If you’re like many retailers, one of your greatest ongoing challenges is disposing of excess inventory. Unwanted stock takes up valuable shelf space that belongs to more profitable merchandise.

From time to time, when you’ve reached your limit, you discount or liquidate those overstocks. It’s not an ideal solution, but what other option do you have?

You have a much better option: product philanthropy. There is a generous tax benefit aimed at C Corporations that donate goods to charity.

According to Section 170(e) (3) of the Internal Revenue Code, C Corporations that donate their inventory to qualified nonprofits can receive a tax deduction of up to twice the cost of the donated products.

Here’s how the double tax deduction works. Under the tax code, deductions are equal to the cost of the inventory donated, plus half the difference between the cost and fair market-selling price, not to exceed twice the cost.

For example, if your product cost $10 and you sell it in store for $30, the difference is $20. Half of $20 is $10. So: $10 (product cost) + $10 (half the difference) = a $20 deduction. Since $20 does not exceed twice the product cost, it does not exceed the maximum allowable deduction.

The easiest way to work this kind of deduction is through a gifts-in-kind organization. These nonprofits collect corporate product donations and give them to qualified charities. The gifts-in-kind organization facilitates the deal, while your company and the receiving charity reap the benefits of the exchange.

Tax benefits are only one of many advantages of donating unwanted merchandise to a gifts-in-kind organization. You will also save time and headaches by avoiding discounting the stock or listing it on auction sites. With gifts-in-kind organizations, once your donation is approved, you just ship it out.

Discounting inventory diminishes the value of your products as well as your store name. That doesn’t happen when you donate it. If anything, the good will you generate elevates your brand, while giving your employees something to be proud of.

Product philanthropy also enables you to give your products to someone who really needs them and will appreciate them. Gifts-in-kind organizations distribute the products to qualified charities, who in turn distribute them to people in need.

The first thing to do is to contact a gifts-in-kind organization and ask how to become a member of its donor network. Typically, you’ll be asked to complete a form providing information about your store and its products. Once your company is accepted as a member, you should be able to make donations at any time.

You start the process by making a list of the inventory you wish to donate. Submit it to your gifts-in-kind organization for approval. Once it’s approved, simply ship it to a designated location. The organization’s workers will sort it, catalog it, and make it available to member charities.

Once it’s received, the gifts-in-kind organization will send you proper tax documentation for your records. And after the products are donated, you’ll be told exactly what charities received your goods.

Start donating now, and by next April, you will see the difference in your corporate tax return. And best of all, you will have made a difference for those in need.

Gary C. Smith is president and CEO of the National Association for the Exchange of Industrial Resources, the largest gifts-in-kind organization in the U.S. NAEIR has received excess inventory donations from 8,000 U.S. corporations and distributed $3 billion in products to charities and schools.