On leftovers.

An anonymous reader e-mails:

So, seeing as you know a lot about economics, I was wondering if you could tell me anything about the economic ramifications of a large corporation like “Large Corporation” donating shrink/ old product to organizations like “Loving Charity.” I am trying to understand why “Large Corporation” donates so little and throws away so much, and it was pointed out to me that there are apparently economic ramifications, but no one seems to be able to clearly explain to me what they are. Something to the effect of it costing more to donate the product than to throw it away and count it as a total loss, and something about donating too much of the product resulting in the product becoming devalued. Like I said, I don’t quite understand it, so I was wondering if you knew anything about this. Thanks!

Please note that I pseudonymified the corporation and the charity. Also, Anonymous Reader, please note that “Large Corporation” does make donations to “Loving Charity”– google it– though perhaps not as much as one might like.

That said, I think you’ve pretty much got the answers already.

Maybe it’s more profitable to destroy the leftovers than it is to donate the leftovers. Maybe writing off the destruction as a profit-lowering cost would lower Large Corporation’s tax bill more than claiming a charitable deduction would. Or maybe the cost of moving the leftovers to Loving Charity is greater than the cost of simply throwing it out.

Or maybe they’re worried that by donating leftovers, they’re propping up Loving Charity as a competitor in the market for those products. They’re afraid consumers will buy the product second-hand at a discount (a 100% discount, in the case of Loving Charity) instead of buying it from Large Corporation at the higher price.

These answers are not different from what you wrote in your questions. I don’t know the actual answers, because I don’t run Large Corporation, I don’t know their numbers, and I don’t know their tax situation.

There may be other plausible reasons; I’ll take suggestions.

One comment

  1. I know when I worked at a particular company, they made us throw away perfectly good grocery goods simply because it had been damaged/opened/etc. Their reasoning was, donating the goods or allowing workers to have them could encourage workers to intentionally damage good to benefit themselves, friends, or others.

    Like

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