Donate or Destroy? How to Decide What to Do With Excess Inventory
Every company that makes or sells physical product ends up with inventory it cannot sell. The usual options are liquidation, destruction or donation. Each one has a real cost, and the cheapest choice is not always the obvious one.
Liquidation
Liquidators pay pennies on the dollar and the product often reappears online below your price. For brands that care about pricing, that is a hidden cost.
Destruction
Destruction protects the brand but you pay for trucking and disposal, and the goods are gone. It is the right call for recalled, unsafe or counterfeit product, and for anything your policy says must be destroyed.
Donation
Donation through vetted 501(c)(3) partners with signed no resale terms protects pricing like destruction does. Trucking costs are similar, and you receive a tax donation receipt. C corporations may qualify for the enhanced deduction under IRC Section 170(e)(3), generally cost basis plus half the gain, capped at twice cost basis.
A simple rule
- Recalled, unsafe, counterfeit or prescription product: destroy.
- Usable product where pricing matters: donate.
- Usable product where pricing does not matter and cash is the goal: liquidate.
Most companies end up with a mix. One program can donate what is usable and route the rest to recycling or certified destruction. Get a donation quote or read the tax deduction guide.
General information, not tax advice. Confirm with your CPA.
