All of your giving. All in one spot.
Charitable giving can be intimidating. It's a lot to keep track of for first time givers. There are three main factors that frequently determine if a person gives. They have to be aware, they have to care, and a little peer pressure goes a long way.
This mobile app aims to combine social cooperation and ease of use into a clean experience that can be exported with the click of a button come tax season.
Despite greater awareness and information sharing than ever before, millennials frequently choose not to give because tax implications feel complex. Let's remove the obstacles to aid.
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Current Giving Landscape
When it comes to non-profits, there are understandably a lot of ways to donate.
If charities made it too difficult to donate, they would likely cease to exist. That doesn't mean that this system cannot be improved however. NGO Go is a fictional app that seeks to do just that.
Referencing IRS Publication 1771: A donor cannot claim a tax deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or letter). The problem is, those receipts are not required to be issued for donations under $250.
According to a former non-profit fundraiser, the most commonly asked questions were: “Do I have to have a receipt to deduct my donation?”, “What amount of donation do I have to have a receipt for?”, and “I only need a receipt if my donation is over $250, right?” There is clearly a lot of confusion.
Although many organizations do issue receipts for smaller cash donations, the onus is on the individual to keep track of the time, date, and amount (including estimated fair market cash value). This creates an environment of fearful ignorance where people either donate less, or simply avoid itemizing deductions altogether to avoid the possibility of an IRS audit.
In the case of an anonymous donation, the charity does not know the name of the donor, and therefore cannot put it on the receipt. Currently, to allow anonymous donors to still benefit from the tax credits, donors need to set up an agency or trust agreement with a third party who will make the donation on their behalf. This third party essentially acts as a go-between with the donor and the IRS.
Blockchain verification solves many of the current pain points involved with charitable giving.
By eliminating the need for third party intermediaries and lowering the record-keeping effort involved with individual donations, utilizing a blockchain structure would increase all-around financial transparency for non-profits and the IRS as well as providing authentication for donations of any size, rather than relying on paper records.
Ideally this app would utilize Ripple's InterLedger Protocol and could eventually incorporate Codius Smart Contracts for decentralized applications. XRP liquidity would clear transaction times faster and more efficiently, quickly getting the money where it's needed while providing an immutable record of the transaction. Current transaction fees are listed as a fraction of a cent.
*While this example lists XRP, theoretically this could be accomplished with a number of blockchain products.
In economics, Jevons Paradox occurs when technological progress decreases the relative cost of using a resource, subsequently increasing the quantity demanded. A recent example of this is email.
In 1990, almost no one sent emails outside of university networks and the military. Today, the world sends over 290 billion emails per day, far outpacing a simple replacement of paper mail. Usage has increased by an order of magnitude. Much like outdated mail systems of the past, charitable giving is usually lumped together into as few payments as possible to simplify record-keeping and maximize tax deduction potential. Small donations frequently fall through the cracks, or do not occur at all, often forgotten or thought of as not worth the effort.
An automatic blockchain record viewable by multiple parties with practically non-existent transaction fees and near-instant clearing of funds would be an exponential improvement over the clunky and fractured system in current use. With a service less prone to error and more effective in almost every regard, people would feel more inclined to make smaller and more frequent donations that better fit their budget, knowing that they will receive full credit come tax season. NGOs and emergency services would receive funding faster, improving response times and overall fundraising efforts.
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The next step would be to create a clickable prototype to put in front of users. As with all human-centric design work, it's crucial to test as soon as possible. Testing would inevitably result in further iteration and improvements.
While the underlying principles of transparency and ease are the foundation of this theoretical service, it's really about making life better for everyone involved: improving transparency for NGOs and the IRS, reducing consumer complexity at tax time, and of course increasing overall donations by connecting generious sentiment with those in need.