Roundup donations are one of the most effective ways for thrift stores to generate more mission revenue while easily engaging customers.
But once you decide to launch a program, you need a practical plan to handle the legal considerations, accounting requirements, and operational steps before going live.
This blog walks you through how to start a successful roundup donation program and answers your most frequently asked questions.
How To Start a Roundup Donation Program in 6 Steps
A well-run roundup donation program can meaningfully increase the funds your thrift store raises for its mission — without adding friction to the checkout experience. These six steps cover everything you need to launch one the right way.
1. Learn the Legal and Tax Implications
Roundup donations are a common way for businesses to support nonprofits, but they require careful handling to ensure you’re not paying taxes on money that isn’t yours.
Roundup donations are considered charitable contributions from the customer, not your thrift store. This means the customer can claim the deduction if they itemize, and you as the merchant can’t claim a deduction for their funds (unless you choose to match them).
In your accounting, these funds must be classified as pass-through liabilities, kept separate from your sales revenue. Recording them as income can inadvertently increase your business tax liability.
The IRS typically accepts a line item on a standard sales receipt as sufficient proof for donations under $250. Check your state-level requirements for charitable solicitation as well, as these vary by location.
2. Choose Your Cause
Selecting the right nonprofit partner matters more than many thrift stores realize. If your thrift store is itself a 501(c)(3), you can direct funds toward your own mission. If you operate as the fundraising arm of a larger organization, that organization is the natural recipient.
Many successful stores choose to rotate local community causes monthly. Donors respond well to causes they can see and feel in their own neighborhood — a local food bank, a youth program, or a community shelter tends to drive stronger participation than a distant national cause.
Choose a partner whose mission connects with your customer base. The right alignment gives donors a reason to keep coming back and bring their donations to your door instead of the shop down the street.
Related Read: Are You Confusing Your Thrift Store’s Customers? 7 Tips To Fix It
3. Automate Your Roundup Donation Request
Tracking a roundup program manually creates gaps in your records and extra work for your staff. A thrift store point of sale (POS) system handles this automatically — a customer-facing prompt appears at checkout, the rounded-up amount is captured separately from sales revenue, and reports are available whenever you need to send funds to your charity partners.
Best Practices for Roundup Donation Prompts
When starting a roundup program, the phrasing of your request can significantly impact your conversion rate. Whether the ask is through a cashier or a digital screen, it has a direct effect on participation. The goal is to make the request clear, quick, and tied to a specific cause.
Here are three rules to keep in mind:
- Follow the three-second rule: The prompt should be short enough for a cashier to say or a customer to read in under three seconds.
- Name the beneficiary immediately: Customers give more readily when they know exactly where their change is going.
- Make your opt-out easy: If using a digital screen, the decline option should be just as visible as the accept button. A friction-free opt-out builds trust.
4. Train Your Staff on the Roundup Ask
Your POS handles the prompt, but your cashiers and volunteers set the tone. A warm, mission-connected ask performs better than a generic one — and a graceful response to a decline keeps the interaction positive regardless of the outcome.
Train your staff to phrase the ask around the specific cause: “Would you like to round up your total today to help provide meals for local families?” If a customer declines, a simple, “No problem at all!” keeps things moving without awkwardness.
5. Show Donors Where Their Roundup Goes
Donors give more consistently when they can see the results of their contributions. Use in-store signage and your email newsletter to share regular program updates — and be specific.
Instead of just saying you raised $500, tell them that the $500 provided 200 backpacks for local students. Use your POS system to track participation rates and pull the data you need to tell that story accurately and consistently.
Sharing specific outcomes — families fed, scholarships funded, supplies distributed — turns a few cents at checkout into a visible act of community support. That level of transparency strengthens your thrift store’s reputation as a trustworthy partner and gives donors a concrete reason to keep saying yes.
6. Work With the Right Professionals
Before you launch, it’s worth building a small circle of experts who understand the legal and accounting requirements for roundup programs in your state. Improper setup can result in paying income tax on funds that were never yours to begin with.
You or someone on your team may already fill one or more of these roles — but at a minimum, have each area reviewed by someone with relevant expertise.
