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National Restaurant Association - Tax changes likely to boost food donations

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Tax changes likely to boost food donations

Congress should extend a tax deduction for smaller businesses that donate surplus food to charity, representatives of the food industry said today in a Capitol Hill briefing.

The briefing for the Senate Hunger Caucus examined the stress and strain on food banks and food donations. As economic woes continue, demand for nutritious food has skyrocketed at food banks, food pantries and other charitable organizations.

One way Congress can encourage more food donations is "changing tax policy to make sure the food goes to families, not the local dump," said Jane Avery, president, Community Harvest Food Bank of Northeast Indiana.

A charitable food donation tax deduction for smaller businesses expired in December. The deduction is equal to the lesser of what operators paid for the food plus half its appreciated value, or two times the cost of the food. Unless Congress votes to extend the tax provision, only large businesses known as "C Corporations" are eligible for the deduction.

The National Restaurant Association and its partners, the Grocery Manufacturers Association and the Food Marketing Institute, are working to convince Congress to pass legislation that would extend and make permanent the deduction for businesses of all sizes.

"This deduction has been a critical tool in encouraging donations of fit and wholesome food to alleviating hunger," NRA, GMA and FMI said in a statement released at the briefing. "Without the deduction, taxpayers get the same tax treatment for throwing out surplus food as they do for giving it to charity."

Need for emergency food assistance has increased 46 percent since 2006, Avery said. At the same time, food donations have decreased because of rising operating costs and decreased supply. They are expected to continue to decrease this year.

Improving the food donation tax deduction would be a powerful incentive for restaurants, food manufacturers, farmers and others in the food industry. It would help offset the costs of storing and transporting donated food and encourage more donations, especially perishable product that needs to be moved quickly.

Many National Restaurant Association members donate surplus food through Food Donation Connection. Knoxville, Tenn.-based FDC helps eliminate food waste by matching nutritious food with hunger-relief agencies. It works with about 13,700  restaurant locations and 7,800 agencies, including Community Harvest Food Bank of Northeast Indiana.

FDC administers restaurants' food-donation programs and handles the paperwork they need to claim the charitable food donation tax deduction. NRA members that donate food through FDC include Auntie Anne's, The Capital Grille, The Cheesecake Factory, Chipotle Mexican Grill, Cracker Barrel, Darden Restaurants, Rock Bottom Restaurants, and YUM! Brands.

The Senate Hunger Caucus, which started in 2004, looks for bipartisan solutions to end hunger in the United States and around the world. More than 37 million
Americans are at risk of hunger. In 2009, the National Restaurant Association honored Sen. Richard Lugar (R-Ind.) and his caucus co-founders with its Congressional Leadership Award for their commitment to ending hunger.

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