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Credit Cards for Giving (jefftk.com)
34 points by apsec112 19 days ago | hide | past | web | favorite | 39 comments

If you’re going to be making donations in the thousands-of-dollars range in the US, set up a donor-advised fund. You donate appreciated assets to the fund, and direct the fund to cut checks to the charities you want to support (this saves small local charities from having to deal with gifts of stock, while preserving your tax advantages of doing so, which far outweigh the credit card points). Many employers will match donations from a DAF that you control, so you keep that, too.

We have one with vanguard charitable, which was easy to set-up and fund (minimum $25k, IIRC), but there’s several good alternatives.

This is great advice. Other advantages of DAFs:

- Super easy donation process - log in, search for the nonprofit you want to give to, click a couple buttons and you're done. Even lower friction than going to the nonprofit's website and entering credit card info.

- If you don't already itemize your tax deductions every year, you can "bunch" several years of charitable giving into one year by contributing in advance for future years. For example, if you plan to donate $5k per year, you can contribute $15k to your DAF this year, but grant $5k out of the fund each year. You can itemize the contribution in the first year, while taking the standard deduction in the 2nd and 3rd years.

- Fewer things to track and list when you do your taxes. You only need to report your contributions into the DAF (often 1 or fewer per year), so you no longer have to scour your records and record each individual charitable donation you made.

[not an accountant nor a lawyer, not tax or investing advice]

Vanguard, Schwab, and Fidelity all have low-cost DAF options that you can set up online in a couple minutes. Annual fees, minimum contributions, and minimum grants vary by provider so it's worth doing a little bit of research.

The point about "bunching" donations is really interesting, and a very savvy option for people whose annual donations are a little below the threshold for itemizing deductions. Thanks for pointing that out!

To expand: the more a stock has grown since you got it, the higher the tax advantage, because you get to deduct the full market value, not the cash you're left with after capital gain taxes. So pick your lots carefully. Also, if you know in advance your income will be higher than in the future (one time events, etc.), you can transfer the shares now, invest the cash in the fund as you see fit and distribute it over the following years.

Another practical benefit is that it allows you to make small donations to tens of nonprofits without fearing you'll be drowning later in fundraising letters, by virtue of not passing your home address along.

And also lets you make many small donations without the headache of many stock transactions to reconcile (which for me is more annoying than the letters).

DAFs also allow you to take several years worth of deductions in one year, which can have tax advantages of you time it correctly. (Take the deduction during your highest tax bracket years)

Less of an advantage with the new tax law, since so many people would still fall under the standard deduction.

Don't donate through Facebook. Their processes are pretty unfriendly to the charity receiving the money. They float the money for an unspecified amount of time, which hurts charities' cash flow. They provide less donor data, so charities can't thank donors or reach out to them again in the future. And if it's a personal fundraiser, even if the money goes to charity, Facebook does charge fees.

Just give directly to the charity. If you're concerned about the fees, just cover them yourself. Industry standard is 2.9% + $0.30.

I run https://hackclub.com, which has received donations via Facebook, through Stripe on our website (https://hackclub.com/donate), through individuals, foundations, and donor-advised funds writing checks, through systems like Benevity (https://www.benevity.com) that facilitate corporate matching programs and send the funds via ACH, and probably through nearly every other method out there.

Here's a breakdown of our processing fees:

* Facebook: None. They cover the credit card fee. If you're interested to see what data nonprofits get from Facebook, here's exactly what I see for our 2018 fundraisers: https://i.imgur.com/lsCFqJh.png. Facebook has not taken noticeably longer to disburse funds than foundations we've worked with.

* Stripe donations: 2.2% + $0.30 for Visa / Mastercard, 3.5% for American Express (this is the nonprofit rate)

* Receiving checks: $25/check. We outsource receiving checks to a vendor to make sure they don't get lost and that we aways have scans on file.

