There are many people who prefer to give charity anonymously. In addition to those who wish to do so out of modesty or to fulfill a higher level of altruism, there are those who do not want to be a charity's mailing list, nor on the mailing list of the various sister charities to whom their name may be traded or sold. The drawback of donating anonymously is that you can't get the receipt needed for a tax deduction. For example, here is a quote from the PayPal website.All donors who included their address will receive a receipt from the American Red Cross for tax-deduction purposes. The receipt is to insure that the money was donated, and that nothing of value was given in return.
It seems it would be quite easy to for a payment company like PayPal or any credit card company to offer the following service. For a small fee, you can donate to a list of IRS approved charities. Donations must be in $20 increments, with the sum total from all donors given to the charity each month. The charity won't be told the identities or even the number of their donors. The charity must in fact fill out a form saying it has no idea who the anonymous donors are. If they have any suspicions who a donor may be, and certainly if they gave anything of value to a suspected donor, they must notify the payment company, which would reduce the charitable donation receipt accordingly if correct. The donor meanwhile would only receive from the payment company a receipt that he donated to an approved charity, without any indication of which charity it was. The payment company would only reveal the identity of the receiving charities to the appropriate government agencies if required to.
Ian, along with his colleagues Jeremy Bulow and Bruce Ackerman, has developed a system for anonymous political donations. Unfortunately, many people have a vested interest in the current system, and for the new system to work the current system must be declared illegal. The same mechanisms they developed for anonymous political donations could also be used for anonymous charitable donations for those who wish to take advantage of it, without forbidding people from doing things the old fashioned way if they so choose. The charity receives a donation, the donor retains his anonymity and receives a tax deduction, and the payment company receives a transaction fee and helps cement its customer relationship by providing another service. A clear win for all involved.
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This is a great idea, and fortunately it already exists. Go to www.networkforgood.org
It is a charity that forwards donations free of charge.
You can look up charities, check on how effective they are, and then donate annonymously.
I realize there are currently ways of doing this. My question is why don't any of the large payment companies (e.g. American Express, Paypal) that already have a relationship with customers offer this service.
There are several reasons why paypal and american express don't offer this service. The first is that state gov. regulators require registration in a state to solicit money for charity (although it is questionable how this works on the internet). The second is that it is difficult to track which charities have IRS status and which are scams. American Express would either have to have a staff constantly checking the charities or they would have to pay GuideStar.org to use its database. Either way is expensive, and not very useful since Network for Good already does this.
I'm sure American Express can use a database to keep track of which charities the IRS approves of. And even if necessary, the cost of a onetime registration in each of the 50 states would also be negligible to a company of that size. The potential PR benefit for American Express though can be tremendous. Here is a company that helps people donate to charity, and helps protect peoples' privacy. While there are organizations that already provide this service (the fact that they do indicates the paperwork and expense isn't too bad), most people aren't aware of them. Even on the website which you gave, you have to dig around to find out that they offer anonymous tax-deductible donations. They don't use it as a way to advertise the website. By American Express bringing this concept to the public's consciousness, it can reap the PR and advertising benefits. The other payment companies would quickly follow and place inserts in your monthly bill informing you of the service, but in the public's mind they would merely be imitators trying to rip off someone else's idea.
If you are concerned with not being solicited, you should be able to specify that when you give. If not, contact the organization and request not to be solicited. Any reputable nonprofit makes an effort to track this anyway. You should also be able to specify that although you don't want to be solicited, you are interested in receiving information about the organization, such as a newsletter.
You could also look into networkforgood, as already mentioned, or other donor-advised funds (run by Fidelity and Vanguard, for instance) or a fiduciary service that could transfer the money anonymously.