I live in Australia and often find myself strangely reluctant to sign up for an overseas charity that isn't tax deductible over here. These are usually great organisations that I'd love to support, so why am I so reluctant?
It's not the exchange rate; while presenting its own set of challenges, I know how to deal with them. This makes me think that the real problem with being unable to deduct a donation from my taxes has something to do with two rather basic human emotions: wanting to be rewarded for doing something good, and – the somewhat darker version of this, if you will – a sense of entitlement for having done the right thing.
There's of course nothing wrong with wanting to be rewarded. We all know it feels great to receive all those donation receipts from your favourite charities at the end of the financial year, tangible proof that you're one of the good guys. And seeing them listed on your tax return feels like an official acknowledgement of your good deeds.
But that's exactly where things can easily move into more dangerous waters: to the idea that because you've been good, you're now entitled to that tax break. This narrows the original intention of your donation – to give something freely so that others may have better lives – to a simple tit for tat, a trade rather than a gift. Ultimately, it devalues your good intentions.
Instead, we should see tax deductibility as what it really is: a bonus; an afterthought. If you can get it, great – if not, well, that wasn't what you were doing it for anyway. After all, those who don't itemise their taxes in the US and other countries never receive tax deductions when they donate to charities – and yet they continue to do so, often at higher percentages than their wealthier counterparts.
If you follow that train of thought to its logical conclusion, you'll probably end up looking at tax deductibility the way my mother does: she and I have an agreement that she'll donate to a charity in Europe instead of buying me Christmas presents. So she does – and then she calculates how much the donation saves her in taxes (because I can't claim it as a deduction in Australia anyway) and donates that amount, too!
You obviously don't have to go quite as far as that if you don't want to, but I believe it's a very liberating way of looking at the issue. It frees you to decide who to give to based on merit – not tax deductibility.
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