This is a great post. Effective Giving still has a huge role to play in achieving so many EA objectives.
One aspect that the community could potentially help with is tax-effective donations. Most people tend to think of that as a “nice bonus”—but we can be much more hard-nosed about it—it is a massive part of what makes a donation “effective”.
Almost every country offers tax-breaks for donations, and in many cases this means that we can donate 10% of our salary with a net cost of, say, 5% (order of magnitude). This is huge:
If you cannot afford to donate 10%, maybe you could afford to donate 5%. In that case, maybe there’s a way to do this year-on-year where you donate 5% plus the tax-rebate, which is effectively 10%.
If you can afford to donate 10% and you’re not cash-strapped right now, maybe you could afford to donate 20% knowing that you’ll get half of that back next year.
I know it’s not so simple, but tax-deductibility rules are typically straightforward enough that a simple online calculator would let people work out what monthly donation they could afford on a going basis, factoring in the tax-rebate.
Part of the challenge with this is that in many countries, including much of the EU, there is not a registered EA charity or EA-recommended charity which provides the standard documents required to claim a fiscal deduction. I’m in Belgium, and it took quite a bit of research for me to figure out how to donate to a direct-giving charity based in the Netherlands and get the right paperwork. There may be an opportunity for someone with the EA community to look at how to simplify this. I’ve talked about it with another EA here, he was struggling with the same problem.
I wonder is there an opportunity which EA could exploit, along with a pledge or separately from it, in which we make the following bargain:
You commit to donating (net) X% of your salary (or just X money per month) and we will commit to making the most effective use of that money, including by maximising tax-deductibility and by ensuring that the money goes to the most effective charities—or to an effective charity (from our list) of your choice.
This would be quite a bit of work, dealing with a lot of bureaucracy—just thinking about the situation in the EU makes me shiver … And we might face opposition from charities which are already set up in each country and which do not necessarily want a “competitor” taking some of their donations.
[To be clear, I have gone a bit off topic relative to the original post—my idea would be to do this not just for EA members, but eventually to promote this donation method to the general public, to businessmen, to businesses, etc. If we truly believe that our recommended effective charities are the best, we should be ready to talk to companies and ask them “why are you donating the funds from your charity drive to Charity X (some famous charity, I won’t name one to avoid offending anyone) when we could achieve 10 times as much with the same money?”]
In case it’s not obvious, this is something I personally am passionate about, and I’d be willing to help, especially within the EU, if someone wants to collaborate and/or has an idea where to start!
First of all, this is a great comment and indeed many others have been thinking along the same lines — I was hired by GWWC in June and a substantial element of my role will be to help effective giving initiatives get started in new legal jurisdictions, which will enable tax-deductions in more places. There are already many national ‘regranting organisations’ which fulfil the purpose you are suggesting here and we’re hoping to see many more get started. For an overview of the effective giving ecosystem and what already exists you can take a look here. And to see tax deductibility of donations by country take a look here. Very tentatively, I’m quite excited about new projects getting started in Italy, India, Singapore, Poland, South Africa, Mexico, South Korea, Japan and Portugal, but need to think a lot more about this.
In my view, the primary purpose of these new initiatives is not to increase impact through extra donations that would have otherwise been paid as tax, but rather to facilitate localised outreach and promotion of effective giving. The majority of resources available online are in English, which means we are missing out on reaching a large segment of the global population who may become effective givers.
I largely agree with HakonHarnes that tax deduction is not “a large part of what makes a donation effective, as our main claim to effectiveness lies in the interventions themselves, which can be many orders of magnitude better than typical charities”. Rather regranting organisations are particularity useful because they reach new audiences which counterfactually would not have started donating to effective charities. It is true that enabling tax-deductible donations will have some counterfactual impact insofar as old donors who previously could not give tax-deducible donations would be able to increase the amount they give. However, the largest impact that tax-deduction has, in my view, is psychological, allowing new donors to give more $ makes them to feel like they are contributing more and getting the most value for their donations. This is especially true when taking people on a journey from making tax-deductible donations to charities in their home country to making donations to highly effective charities. It may make people feel uncomfortable that they are able to give less overall, and they may initially struggle to buy into the idea that the best charities are 100x more effective than the median charities. For this reason I agree that tax-deductibility is an important element of the strategy to make effective giving more widespread.