* Benevity / electronic transfers / wires: None (our bank charges no wire fee)

On top of that, it's important to note that checks and manual ACH / wire transfers take the most processing time for me, as for each check I need to work with our accountants to ensure donor information is properly on file and the donor received any needed tax documentation. We're small enough where I'm still doing this myself for each check, which probably takes me 20-30 minutes for each donation. Up to an hour if the donor didn't include all their tax information with the check.

I'm curious as to why Facebook eat the credit card fee? Do you know why they absorb that cost?

No, sorry. I imagine it's a comms problem. I did find this article from 2017 on it, which might provide more info: https://www.reuters.com/article/us-facebook-zuckerberg/faceb...

Interesting, thank you

> If you're concerned about the fees, just cover them yourself. Industry standard is 2.9% + $0.30.

I can recognise, from the links in this blog and other posts on the same blog like [1], that the author is giving a double-digit percentage of their income to charity. Maybe as much as 50%.

A person earning $100,000 and giving $50,000 to charity who paid a 2.9% card fee would be giving $1450 to a credit card processor - money that could have gone to the charity had they simply done a bank transfer instead.

Of course, for many charity donors paying by credit card is fine - better a moderately efficient donation that happens than a highly efficient donation that doesn't happen because of the inconvenience barrier!

[1] https://www.jefftk.com/p/earning-to-give-transcript

Yes, if you're giving enough that the credit card fees are substantial, then you should be using another payment method. At worst, mail them a check. There's nothing better for a small non-profit than to open a letter containing a large and unexpected donation check.

In my experience, most people making gifts >$25,000 are either making them through a foundation or through a donor-advised fund, both of which almost always write checks.

> They provide less donor data, so charities can't thank donors or reach out to them again in the future.

wait, facebook does something to help me maintain my privacy? i hate giving some place $25 and then getting monthly mail for the next 10 years.

You can always unsubscribe. I prefer that option vs going through Facebook.

I was expecting this comment.

Charities send mail because it helps them raise money, and it's one place that direct mail still works, and it works well. You can call the org and have them take you off their mailing list. I would just ask that if you do, also set up a recurring donation. One time donations are nice, recurring donations are better.

But if you're more comfortable giving Facebook more data about you (donations contain a lot of information) but not giving that data to the charity, why are you donating to them in the first place?

> Charities send mail because it helps them raise money

not every activity that helps you raise money is something you should do, even if you're a charity.

if they'd confine themselves to pestering donors who'd given them >$500, or even donated more than once, it'd be one thing.

> You can call the org and have them take you off their mailing list.

been there, tried that. less effective than you'd like me to believe! (and then they've got my phone number, too.)

> But if you're more comfortable giving Facebook more data about you (donations contain a lot of information) but not giving that data to the charity, why are you donating to them in the first place?

i don't care if the charity knows who i am; i don't care if anyone (facebook or otherwise) knows about my donations.

i care that the charities will pester me for YEARS because i gave them less money than they'll spend printing out the wads of full color mail they'll send me.

You create second-time donors by persistently contacting first-time donors.

Are you asking why people don’t want to sign up for getting spammed by charities? Just because it’s easy to unsubscribe doesn’t mean I want to have to do that.

I just want to help out a non profit. My recurring donation is that they don’t need to waste money to spam me anymore.

I’m looking you you, blood banks.

> [Facebook] provides less donor data, so charities can't thank donors or reach out to them again in the future.

As a donor, I've found myself giving more often through Facebook to keep my contact information more private. I tend to unsubscribe from mailing lists and set up Gmail filters, so perhaps I'm more sensitive to unsolicited mail than average.

In my experience, most of the charities and institutions I've donated to directly (e.g. Red Cross, National Park Foundation, my university) send mail for years after a donation. Some of them like the National Park Foundation share your information with other charities so you get even more unsolicited mail.

