How Donating & Giving Dollars Work

Givingism's primary service is to provide a way for customers to direct contributions to nonprofits every time they make a purchase. Our desire is to make sure that 100% of contributions to nonprofits actually make it to the nonprofits without being eaten away by taxes and random fees. At the moment, direct monetary donations from customers are not possible. Instead, we operate with a system that functions similarly to a rewards program or the now discontinued Amazon Smile program. While we try to keep things simple for you, the way that money is distributed between parties on Givingism is a bit convoluted and confusing so if you're looking to find out more about how we truly function financially, you came to the right place.

What are Giving Dollars?

Giving Dollars are a sort of rewards program. When a customer makes a purchase, they earn Giving Dollars equal to a specific percentage of the product's price. Customers can then search for nonprofits to contribute Giving Dollars to them and the Givingism Foundation will match that by donating real money to that nonprofit assuming there's no complications along the way.

How do Giving Dollars work?

Because of our 30-day return/refund window along with the fact that donations are made by sellers but directed by customers through the Givingism Foundation, the ways which money is handled can be pretty confusing. We want to be fully transparent, so we'll do our best to lay it out here.

For legal and tax reasons, Giving Dollars are not real money and therefore customers are not actually responsible for making a tax-deductible financial donation. The Givingism Foundation will make monetary donations based on how users designate their Giving Dollars. When a customer contributes 1 Giving Dollar to a nonprofit, the Givingism Foundation will redeem that value by giving $1.00 USD to that same nonprofit. Here's the breakdown in how money flows with a given purchase:

Again, the 30-day waiting period ensures that customers have time to request refunds before Givingism releases that money to Sellers and Nonprofits.

Sellers get the tax break.

When a seller makes a sale on the Marketplace, they also make a donation to the Givingism Foundation in parallel to the listing fee. Customers then choose who the Foundation makes contributions to and 100% of your Giving Dollars will make it into the hands of the nonprofits chosen by the Givingism community. This means that sellers get the tax break.

Why does this seem unnecessarily complicated?

This system may seem overly complex but it's the only way we can both sell a broad range of goods as well as make tax-free donations to nonprofits. There are two reasons for this:

1. The money used for donations is considered to be profit in the eyes of the IRS. And for-profit entities can only donate up to 50% of their profit tax-free. If we operated just as a for-profit entity, our donations would far exceed our actual profit which means donations would be significantly reduced by taxes.
2. For nonprofit entities, selling goods is only tax-exempt as long as the goods sold directly contribute to the nonprofit's charitable cause. Unfortunately, "raising money to give it away" does not count as a valid cause in the eyes of the IRS.

What this means is that we cannot operate purely as a for-profit nor a nonprofit. Our solution is a hybrid approach with the formation of the Givingism Marketplace in partnership with the Givingism Foundation. Under this approach, we can sell products and pay honest taxes on our actual profit while ensuring that every Giving Dollar you contribute actually makes it into the pockets of the Nonprofits.

Are there ever situations where Giving Dollars might not be used as expected?

Giving Dollars will not go to the intended recipient in cases of fraud or violation of our policies. We make our best effort to vet nonprofits but sometimes accounts may be fraudulent, or they may get banned for policy violations before donations make it to them. In these cases, the Givingism Foundation will properly allocate those Giving Dollars to another nonprofit of our choosing. Likewise, Giving Dollars can expire on inactive accounts, but we ensure that these allocated funds still make it to a nonprofit.