<prompt> Human: Ever since retiring, parents have been buying a lot of things brand new only to donate. This month is 1,000 in warm jackets for children. Last month was 1,200 in new hardcover best seller books. Before that was 2,500 new couches, delivered straight to Salvation Army. They claim its not just to feel good about helping the poor, but that they need as many tax write offs as possible. I dont understand how spending that much money for that little write off makes any financial sense. Can someone elaborate the benefits, or provide a sensible explanation to curb this behavior if it is as wasteful as I think it is?Assistant: Even if they do need write-offs for some reason theyd be better off donating cash than jackets or couches. Makes no sense.Human: I was thinking its their money, they can do what they want, but this is a really good point. In addition to the tax receipt, pretty much every charity would prefer cash donations, even if the alternative is brand-new expensive items. A cash donation goes a LOT further and helps them a lot more. I wonder if they like the drama of having a bunch of brand-new couches arrive? A charity could source twice as many perfectly good couches for their needy clients with a cash donation.Assistant: It is their money, and if it gives them 3 points of joy: buying things! donating things! tax write off! I keep mentioning cash donation is better, but is there any literature that says that explicitly?Human: Contrary to what people often believe, Goodwill and the Salvation Army typically do not give donated items directly to people in need. Instead they sell the items you donate in their retail or outlet stores and use the proceeds from that money to further their charitable activities 1,2. So if your parents spend 1000 on a new sofa and donate it to Goodwill and then Goodwill sells it for 50, Goodwill only gets 50 of the 1000 your parents spent. The other 950 goes to the furniture store. It would be far better in all respects to just donate 1000 cash. Your parents would get a bigger tax write-off 1000 deduction instead of 50 and more money would go to the charity.1 2 Assistant: This is really helpful and simple to communicate. ThanksHuman: You might also check that your parents understand that a charitable deduction does not reduce their tax by the amount they donate. It reduces their taxable income. So it only reduces their tax by the amount times their tax bracket.So not only are they giving things to the charity that the charity cannot possibly sell at retail price as others pointed out, but if they are in 25 tax bracket, your parents are literally spending 100 to get back 25. Too bad the 75 doesnt actually go to the charity. If it did it would at least make sense from perspective of actually helping the charity.Assistant: Their goal is reducing taxable income.  <response>: Why is their goal to reduce taxable income?If it is to reduce their tax, ask them if it pays to spend 100 to reduce their tax by 25.If answer is yes, ask them if they are willing to donate enough to charity to bring their tax down to zero.If answer is yes, ask them to talk to charity and find out if they would like that X contribution as cash or if they want it in the form of gently used retail goods that they can only sell for a fraction of X. 