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Federal Incentives for Businesses to Donate Food

Posted by Jean Buzby, USDA Food Loss and Waste Liaison in Food and Nutrition Health and Safety
Jul 08, 2020

If businesses have an excess inventory of wholesome food, they can donate it to hunger relief organizations, such as food banks, food pantries, and community-based organizations, to help families in need. These donations are particularly important in challenging economic times. Donating food can also help businesses with their bottom line and divert food from being dumped in landfills, which in turn helps the environment.

As the USDA Food Loss and Waste Liaison, I want to point out three types of federal government provisions that encourage the donation of wholesome food to those in need.

First, the Internal Revenue Code 170(e)(3) (PDF, 347 KB) of 2011 provides enhanced tax deductions to businesses to encourage donations of fit and wholesome food to qualified nonprofit organizations serving the poor and needy. Qualified business taxpayers can deduct the cost to produce the food and half the difference between the cost and full fair market value of the donated food. In December 2015, the U.S. Congress passed the Protecting Americans from Tax Hikes (PATH) Act, making permanent and extending the enhanced tax deductions to all businesses, including C-corporations, S-corporations, limited liability corporations (LLCs), partnerships, and sole proprietorships.

Second, for federal agencies and their contractors, the U.S. Federal Food Donation Act (PDF, 92 KB) of 2008 specifies procurement contract language that encourages the donation of excess wholesome food to eligible nonprofits to feed food-insecure people in the United States.

Third, we have liability protection for businesses that wish to donate food. The Bill Emerson Good Samaritan (PDF, 207 KB) Food Donation Act of 1996 provides limited liability protection for persons who make good faith donations to nonprofits that feed the hungry. Here, the term “person” includes farmers, grocers, wholesalers, hotels, manufacturers, restaurants, caterers, schools, and others. Visit 42 U.S. Code § 1791 and USDA’s Frequently Asked Questions (PDF, 241 KB) about the Bill Emerson Good Samaritan Food Donation Act for more information. All fifty states have food donation statutes that limit food donor’s liability – these vary widely, such as by who (i.e., donors, nonprofit organizations), and what foods and food products are covered.

Food donations by businesses must still comply with applicable state and local health, food handling, and food safety laws and regulations. For example, packaging that is already open or damaged, such as bloated or dented cans should not be donated. According to Feeding America, the largest domestic hunger relief organization in the United States, the best foods to donate to food banks are dry and canned food donations that are essentially shelf-stable or nonperishable, like canned tuna, pasta, rice, and peanut butter. However, whole, unprocessed or minimally processed foods which can be used to create healthy meals are accepted by many hunger-relief organizations across the country.

During the COVID-19 public health challenge, increasing access to healthy foods for children is more important than ever. School districts that participate in the National School Lunch Program (NSLP), School Breakfast Program, and Seamless Summer Option are vital distribution points for receiving and donating excess food from their cafeterias. According to NSLP food policy researcher Melissa Terry, "Many school districts are not aware that the Good Samaritan Food Donation Act applies to them. When we work with our Districts to donate surplus food items and/or increase opportunities for families to participate, we keep good food moving through the last mile of the supply chain and into the hands of our children."

Stay tuned for my next blog, which will focus on the Good Samaritan Food Donation Act. For more resources on donating food, visit USDA’s Food Loss and Waste website.