Comments
Thanks so much! Interesting that they count GiftAid and not employer ones, that seems contradictory.
Agree on the counterfactual impact of the person offering donation matching otherwise donating to other effective charities.
Thanks so much! Interesting that they count GiftAid and not employer ones, that seems contradictory.
Agree on the counterfactual impact of the person offering donation matching otherwise donating to other effective charities.
It mostly makes sense to me. Gift Aid has much the same purpose and ultimate effect in the UK as the US' tax deductions for charitable contributions, I think.
In the US, if I give $10,000, I will (often) be able to deduct a certain amount from my tax bill -- the amount depends on my marginal tax rate, but let's say $2,200 for this example. So the "cost" to me of directing $10,000 to the charity is $7,800.
In the UK, I can give $8,000, and the UK government will kick in an extra $2,000. I think that is seen as coming from my tax payment (in that if the charity gets more Gift Aid than you paid in tax, you're on the hook for the difference). So the "cost" to me of directing $10,000 to the charity is $8,000.
In both cases, the government covers ~ 20% of the donation, and I am only out 80% of the donated amount. The mechanics are just different. So unless you're going to require US donors to reduce their gift by the tax benefit for pledge purposes -- which would add complexity and be unpalatable to many people -- allowing Gift Aid to count seems necessary for equality of treatment.
I think that's a fairly democratic stance in the UK, because most pledgers will have enough income tax liability to fully benefit from the tax advantage. It is less so in the US, where low and many middle income taxpayers do not benefit from itemizing (especially after recent changes to the standard deduction).
In contrast, allowing matches to count would call for very different sacrifices from pledgers based on a circumstance totally divorced from ability to donate -- whether one's employer matches. It creates a tier of 5% (or even 3.33%) pledgers.
I do, however, think that an 8% pledge target should be acceptable for US residents who do not itemize, or UK residents who cannot claim Gift Aid for some reason. Because the burden of donating is not reduced by the tax system for them, they are being asked for proportionally more sacrifice than their wealthier, itemizing countrymates, and for more than similarly situated people in the UK (and probably other countries). In other words, the 8% target would treat non-itemizing US residents / ineligible UK residents as though their donations were receiving UK Gift Aid.
The GWWC FAQ says that employer matches do not count:
Do I count employer donation matching towards my giving pledge?
We think it's wonderful when employers offer donor matching and encourage donors to use this opportunity as it results in more money going to high-impact charities! However, when it comes a giving pledge, we only count the donation that the donor makes themselves. This is because the spirit of the pledge is to voluntarily forego a certain portion of your income and use it to improve the lives of others.
However, gift aid does:
Does Gift Aid count toward my pledge?
Yes! If you are a UK taxpayer and claim Gift Aid on your donations, we recommend counting both the Gift Aid as well as your original donation toward your giving pledge. If you donate via Giving What We Can
we can automatically claim the Gift Aid for you. If you report donations
with the Giving What We Can dashboard it will automatically calculate the Gift Aid amount for you.
If you are counting Gift Aid towards your pledge it is recommended to calculate your pledge amount based on your pre-tax income. If you are not claiming Gift Aid or any tax benefit then it is recommended to calculate your pledge amount based on your post-tax income.
My guess is that most charity-offered donation matches are not counterfactually valid - the person supplying the 'matching' grants would have given anyway - which seems like a good reason not to count it. Yes, this means it doesn't work as an "incentive", which is the right outcome, because it matches the pledge-compliance incentive with the real world outcomes. In fact the case for counting employer-provided donation matches seems stronger than charity-provided ones, since they are more likely to be target-agnostic and hence have more counterfactual validity.
It's giving season and some charities are offering donation matching again. For this to work as an incentive, I feel that I should be able to use them as a "donation discount" on my pledge. So for example if I pledged 10% of my income of 100k, then if I donate 5k to a matching scheme, thereby achieving 10k donated, I would have fulfilled my pledge of donating 10k. How do others treat this?
@Larks. Further to Jason’s above comment (noting it’s roughly equivalent to tax deductible donation calculations), you count Gift Aid if you count your pre-tax income. If you can’t claim Gift Aid then you count your post-tax income.