A feel-good way to cut your taxes: some pointers in avoiding penalties when giving to charities.

• Author: Bohi, Heidi
• Position: ACCOUNTING

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In the world of nonprofits, charitable contributions made by companies and business executives are a critical line item of their annual operating budgets. Besides this money being a lifeline for these organizations to continue servicing the public, they are significant because they are one of the few sources of income considered discretionary funding and can be spent any way the organization sees fit without the restrictive mandates of government grants and contract awards.

Just like individual taxpayers, businesses are allowed a deduction for charitable contributions. Some contribute because of their personal beliefs and "they support the cause, regardless of a tax benefit," says Carmen Jimenez, CPA and tax manager for Anchorage-based accounting firm Mikunda, Cottrell & Co. "Some do it just to get the deduction."

In Alaska, oil companies, banks, law firms, construction businesses, Native corporations, commercial developers, transportation conglomerates and insurance agencies represent several of the industries that fund the majority of the state's corporate charitable bequests in fact, of the 60 largest philanthropic donations made nationwide in 2000, the late Elmer Rasmuson ranked fourth. Rasmuson gave $113.4 million to the Anchorage Museum of History and Art, the University of Alaska, Alaska Pacific University and to establish the $39 million Rasmuson Foundation, a private family foundation that forever changed the landscape of charitable giving in Alaska.

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MONEY MUCH NEEDED

Without hesitating, Judy Cordell, executive director of Abused Women's Aid In Crisis (AWAIC), says her organization depends on both individual and corporate donations for 14 percent of the $3.4 million operating budget for the organization, which amounts to $476,000 a year. Although these contributions trickle in throughout the year, about 40 percent of them come squeaking in before the Dec. 31 deadline allowing donors to qualify for the tax benefits. "It doesn't matter to us--we're grateful whenever it comes in," she says.

As the end of the year approaches, Jimenez says, there is always a mad rush to donate as most individual and corporate donations come in at the last minute simply because they have procrastinated. Anticipating this end-of-year flux, nonprofits statewide come up with ways to make it easy to contribute by hosting special donor opportunities that range from toy drives to bell ringers and direct-mail...