bchad, I think you’re getting hung-up on the word matching. Perhaps subsidizing is a better word.
See ohai’s post. It’s framing. You can call it a deduction or a match, or pie in the sky. Money that would have flowed to the government flows to the charity. It’s a match, just like a 401k. Personal donations are matched if you have an effective rate above zero and you claim the deduction. If you think you gave $100 dollars to a charity and have a 40% marginal rate, you gave $60 and the government gave $40, if you claimed the deduction. Ohai and I are not talking grants here.
When Ghibli says “match” he means the tax breaks, not an actual match.
I’m going to have to sort this out.
I have income of $100, which I give to charity. That means the charity gets my $100, and I get a 40% tax break, which means I get $40 back. So I’m out $60, and the government is out $40. And if I’m giving 60 and the government is giving 40, that means that the government is actually matching me 40/60, or 67%.
Had I not given the money to charity, I would have $100 in income, and the government would have claimed $40. That would have meant that I had $60 and the government had $40.
OK, I get it. Had to think out loud for a second.
There is no tax break. The individual just gets to tell the government what to do with the money, as long as certain criteria are met of course.
I do agree with greeny’s explanation.
It’s not a real “matching” as the charity doesn’t get anything from the govt.
The govt is simply subsidizing your donation by giving you the donor the tax deduction.
In the nonprofit world “match” has a specific meaning. My error in assuming you knew what you were saying.
Framing, semantics, whatever…money is fungible. Doesn’t matter if the $40 jumped into the government’s coffers first and then jumped over to the charity. Would change nothing. There is a reason it framed as it is. Sounds much more palatable than the government is matching the poor’s donation at a much smaller rate, if at all, than the rich. Cracks me up every time during tax season. I get to tell people I gave a hundred dollars when in fact I only gave $60.
Your error was assuming I was talking about grants and not realizing that the term “tax deduction” is just a euphemism for a government match of a donation.
I tend to agree more with Ghibli on this. (edit - admittedly, the word “match” threw me off for a minute, too, which is why I went through the academic exercise)
If I give $100 to Red Cross and get $40 back, how is that fundamentally different than sending them $60 and the government sending them $40?
Remember, however, that in practice, many of these deductions get reduced at higher income levels. I’m not sure if charitable contributions are one of them. In fact, I think charitable contributions carry forward.
Your error was eating those extra spicy nachos while the bathroom was out of order.