Did you know that in Spain, you can get 80% of your charitable donations back in tax deductions for the first 250€? This means if you donate 250€, you’ll get 200€ back through your tax return.

Every 1€ you spend, people can receive 5€. Sounds like a bargain, doesn’t it? Then, why doesn’t everyone do it? I think it’s because there is a generalized (and mostly deserved) mistrust towards charities. Most are embarassingly ineffective despite the best intentions, and some others are borderline scams.

But I think there are some charities that are doing a good job. Let me share some of them with you.

GiveWell & Ayuda Efectiva as a starting point

GiveWell is an organization dedicated to finding the charities that save or improve human lives the most per dollar donated. Their research is thorough, transparent, and focused on measurable impact. Check out their top charities to see which ones they recommend.

Their credibility is so strong that a relatively small but significant group of 9000 people donate as much as 10% of their pre-tax income to charities recommended by them. Including my very good friend Pau. 10% of someone’s income is a lot of money, isn’t it? Check out Giving What We Can for more information.

For Spanish residents, there’s Ayuda Efectiva, a local NGO that channels donations to GiveWell-recommended charities while ensuring you get the Spanish tax benefits. They are doing a fantastic job at it. Even the experience of donating through the website is a delight.

Ayuda Efectiva also includes three impactful organizations beyond GiveWell’s top picks:

• GiveDirectly, for direct cash transfers to extremely poor households.
• The Humane League, a charity that puts pressure on big companies to improve the living conditions of factory-farmed animals.
• Clean Air Task Force, their top pick for climate change.

My Personal Choice: GiveDirectly

While GiveWell’s top charities are excellent choices, I personally donate to GiveDirectly. They simply send my money directly to extremely poor households in countries where my euros are worth more than in Spain, no strings attached. And people themselves decide how best to improve their lives. (fun fact: I’m the first ever person to donate to GiveDirectly through Ayuda Efectiva)

And it works! GiveDirectly has solid support from GiveWell, pointing to extensive research showing positive impacts. Recipients have used the money for everything from starting businesses to fixing their homes, sending kids to school, or buying higher quality food. The reason they don’t recommend it is because they think it’s just 30% as effective as their top charities. But that’s still a lot of effectiveness, isn’t it?

I strongly believe in people’s autonomy to make their own choices. Instead of us in wealthy countries deciding what others need. I am convinced this extra autonomy has an immense value that just cannot be easily measured by GiveWell’s highly scientific approach. (after all, science has blind spots)

And how does the tax deduction work?

Tax deductions are simple: they are an amount that gets subtracted from your tax bill directly. Unless your income is the minimum salary or below, you are paying taxes and you can get a tax deduction for your donations.

Here’s how it works:

• 80% deduction for the first 250€ donated each year
• 40% deduction for additional amounts
• 45% deduction for amounts above 250€ if you keep or increase your donation for 3+ years

For example:

• If you donate 100€, you’ll get 80€ back (80% of 100€)
• If you donate 250€, you’ll get 200€ back (80% of 250€)
• If you donate 500€, you’ll get 300€ back (200€ from the first 250€ + 100€ from 40% of the remaining 250€)

Charities will report your donation directly to the tax authorities, so it should appear automatically in your draft Declaración de la Renta and be no extra effort.

Learn more about how this works in this article (in Spanish).

Let’s do it now before the end of the year?

1. Decide how much you want to donate (remember, you’ll get 80% back for the first 250€). For example you can donate 100€, and get 80€ back.
2. Choose a charity:
   • The charity of your choice if you have one.
   • Check out GiveDirectly if you believe in direct cash transfers
   • Visit GiveWell or Ayuda Efectiva for their top recommendations.
3. Make your donation! (through Ayuda Efectiva to get the tax benefits)
4. Get your money back on the next Declaración de la Renta.
5. Repeat next year!

Oh! And if this post helped you do it, let me know at ei@yoel.cat to make me smile.

Or if you donate through Ayuda Efectiva you can use this link to get our accounts linked.