Cross Border and International Donations

How can Americans looking to donate to Canadian charities or Canadians looking to donate to American charities donate?(Part 1)

What is the best way for Americans looking to donate to Canadian charities or Canadians looking to donate to American charities? There are several ways to go about cross border donations. Over the coming weeks we will explore some of the options and the possible advantages and or disadvantages. In this post we will explore the most common way to donate to a charity across the border.

The most common way to donate to a charity in another country is by sending the donation directly to the designated charity on the other side of the border. For example, an American resident sends a donation to a Vancouver homeless shelter. The donor can send it by cheque, wire transfer, or credit card if the charity accepts credit cards. The advantage of this donation method is the charity receives the donation directly into their account from the donor without any intermediaries.

However, there are some disadvantages. First, the donor would need to convert the US dollar funds into CAD dollars. If the donor does not have a special FX rate with their bank or credit card the donor may pay 3-4% above the market currency exchange rate. Second, if the donors is sending a wire, there may be a significant wire fee and if the donor is paying with a credit card the charity pays up to 4% credit card processing fee. Third, although the donor may receive a Canadian tax receipt, the US donor can not use the tax receipt for a US tax deduction. (Unless the donor also files a Canadian tax return and claim the tax deduction on their Canadian earnings, in which the IRS may allow for a limited deduction in some circumstances.) As the IRS would only accept a tax receipt from US charity, not a foreign or international charity. The same apply to Canadians donating to a US charity.

Charity Exchange can help donors with its unique donation matching program for cross border donations. Visit Charity Exchange FAQ page to see how matching donation work.

Click here to read part 2 Donating to American Charities

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