Webinar: Creating a Tax Incentive for Food Donation in Michigan

Michigan Sustainable Business Forum hosted a webinar exploring how tax incentives for food donation, and the transportation of donated food, can strengthen food recovery systems while reducing food waste and addressing food insecurity. The session brought together national policy expertise, state-level examples, and real-world implementation insights to examine how financial incentives can influence donor behavior and improve system outcomes.

Speakers provided an overview of the federal enhanced tax deduction for food donation, highlighting both its benefits and its limitations. The discussion emphasized several gaps in the current federal framework, including the lack of transportation support, limited usefulness for some low-margin businesses, and structural barriers that can unintentionally limit participation.

The conversation also explored state-level opportunities, including Michigan’s proposed House Bill 5166. Panelists explored how thoughtfully designed tax credits, paired with broader system coordination, can increase donation, improve food quality, and better align surplus food with community need. Throughout the session, speakers underscored the importance of designing policies that are practical for donors while also responsive to the operational realities of food rescue organizations.

Learning Objectives:

• Understand how tax incentives can influence food donation behavior across businesses and institutions
• Identify key gaps in the current policy landscape, including transportation, access, and eligibility barriers
• Recognize how policy, infrastructure, and partnerships must align to effectively scale food donation efforts

Speakers:

• Sarah DiPasquale, Chief Program Officer, Sharing Excess
• April S. Love, Clinical Instructor, Food Law and Policy Clinic
• Daniel Schoonmaker, Executive Director, Michigan Sustainable Business Forum

Webinar Review

This webinar offered a grounded and practical exploration of how policy can help unlock greater food donation while strengthening the broader food recovery system. By combining federal policy context, state-level examples, and operational insights from the field, the discussion highlighted both the promise and complexity of implementing effective tax incentives.

A key takeaway was that tax incentives are most effective when they are part of a broader, coordinated system. Policy alone cannot scale food donation unless it is supported by adequate infrastructure, strong partnerships, clear implementation guidance, and the operational capacity needed to move food safely and efficiently.

The session also illustrated how specific incentive design choices, such as including transportation costs, setting appropriate caps, and defining eligible donors, can significantly influence outcomes across the food recovery system.

Key Themes

The discussion highlighted the interconnected nature of policy, infrastructure, and partnerships in advancing food recovery efforts. A central takeaway from the discussion was that tax incentives are most effective when they are part of a broader, well-coordinated system that aligns policy, infrastructure, and stakeholder behavior.

• Federal incentives provide an important foundation, but leave critical gaps, including transportation support and limited accessibility for some donors
• State-level tax credits can help address these gaps and respond more directly to local needs
• Tax incentives can influence donor behavior, including encouraging earlier donation of surplus food
• Policy must be paired with system capacity to ensure increased donation translates into meaningful community impact

Policy Design & National Landscape

Speakers emphasized that well-designed tax incentives can support increased food donation when they are accessible, clearly structured, and aligned with donor realities. The federal enhanced tax deduction remains an important tool, but it does not fully meet the needs of all potential food donors.

Several limitations were discussed, including:

• The federal incentive is structured as a deduction rather than a credit, which can limit its usefulness for low-margin businesses such as farms
• Transportation and logistics costs are not directly supported, even though they are often major barriers to donation
• Certain restrictions, e.g. “no charge” provisions, can complicate partnerships across the food recovery system

These challenges point to the need for complementary state-level tools that can better address practical barriers and support participation from a wider range of donors.

State-Level Impact & Real-World Examples

Speakers shared compelling examples from Pennsylvania and California demonstrating how tax credits can drive measurable increases in food donation while improving efficiency and outcomes.

In Pennsylvania, the Neighborhood Assistance Program has helped enable tax credit-supported partnerships that contribute to food rescue and distribution efforts. California’s experience also suggests that food donation tax credits can generate a strong return on investment, with speakers noting that each dollar in tax credit can result in several dollars’ worth of donated food.

Importantly, the discussion emphasized that incentives influence more than donation volume. When designed well, incentives can encourage donors to offer food earlier in its lifecycle, improving quality and usability for food rescue organizations and the residents they serve. They can also make donation a more attractive option for businesses that might otherwise sell surplus at a loss or discard it.

Michigan Opportunity & Policy Design Considerations

The webinar positioned Michigan’s proposed House Bill 5166 as an important opportunity to strengthen the state’s food recovery system. Speakers described the bill as a promising starting point while also emphasizing the importance of thoughtful, iterative policy design.

Discussion focused on balancing ambition with feasibility, particularly in the early stages of a new state tax credit. Proposed design considerations included a credit based on a percentage of fair market value, taxpayer-level caps, and mechanisms to manage fiscal impact while testing program demand and effectiveness.

Panelists also noted that future policy iterations could expand eligibility, increase flexibility, or address additional system gaps, including transportation and logistics. As Michigan continues working toward its food waste reduction goals, a well-designed food donation tax credit could serve as one tool within a broader strategy to increase donation, strengthen partnerships, and ensure more surplus food reaches residents.