory to qualified nonprofits, it qualifies for a tax deduction of up to twice the cost of the donated products. Under the code, deductions are equal to the cost of the inventory donated, plus half the difference between the cost and fair market-selling price, not to exceed twice the cost.

So, if your product cost $10 and you sell it for $30, the difference is $20. Half of $20 is $10. So, $10 (product cost) + $10 (half the difference) = a $20 deduction (which doesn’t exceed twice the product cost).

It’s Easy

You don’t have to hunt for worthy not-for-profits. A gifts-in-kind organization will do it for you. These are 501c3 nonprofits that exist to collect corporate product donations and then distribute them to qualified nonprofits.

A gifts-in-kind organization should accept 100 percent of your overstock. It’s particularly helpful when consolidating a warehouse, transitioning between selling seasons or dealing with a run of returns.  

How It Works 

First, contact a reputable gifts-in-kind organization and ask how to become a member of its donor network. You’ll have to complete a simple form about your company and products.

Once you’re accepted, make a list of the inventory you want to give, and submit it. Once it’s approved, simply ship it to the designated location. The gifts-in-kind organization assumes responsibility for sorting, cataloging, and making it available to member charities.

When your merchandise is received, the organization will send you tax documentation. After the products are donated, you’ll learn which charities received your goods.

More Benefits

The time you save — and the tax benefits you reap — aren’t the only advantages. You’ll also:

  • Protect your brand. Discounting inventory devalues your products and name, while making corporate donations elevates your brand.
  • Enhance employee engagement. Employees like working for companies with heart. Sharing the names of the charities that benefited from your donations makes great newsletter content that raises morale.   
  • Keep your inventory current. There’s no reason to hang onto obsolete stock when there’s a simple process for moving it.
  • Keep your stockroom uncluttered. Storage space is valuable. Most gifts-in-kind organizations accept both large and small donations, allowing you to better manage your space. 

Most important, your company will help people in need and the charities that serve them. Your unwanted stock can enjoy new life in the hands of those who can use it. Why discount or liquidate when you can donate?  

Gary C. Smith is President and CEO of the National Association for the Exchange of Industrial Resources, the largest gifts-in-kind organization in the U.S. Based in Galesburg, IL, NAEIR ( has received donations of extra inventory from over 8,000 U.S. corporations and redistributed over $3 billion in products to non-profits and schools. Call (800) 562-0955


This article originally appeared in the November-December 2017 edition of INVISION


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