One thing I’d love to follow up on from you’re comment is whether you’re saying that Belgians can always donate to Dutch charities in a tax-deducible way? Because if so that would mean that such information could potentially provided on the website of Doneer Effectief and could be promoted to Belgians.
On the promoting effective giving to businesses side of things, One For The World have been having some success and I’m excited to see much more done on that front!
Really excited to hear about work on the tax advantage front! In addition to what you said, I think some people see their national governments as low-bar charity evaluators, and the lack of clearing that perceived “bar” is an impediment.
Thank you Luke for this great answer and so much valuable information. It may be the Belgium is just a few steps behind other countries, since most of the countries surrounding Belgium seem to have the option to donate tax-deductably.
No, as far as I know it is NOT possible in general for Belgians to donate to Dutch charities, but there are schemes which enable donations to specific charities which are part of those schemes.
For example, the website Transnationalgiving.eu seems to be a great resource on this, but it’s still highlighting the complexity of cross-border donations within the EU.
There is a process through which it is possible for someone from Belgium to donate, but only to charities which are registered with this scheme. There is GiveDirectly in UK and I think other direct donation charities (which I like), but I do not see any effective altruism charities on that list. If there are some, it would be great to make people aware of it. If there are none, maybe it would be worth contacting some EU / UK based charities to see if they can easily register.
I am happy to try to do this—are there any specific charities you would recommend in the list of countries given on the website?
Really appreciate your comment and advice, and sorry for the very slow reply, I had some heavy time-commitments recently.
Sorry for not seeing this sooner! If you’re interested in reaching out to a few charities and making the case that they register (if it’s not to hard) that would be pretty useful. I’d recommend starting with GWWC’s top recommendations: https://www.givingwhatwecan.org/donate/organizations
I’ve been involved with Gi Effektivt for many years, which is the Norwegian version of what you are suggesting here. There are many effective giving orgs all over Europe, and more to come, which focus on this area exactly. In NL Doneer Effectief is probably the dutch version you are referring to?
We’ve been surprised to see how much people care about tax deductions, especially outside the core EA movement. I think I disagree that tax deduction are a large part of what makes a donation effective, as our main claim to effectiveness lies in the interventions themselves, which can be many orders of magnitude better than typical charities. In Norway tax deductions give you ~23% more donation capacity up to 2 500 euros. That is, you get to deduct your donations up to a ceiling of 2 500 euros (it’s slightly more complicated, but it’s the gist of it).
Surprisingly we see even donors donating substantially above this ceiling amount care a lot about getting their deductions. So yes, there is some evidence that this is important for donors that fit the typical EA-mindset, at least in Norway :)
From a US perspective, I’d note that the tax break is useless to most people, especially after the Trump-era tax reforms. You have to itemize deductions and choose to give up the standard (default) deduction amount in exchange for that. Only a minority of people itemize, generally those who are wealthier and/or pay lots of mortgage interest.
Thanks Jason, I did not know this. On my tax returns, it is literally worth 45% of every donation. If I donate 100 euros, I get back 45 as a tax rebate. Or put another way, if I donate 200 euros, it only costs me 110 net. Which is quite a dramatic number.
And while I agree with the other comments that this is less than the 100x efficiency differences we sometimes see, I would reply that the goal would be to donate the 200 euros to the 100x more efficient charity, and so get 200 x the benefit, which is still valuable.
But fully agree with everyone who is saying that it’s better to donate to a very efficient charity even without a tax-deduction than to limit myself to donating to charities which are approved for tax-decudtion.
This is a great post. Effective Giving still has a huge role to play in achieving so many EA objectives.
