Q: I am a wealthy philanthropist. I want to make gifts to companies that I think are doing exciting work, making exciting products that I think might change the world, and employing lots of people. I don’t want to buy stock. I don’t want to hassle with negotiating securities purchase agreements. I just want to give the money to the companies as a gift. Can I do this? And if so, can I write off my contribution to these companies as a charitable contribution?
A: If companies are willing to accept your cash, you can certainly give it to them. There is no law that prohibits the giving of funds to private companies.
Can you take a charitable contribution deduction for the contribution? No, because the private companies are not going to be charitable organizations to which contributions are deductible under the federal tax law.
Unfortunately, the Internal Revenue Code does not provide a deduction for these types of gifts.
Congress ought to act on this. We need rules that allow people to give cash to startups and to take a deduction if their contribution is creating jobs and helping the economy.