In contrast, as far as I can tell, I haven't received any physical mail nor email after donating through Facebook. The privacy, for lack of a better word, is compelling enough I'd prefer to look up a charity on Facebook rather than going to their website directly.

I just donated through FB to see how it works. It looks like FB gives the user an opt-in to share info with the charities. I like this, because I get spammed all the time by previous charitable donations.

Can’t speak to the payment timelines, but the fact that fb gives me more control is nice.

Also, from their documentation, it looks like nonprofits do see my name. The opt in is for sharing my email.

In Ireland, I try and make donations of at least €250 (usually by direct debit / bank transfer) and complete the relevant tax form so the charity can reclaim the income tax on the donation amount (increases the donation by ~ 44.9%).


ACH is a cheap way to send money too. Not much in the way of rewards if that's your thing though.

ACH is cheap, but many banks don’t support sending transfers to random accounts owned by other entities. You typically have to do deposit verification because most banks’ offerings are intended for personal transfers. Few companies will dig into their records to find the micro-deposit amounts for you.

As I understand it in 2021 these micro deposits or a similar control will become mandatory (date delayed from Jan 2020), but for the time being it's optional. I don't see why a bank won't allow an ACH payment from one account to another - that's what the system is made for right?

The new rule only applies to debuts (e.g., you pull money from my account, rather than I push money to yours). See https://www.nacha.org/rules/supplementing-fraud-detection-st....

Most banks have some form of P2P transfer such as Zelle or Popmoney. If you want to pay a business, they push you toward a bill pay service that often mails a physical check.

My guess is that ACH cuts into fees earned from wire transfers. Additionally, giving everyone the ability to send funds to any other random account increases the bad outcomes of a login being compromised, or someone inputting the wrong account number.

I think you're right on the ACH Vs Wire Fees earned by banks - from what I've seen the banks earn many many multiples on Wires. Although I understand that real time and faster payments are being explored as an alternative to Wires which may take some of this share if the schemes get the network effect via all banks signing up to it.

Yep! The big banks are signed up for RTP. We consumers should start seeing it sometime this year.


Edit: Some customers have had access since last year: https://www.jpmorgan.com/country/US/en/detail/1320572715530.

Also ACH allows two way transactions. If a company we’re to complete the deposit verification that would give you the ability to withdraw money from their account without any recourse on their part.

Many banks only allow you to add ACH accounts for which you are the account holder.

Is that really the case? If I have made an ACH payment to a company they then have a unilateral right to withdraw funds from my account? A valid authorization is required for this to happen. [Edit] Plus there is recourse via disputing an unauthorized transaction, the process is well established.

ACH is a two-way street. when you give your routing and accounting number to your employer for direct deposit they can pull money out of your account. There have been multiple public instances of this happening due to bugs or bad software. The most recent case involved an HR startup whose founder embezzled his company's funds and thus the banks pulled back the money from the client's employee accounts.

My employer's bank recently mistakenly did the DD 3 times and pulled back two of them.

ACH doesn't come with two-factor auth or any sort of real safeguards, I would be very careful who I give access to.

Interesting I wasn't aware of these cases. Thanks

Facebook already has their claws in so much of my data, why not hand over my donation history as well?

At least for myself, I have no objection to having my donation history public: https://www.jefftk.com/donations

I'm down for having it public like that, but until everyone does perhaps it'd be best not to readily serialize it in a format for Facebook's immediate consumption.

Coming soon, Facebook Birth and Life Insurance

It's coming. They've just started asking for data on users' preventative care checkups.


> As a 30-year old woman, Facebook gave me a list of suggestions that included a Pap test and an HPV test. It also suggested that I get a cholesterol screening, a blood pressure test, and a flu shot. For my male counterparts, Facebook only suggests the last three.

Even better would be to bypass the whole finance and banking sector altogether and have these charities adopting blockchain for this.

A stablecoin like DAI is perfect for this on the large, and later the charities themselves could issue their own tokens and estimulate local economies

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