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I run a small business and use open source software (OSS). I'd like to give money to the OSS developers to motivate them to keep doing it. I don't get anything in return.

Can I claim such a payment as a business expense? I don't know if it would be considered necessary.

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  • Do you get any benefit at all by making the donation? Do they work on your bug submissions faster?
    – mhoran_psprep
    Nov 30, 2021 at 16:10
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    If the OSS project(s) stopped being maintained for lack of funds/support, would that be a business risk and/or result in alternate costs?
    – Chris W. Rea
    Nov 30, 2021 at 18:42
  • @mhoran_psprep and Chris, those certainly sound like good arguments that they are necessary, but would the IRS buy it? I suppose I can just do it and see what happens if I get audited...
    – minou
    Nov 30, 2021 at 19:01
  • Related: 26 CFR § 1.162-15 A (Regulation covering donations as business expenses)
    – Brian
    Dec 9, 2021 at 21:04
  • @Brian, that looks very relevant! In particular, part (b) since the recipients are generally not charitable organizations. Would be awesome if there was a tax accountant here who could confirm since the regulations are quite complex...
    – minou
    Dec 9, 2021 at 22:09

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Technically you can "claim" anything you want on your taxes, but this wouldn't be a good idea. You run a high risk of being audited and would probably lose, though really that's up to a judge, (and I am not a lawyer).

Maybe instead of this, you should recognize the income and then, assuming they're an appropriately recognized 501c just deduct the donation (might have to do this on personal side, not certain). This would have the the same effect, but probably less likely to run afoul of the law. Definitely would suggest discussing with your tax professional first though.

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    "That's up to a judge" - no it isn't; it's up to the tax code. "Assuming they're an appropriately recognized 501c" - there's no way a random developer that accepts donations is. "I am not a lawyer" - the question is about tax law. This answer is worthless speculation; you might as well have just said "I don't know."
    – blueorchid3
    Dec 15, 2021 at 2:20

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