I agree with Owen. I don’t have anything to add to what’s been said, other than a response to the strongest reason against having that norm: It only conflicts with the norm of “do what’s most effective” if it truly is more effective to donate to one’s own employer. But because of the signaling/weirdness reasons (and, yes, the bias) that doesn’t seem to be true. We’re sophisticated enough that we can have a hierarchy of norms, with “do what’s most effective” at the top and “don’t donate to your employer unless there’s a special circumstance” as a lower norm—as a helpful heuristic/guideline.
How much money is saved from taxes by foregoing salary? If it’s at least 20% of the donation then I might change my mind.
Does that include National Insurance? As you can’t claim back NI from Gift Aid, but you never pay it if you forego salary, the saving looks like it would be 12% on employee NI and 13.8% on employer NI (if I’m interpreting the taxes properly).
Wow, thanks. It was supposed to represent National Insurance, but it was based on a remembered figure. I think I must have worked out an average rate and assumed it was marginal at some point; perhaps this was also just on employee contributions.
Anyhow, I think that makes it 22.5% lost to taxes (so +29% on your donation) if you’re a basic rate taxpayer, and 13% lost (+15% on donation) if you’re a higher rate taxpayer.
Adding another mark in the “Look factual information up even when you think you know the answer” ledger.
Were I working for an EA org this would be the decisive factor that would swing me, so it would be really good if we could work this out.
Giving to another org adds Gift Aid to your donation. +20%
Forgoing salary saves you and your employer National Insurance. +29%
So if you’re basic rate, is giving to your employer better value?
It only conflicts with the norm of “do what’s most effective” if it truly is more effective to donate to one’s own employer. But because of the signaling/weirdness reasons (and, yes, the bias) that doesn’t seem to be true. We’re sophisticated enough that we can have a hierarchy of norms, with “do what’s most effective” at the top and “don’t donate to your employer unless there’s a special circumstance” as a lower norm—as a helpful heuristic/guideline.
The only reason affecting giving is doing what’s most effective. So the norm you’re proposing for employer donations should never come into effect. Every rational person who donates to their employer will claim that it’s a most effective use of their money.
I agree with Owen. I don’t have anything to add to what’s been said, other than a response to the strongest reason against having that norm: It only conflicts with the norm of “do what’s most effective” if it truly is more effective to donate to one’s own employer. But because of the signaling/weirdness reasons (and, yes, the bias) that doesn’t seem to be true. We’re sophisticated enough that we can have a hierarchy of norms, with “do what’s most effective” at the top and “don’t donate to your employer unless there’s a special circumstance” as a lower norm—as a helpful heuristic/guideline.
How much money is saved from taxes by foregoing salary? If it’s at least 20% of the donation then I might change my mind.
+1 for the statement of what would change your mind.
In the UK I think it’s normally about 7% (assuming you’d get tax deductability / Gift Aid on another donation).
Does that include National Insurance? As you can’t claim back NI from Gift Aid, but you never pay it if you forego salary, the saving looks like it would be 12% on employee NI and 13.8% on employer NI (if I’m interpreting the taxes properly).
(source: https://www.gov.uk/national-insurance-rates-letters/contribution-rates)
Wow, thanks. It was supposed to represent National Insurance, but it was based on a remembered figure. I think I must have worked out an average rate and assumed it was marginal at some point; perhaps this was also just on employee contributions.
Anyhow, I think that makes it 22.5% lost to taxes (so +29% on your donation) if you’re a basic rate taxpayer, and 13% lost (+15% on donation) if you’re a higher rate taxpayer.
Adding another mark in the “Look factual information up even when you think you know the answer” ledger.
Were I working for an EA org this would be the decisive factor that would swing me, so it would be really good if we could work this out. Giving to another org adds Gift Aid to your donation. +20% Forgoing salary saves you and your employer National Insurance. +29%
So if you’re basic rate, is giving to your employer better value?
The only reason affecting giving is doing what’s most effective. So the norm you’re proposing for employer donations should never come into effect. Every rational person who donates to their employer will claim that it’s a most effective use of their money.