One aspect that the community could potentially help with is tax-effective donations. Most people tend to think of that as a “nice bonus”—but we can be much more hard-nosed about it—it is a massive part of what makes a donation “effective”.
Almost every country offers tax-breaks for donations, and in many cases this means that we can donate 10% of our salary with a net cost of, say, 5% (order of magnitude). This is huge:
If you cannot afford to donate 10%, maybe you could afford to donate 5%. In that case, maybe there’s a way to do this year-on-year where you donate 5% plus the tax-rebate, which is effectively 10%.
If you can afford to donate 10% and you’re not cash-strapped right now, maybe you could afford to donate 20% knowing that you’ll get half of that back next year.
I know it’s not so simple, but tax-deductibility rules are typically straightforward enough that a simple online calculator would let people work out what monthly donation they could afford on a going basis, factoring in the tax-rebate.
Part of the challenge with this is that in many countries, including much of the EU, there is not a registered EA charity or EA-recommended charity which provides the standard documents required to claim a fiscal deduction. I’m in Belgium, and it took quite a bit of research for me to figure out how to donate to a direct-giving charity based in the Netherlands and get the right paperwork. There may be an opportunity for someone with the EA community to look at how to simplify this. I’ve talked about it with another EA here, he was struggling with the same problem.
I wonder is there an opportunity which EA could exploit, along with a pledge or separately from it, in which we make the following bargain:
You commit to donating (net) X% of your salary (or just X money per month) and we will commit to making the most effective use of that money, including by maximising tax-deductibility and by ensuring that the money goes to the most effective charities—or to an effective charity (from our list) of your choice.
This would be quite a bit of work, dealing with a lot of bureaucracy—just thinking about the situation in the EU makes me shiver … And we might face opposition from charities which are already set up in each country and which do not necessarily want a “competitor” taking some of their donations.
[To be clear, I have gone a bit off topic relative to the original post—my idea would be to do this not just for EA members, but eventually to promote this donation method to the general public, to businessmen, to businesses, etc. If we truly believe that our recommended effective charities are the best, we should be ready to talk to companies and ask them “why are you donating the funds from your charity drive to Charity X (some famous charity, I won’t name one to avoid offending anyone) when we could achieve 10 times as much with the same money?”]
In case it’s not obvious, this is something I personally am passionate about, and I’d be willing to help, especially within the EU, if someone wants to collaborate and/or has an idea where to start!
First of all, this is a great comment and indeed many others have been thinking along the same lines — I was hired by GWWC in June and a substantial element of my role will be to help effective giving initiatives get started in new legal jurisdictions, which will enable tax-deductions in more places. There are already many national ‘regranting organisations’ which fulfil the purpose you are suggesting here and we’re hoping to see many more get started. For an overview of the effective giving ecosystem and what already exists you can take a look here. And to see tax deductibility of donations by country take a look here. Very tentatively, I’m quite excited about new projects getting started in Italy, India, Singapore, Poland, South Africa, Mexico, South Korea, Japan and Portugal, but need to think a lot more about this.
In my view, the primary purpose of these new initiatives is not to increase impact through extra donations that would have otherwise been paid as tax, but rather to facilitate localised outreach and promotion of effective giving. The majority of resources available online are in English, which means we are missing out on reaching a large segment of the global population who may become effective givers.
I largely agree with HakonHarnes that tax deduction is not “a large part of what makes a donation effective, as our main claim to effectiveness lies in the interventions themselves, which can be many orders of magnitude better than typical charities”. Rather regranting organisations are particularity useful because they reach new audiences which counterfactually would not have started donating to effective charities. It is true that enabling tax-deductible donations will have some counterfactual impact insofar as old donors who previously could not give tax-deducible donations would be able to increase the amount they give. However, the largest impact that tax-deduction has, in my view, is psychological, allowing new donors to give more $ makes them to feel like they are contributing more and getting the most value for their donations. This is especially true when taking people on a journey from making tax-deductible donations to charities in their home country to making donations to highly effective charities. It may make people feel uncomfortable that they are able to give less overall, and they may initially struggle to buy into the idea that the best charities are 100x more effective than the median charities. For this reason I agree that tax-deductibility is an important element of the strategy to make effective giving more widespread.
