I wasn’t going to comment initially but, thinking again, I will.

According to what I was once explained, the scheme runs like this.

a) organization X starts a fund raising campaign

This alone can be deducted as an expense, as any amount of hours can be attributed to planning, preparing, etc, the entire thing.

As this time as no profitable end, it can be deducted.

b) You donate. But now it’s their money.

Your money is siphoned to a separate bank account or just tallied and earmarked as for charitable purpouses but this does not mean the entity needs to hand it over immediatly.

That money is held within the company’s vaults, figure of expression, and, as such, counts towards the overall financial assets of the company.

It still needs to be handed to the end recipient but until it does it can be used to leverage loans and be invested into short term investment products, like overnight deposits (with hundreds of thousands or even millions it does gain interest overnight).

c) the money gets donated eventually but not by you

Eventually, all that money gets handed over but it is now their money, not yours. And as such, they get the tax deduction. And, again, with hundreds of thousands to millions in donations, the deduction gets very high.

This deduction, on your expense, goes towards clearing more of their profits.

Want to do something good?

Volunteer. Help your neighbour. With your own efforts, actions and work. Don’t hand over money.