Announcing the EA donation swap system

bycafelow6mo25th Nov 201811 comments

55


The new EA donation swap system on donationswap.eahub.org matches donors together so they can donate to each other's favourite charity, and both receive tax benefits.

If you want to donate to a charity or fund that is not tax deductible in your country, this system is for you!

AND

If you are a donor that is lucky enough to have many tax deductible charities (especially UK, US, Canada, Germany, Netherlands, Switzerland), then you can help EAs from around the world using this system.

The problem:

Many countries have a very small number of EA charities or funds that are eligible for tax deductions (e.g. New Zealand, Australia, Denmark, Norway), and expanding the list of tax deductible organisations can be very difficult. This means that EA charities are probably not be getting as much money as they could and/or EAs may not have as much money in their pockets as they could.

The size of the potential loss to EA charities can be very roughly estimated using the 2018 EA survey data. We removed the very large donors with $1 million+ donations from the data set (as they’d probably be hard to match), and the donors from countries with a large number of tax deductible EA charities (UK, US, Canada, Germany, Netherlands, Switzerland). The remaining donors donated approximately 2 million USD during 2017. If half of those donations are currently not receiving tax deductions, and the average tax back is 40%, that could be a loss of $400,000 to EA charities during 2017. We believe this is an underestimation, as it is likely that many interested donors would not have taken the EA survey.

Another potential loss is that some donors may be donating to charities they believe to be less effective, in order to receive a tax deduction. (We don’t recommend doing this as the variance between charities is likely to be much larger than the gain from the tax deduction).

The solution:

The EA donation swap system will match donors together who want to support charities or funds that are tax deductible in each other’s country. They then donate to each other’s favourite charity or fund. The additional tax benefits will mean EAs will have more money in their pocket, or more money will be donated to effective charities.

Members of EA New Zealand have arranged a handful of swaps in the past, indicating there is a market for this system.

The countries we support so far are Australia, Canada, Denmark, France, Germany, Ireland, Italy, Netherlands, New Zealand, Norway, South Africa, Spain, Switzerland, USA, United Kingdom

A simple example of how it works:

Inger from Norway wants to support the Good Food Institute (GFI) with a donation of 5000 USD. Robert from the USA wants to support the Against Malaria Foundation (AMF) with a donation of 5000 USD. AMF is tax deductible in both countries, GFI is only tax deductible in the USA. The EA donation swap system introduces Robert and Inger together and they agree to swap donations.

Inger donates 5000 USD to AMF, Robert donates 5000 USD to GFI. They both get their tax deductions at the end of the financial year.

Keeping it in the EA community

Since this is a trust system, we think it would be best if this is kept to the EA community. We are only adding charities that have some affiliation to EA, or are recommended by EAs.

We also recognise that this system could result in a lower tax take, so may not be welcomed by the tax departments! We’ve had some EAs with legal experience state they believe it is okay in their country, but we haven’t confirmed that swapping donations is legal in all of our countries where we offer swaps.

Beta version

This is the first iteration of the EA donation swap system, so there are bound to be some issues, and there are many improvements that could be made if it proves to be popular, including

  • adding more countries and charities
  • improving the user experience
  • supporting recurring donations
  • improving the matching algorithm

We would really appreciate feedback to help us improve.

For more information, or to set up a swap, please go to donationswap.eahub.org.

If you have any questions that our website doesn’t answer, please ask in the comments below or get in touch on donationswap@eahub.org.

The EA donation swap system is a volunteer project by EA Christchurch, with the assistance of a handful of EAs around the world who provided us with donation information, and Rethink Charity who are allowing us to host it on the EA Hub website.

The team: Catherine Low, Marc Spoor, Jaram Lallu and Zoe Williams