Should All Your Friends/Family Repay You With Donations?
Starting in 2026 US tax-payers taking the standard deduction can also deduct an extra $1000 in charitable donations. Many EAs, like those taking a 10% pledge, plan to donate more than $1000 each year.
Many of those EAs will have friends & family who will not donate up to $1000 per year. Also if I’m not mistaken, things like $1000 gifted between friends and/or family does not need to be reported on taxes.
Should EAs planning to donate more than $1000 per year offer to all their friends & family that when we do things throughout the year like pay their restaurant bill, buy their plane tickets, loan them money, etc then they can pay us back by making donations to the our chosen programs, like the GiveWell All Grants Fund or EA Animal Welfare Fund? That way EAs are still directing the money to highly effective programs, but they are also getting more tax write-offs for their family/friends & possibly making them more excited about giving to effective programs.
I’m not a lawyer but this sounds… questionably legal.
The most likely problem is that a donor must reduce the amount of their deduction by the amount of the personal benefit they received as a result of the donation. That the benefit is bestowed by a third party doesn’t change the result. Here, the donor is receiving a very real and substantial personal benefit (release from their personal indebtedness). So after the reduction, their donation amount is $0.
Why would this be illegal?
I had already sometimes been doing this, just to get the idea of donating more in my friends’ heads, so this seems to make it all the more justified.