Charitable Tax Deductions and International Giving

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Americans gave more than $335 billion to charitable causes in 2014, but only about four percent of that went to international causes (GivingUSA 2014).  

That percentage seems shockingly low and it is compared to other countries. Many Americans think that our government spends a lot on foreign aid so why should we worry? However, the US government spends less than one percent of its budget on foreign aid.

 

As dire needs increase around the world, many of us want to help more. But, we also love our charitable tax deductions. Here's how you can give internationally and still receive that deduction.

How Charitable Tax Deductions Work for International Giving

If you contribute to an international cause through an organization that is not registered as tax-exempt with the IRS in the US, you will not be able to receive a charitable tax deduction.

However, there are many US registered nonprofits that work internationally. They include well-known names such as:

Also, many American nonprofits, such as the American Red Cross, funnel money to international destinations through disaster relief or other on the ground activities.

If you want to include international giving in your charitable giving plans, but still wish to receive a tax deduction, there are plenty of ways to do so.

Check with the organizations you are considering to make sure that your contribution is tax deductible. Look for the 501(c)(3) designation in the materials the charity provides or on its website. Charitable tax deductions can only be claimed for donations given to this type of nonprofit.

Giving Internationally Through a Charitable Gift Account

Another way to give abroad and receive a tax deduction is through a donor advised fund.

Donors can set up charitable gift accounts through a national charitable fund such as Schwab Charitable, and the Calvert Foundation.

Donor-advised funds work well for donors with at least $5,000 to invest. Contributions are tax-deductible and can be in the form of cash or securities.

The money is invested so that the donor can later contribute to the causes of his choice.  The holding organizations often help screen charities and provide advice to their donor-advised clients.

Schwab Charitable recommends two ways to contribute to international causes.

One is to use charities that are based or have branches in the U.S., but that perform their work abroad. These types of charities include:

You can also use an intermediary organization, in conjunction with your donor-advised fund, such as:

Intermediary organizations do charge a fee but they have many benefits such as identifying legitimate and effective charities in other countries.

 

Resources: 

Summary of Giving Statistics, Charity Navigator

Robin Hood Was Right: A Guide to Giving Your Money for Social Change, Collins, Rogers, and Garner, Norton & Co., 2001.