Here are the roles you need:
- Certified public accountant (CPA): A CPA ensures your roundup liability account is set up correctly in your accounting software so that donated funds pass through your books without touching your profit and loss (P&L) statement. They can also advise on the timing of payouts to keep you compliant with state charitable solicitation laws.
- Small business attorney: Some states have commercial co-venturer laws that apply to roundup programs. An attorney can draft a simple memorandum of understanding (MOU) between your business and the nonprofit that outlines how long the campaign runs, how funds are transferred, and how the charity’s logo may be used in your marketing.
- Bookkeeper: While the CPA handles high-level strategy and tax filings, a bookkeeper manages the monthly work — reconciling your POS donation report against bank deposits and ensuring the collected funds are sent to the charity on schedule.
- Thrift store POS provider: You need a system that treats donations as a nonrevenue liability rather than a sale. If your POS adds the roundup amount to the total sale, it’s recorded as taxable income. Look for a provider that can automate your request at the terminal, track funds in a separate account, and generate a receipt that clearly shows the donation for the customer’s tax records.
Related Read: How To Capitalize on the Resale Boom Without Overhauling Your Thrift Store
Roundup Donation Program FAQs
Here are some of the most frequently asked questions about how to start a roundup donation program.
Q: Are roundup donations tax-deductible for customers?
A: Yes. When a customer rounds up their change or adds a flat donation at the register, they’re the legal donor, not the business. Customers can claim these donations as contributions on their personal tax returns if they itemize deductions. As the merchant, you can’t claim a deduction for these funds because the money didn’t come from your business’ earnings.
Q: How should roundup donations be classified in accounting?
A: Roundup donations should be treated as pass-through funds, similar to how you handle sales tax. Record them on your balance sheet as a liability — charitable donations payable — and keep them out of your sales revenue on your P&L statement. Including them overstates your income and could increase your tax liability for money you never earned.
When a customer pays, the donation amount goes into the liability account. When you send the funds to the charity at the end of the month or quarter, you debit that account to clear the balance.
Q: Do I need to issue tax receipts for roundup donations?
A: For most roundup donations, a line item on a standard sales receipt is sufficient documentation for the customer. The IRS typically accepts this for donations under $250.
If a single donation exceeds $250, the customer needs a contemporaneous written acknowledgment from the charity itself to claim the deduction. Your POS system should be configured to show the donation as a separate line item on every receipt so customers always have the documentation they need.
Q: What should I ask nonprofit partners before accepting donations on their behalf?
A: Before formalizing the relationship, ask your nonprofit partner to provide a 501(c)(3) determination letter for your records. Confirm how the funds will be used, what reporting they’ll provide, and whether they’re comfortable being featured in your in-store signage and social media. Getting these details in writing — ideally in a simple MOU — protects both parties.
Q: How do I choose a reliable charity partner?
A: Look for a charity whose mission connects naturally to your store and your customer base. A strong alignment makes the ask feel genuine rather than transactional. Use Charity Navigator or Candid (formerly GuideStar) to verify their efficiency rating and confirm they’re in good standing before you commit.
Start a Roundup Donation Program With ThriftCart
ThriftCart is designed specifically for thrift stores. While general retail systems often struggle with nonrevenue funds, ThriftCart treats your roundup program as an integrated part of your checkout.
Here’s how ThriftCart simplifies the roundup process for your team:
- Automate prompts: The system prompts customers on screen to round up their total to the nearest dollar or preset amounts you choose.
- Map accounting: It automatically maps roundup donations to a specific liability account, keeping them completely separate from your taxable sales. You can pull a donation report at any time to see exactly how much you’ve collected for your partner charity, making the monthly payout as simple as cutting a single check.
- Create receipts: The donation is clearly labeled as a separate line item on the printed or emailed receipt, giving your customers a professional paper trail that donors appreciate.
- Track donations: ThriftCart’s robust reporting suite allows you to track the success of your program by date, cashier, or location.
With ThriftCart, you can be up and running quickly, so your store can fund your mission with every transaction. Schedule a demo today.