One thing I’d love to follow up on from you’re comment is whether you’re saying that Belgians can always donate to Dutch charities in a tax-deducible way? Because if so that would mean that such information could potentially provided on the website of Doneer Effectief and could be promoted to Belgians.
On the promoting effective giving to businesses side of things, One For The World have been having some success and I’m excited to see much more done on that front!
Really excited to hear about work on the tax advantage front! In addition to what you said, I think some people see their national governments as low-bar charity evaluators, and the lack of clearing that perceived “bar” is an impediment.
Thank you Luke for this great answer and so much valuable information. It may be the Belgium is just a few steps behind other countries, since most of the countries surrounding Belgium seem to have the option to donate tax-deductably.
No, as far as I know it is NOT possible in general for Belgians to donate to Dutch charities, but there are schemes which enable donations to specific charities which are part of those schemes.
For example, the website Transnationalgiving.eu seems to be a great resource on this, but it’s still highlighting the complexity of cross-border donations within the EU.
There is a process through which it is possible for someone from Belgium to donate, but only to charities which are registered with this scheme. There is GiveDirectly in UK and I think other direct donation charities (which I like), but I do not see any effective altruism charities on that list. If there are some, it would be great to make people aware of it. If there are none, maybe it would be worth contacting some EU / UK based charities to see if they can easily register.
I am happy to try to do this—are there any specific charities you would recommend in the list of countries given on the website?
Really appreciate your comment and advice, and sorry for the very slow reply, I had some heavy time-commitments recently.
Hey Denis,
Sorry for not seeing this sooner! If you’re interested in reaching out to a few charities and making the case that they register (if it’s not to hard) that would be pretty useful. I’d recommend starting with GWWC’s top recommendations: https://www.givingwhatwecan.org/donate/organizations
Please contact me on lucas.moore@givingwhatwecan.org if you get anywhere with this :)
I’ve been involved with Gi Effektivt for many years, which is the Norwegian version of what you are suggesting here. There are many effective giving orgs all over Europe, and more to come, which focus on this area exactly. In NL Doneer Effectief is probably the dutch version you are referring to?
We’ve been surprised to see how much people care about tax deductions, especially outside the core EA movement. I think I disagree that tax deduction are a large part of what makes a donation effective, as our main claim to effectiveness lies in the interventions themselves, which can be many orders of magnitude better than typical charities. In Norway tax deductions give you ~23% more donation capacity up to 2 500 euros. That is, you get to deduct your donations up to a ceiling of 2 500 euros (it’s slightly more complicated, but it’s the gist of it).
Surprisingly we see even donors donating substantially above this ceiling amount care a lot about getting their deductions. So yes, there is some evidence that this is important for donors that fit the typical EA-mindset, at least in Norway :)
From a US perspective, I’d note that the tax break is useless to most people, especially after the Trump-era tax reforms. You have to itemize deductions and choose to give up the standard (default) deduction amount in exchange for that. Only a minority of people itemize, generally those who are wealthier and/or pay lots of mortgage interest.
Thanks Jason, I did not know this. On my tax returns, it is literally worth 45% of every donation. If I donate 100 euros, I get back 45 as a tax rebate. Or put another way, if I donate 200 euros, it only costs me 110 net. Which is quite a dramatic number.
And while I agree with the other comments that this is less than the 100x efficiency differences we sometimes see, I would reply that the goal would be to donate the 200 euros to the 100x more efficient charity, and so get 200 x the benefit, which is still valuable.
But fully agree with everyone who is saying that it’s better to donate to a very efficient charity even without a tax-deduction than to limit myself to donating to charities which are approved for tax-decudtion.