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The first part is correct. Get a receipt for your donation, determine fair market value for your donation, and use that amount as a charitable deduction just as if you had given a monetary donation. You can only claim the charitable deduction if you itemize your deductions on your tax return, rather than taking the standard deduction.
The second part is only partially correct. By IRS rules, you must report hobby income. Your costs are deductible as expenses to that income only. You cannot deduct your own time as a labor expense. (Your own time is generally the income producing part of it, and is taxable). You cannot report a loss and reduce your tax liability on other incomes.
This only works to the favor of the IRS. If, after your expense deductions, you show a profit then you owe taxes on that money. If you show a loss, your tax liability is zero for your hobby income. That loss cannot be used to reduce the amount of other taxable incomes.