In 2018, we enabled donors to give a total of $2,494,210 to highly effective charities outside their home countries, 98% of that as tax-deductible donations. Based on a simple model, we think at least $700,000 of these donations would not have happened without our service. It cost us around $100,000 to offer this service, resulting in a fundraising multiplier of at least 7. Compared to last year, the donation volume rose by 27%.
In 2018, we raised a total of $2,494,210 for highly effective charities, processing 5,867 individual donations. This is mainly driven by donors from Germany, Switzerland, and the Netherlands who want to support highly effective charities outside their respective countries. Since we have charitable status in the donor countries, they may give to us and we, in turn, regrant their donations to highly effective charities.1 These donations are separate from any donations we processed as part of our project Raising for Effective Giving (2018 Transparency Report).
A simple model for estimating counterfactual donations
As these donations are not the result of a dedicated fundraising effort, it’s likely that a significant portion of the total would have been donated in any case, even if we had not provided this service. While donors would not have been able to deduct the donations from their taxable income (or take advantage from similar tax schemes), it’s unlikely that this would have caused them to donate nothing whatsoever. However, they would donate less without the deduction since their taxable income increases, which in turn increases their taxes. This represents an effective price increase for the donation. For simplicity, we’ll assume a price elasticity of –1, i.e. unitary elasticity.2 How much taxes are saved by the donation depends on the income of the donor and the size of the donation, which together determine the effective marginal tax rate. This differs from country to country, and from state to state in some cases.
Using these numbers, we arrive at ~$708,574 (28.4%) as having being donated due to us providing this service. This likely underestimates the impact. From what we can tell, the studies on the price elasticity of donations were mainly done on changes to the tax code, not changes to the charitable status of individual charities. In the latter case, we’d expect significant substitution effects because donors decide to support other charities. In this case, they might donate to considerably less effective charities which are, however, tax deductible in their respective countries.
Comparison to previous years
We estimate the expenses in 2018 required for processing donations as well as maintaining and improving the underlying infrastructure at about $102,758.5 Without accounting for counterfactuals, this puts the fundraising multiplier at about 24, i.e. for every dollar that we spent we raised 24 in return. Taking into account counterfactual donations using the model outlined above, this activity still has a multiplier of 7.
Distribution by charity6
|Charity||No. of donations||Donation total ($)|
|Against Malaria Foundation||641||285,173|
|Deworm the World Initiative (Evidence Action)||471||205,775|
|GiveDirectly (Basic Income Project)||921||181,561|
|The Good Food Institute||95||144,505|
|Schistosomiasis Control Initiative||280||119,854|
|Evidence Action (unrestricted)||133||79,492|
|Malaria Consortium (Seasonal Malaria Chemoprevention Program)||68||50,723|
|The Humane League||109||44,846|
|Clean Air Task Force||30||36,583|
|Machine Intelligence Research Institute||61||36,469|
|Helen Keller International (Vitamin A Supplementation Program)||88||35,242|
|Centre for Effective Altruism||69||27,938|
|Animal Charity Evaluators||41||16,835|
|Effective Altruism Fund: Animal Welfare||48||15,972|
|Effective Altruism Fund: Global Health and Development||147||15,893|
|Mercy For Animals||19||15,158|
|Future of Humanity Institute||52||12,431|
|No Lean Season||39||11,950|
|Effective Altruism Fund: Long-term Future||62||9,780|
|END Fund (Deworming Program)||21||7,353|
|Development Media International||8||4,221|
|Sightsavers (Deworming Program)||22||3,907|
|Effective Altruism Fund: Meta||49||3,706|
|GiveWell (90% for regranting to top charities and 10% unrestricted)||9||2,367|
|Global Alliance for Improved Nutrition (Universal Salt Iodization)||3||492|
|Project Healthy Children||7||157|
|Humane Slaughter Association||1||114|
Distribution by cause area
1 Since we are not a fiduciary, we cannot legally commit to forwarding any donations to the desired charities. However, we very strongly take into account the wishes of the donors when regranting donations.
2 After briefly reviewing the evidence on this, this seems about right. The only meta-analysis we could find gives a mean elasticity of –1.44 (standard deviation of 1.21). However, this report seems to suggest that such a high elasticity likely overstates the real effects. When the meta-analysis excluded outliers, they found an elasticity of –1.11.
3 In Germany, the median income is about €34,000 (~$38,000) per year which would put the marginal tax rate at 33% (single household, no children). In Switzerland, the median income is about CHF 78,000 (~$78,000) per year. Unfortunately, income taxes are determined locally to a significant extent. A rough estimate gives a marginal tax rate of 17%. In the Netherlands, the median income is about €36,000 (~$40,000) per year which would put the marginal tax rate at 38.1% (single household, no children). We’ll assume 0% for any other countries since we donations to EAF are not tax-deductible there.
4 For previous years, we used the same marginal tax rates estimates as for 2018 and adjusted based on the donation volume per country for that year.
5 This estimate is somewhat subjective since the staff involved also works on other projects and the same donation processing infrastructure is also used by our project Raising for Effective Giving. We split the associated expenses between these two activities using a weighted formula that takes the respective donation count and donation volume into account.
6 We no longer support all of the charities listed here.