Charitable Fundraising Transaction System with Tax Deduction

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Solution Overview

Problem

Traditional affinity card systems generate limited charitable funding and do not provide tax benefits to users, as the majority of transaction fees go to the card issuer rather than the charity, and users cannot claim tax deductions for their fee payments.

Innovation Solution

A financial transaction system where users agree to allocate portions of their transaction fees, including credit card, debit card, and merchant fees, as charitable contributions, with accounting and reporting mechanisms to track and deduct these contributions for tax benefits.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Quantity of substance

If traditional affinity card systems are used, then some charitable funding is generated, but the amount of funding is limited and users cannot claim tax benefits

Engineering Contradiction:

Improvecharitable funding amountVSAvoidtax benefit availability

Core Design Contradiction:

Quantity of substanceVSProductivity

Solution Approach 1:

The patent segments the transaction fee into multiple components (interchange fee, processing fee, assessment fee) and allocates different portions to different purposes. Specifically, it segments the cardholder's fee payment to separate the portion that goes to the charity from the portion that covers the card issuer's operational costs, enabling both charitable contribution and tax benefit simultaneously.

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The patent introduces a charitable organization as an intermediary between the cardholder and the card issuer. The cardholder pays fees to the card issuer, which then allocates a portion to the charitable organization. This intermediary structure enables the cardholder to claim tax benefits while the charity receives funding, resolving the contradiction between limited funding and lack of tax benefits.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Reliability

If cardholders pay transaction fees to the card issuer, then the card issuer can operate the system, but the fees do not contribute to charitable purposes and are not tax deductible

Engineering Contradiction:

Improvesystem operation continuityVSAvoidcharitable contribution effectiveness

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The patent makes the fee allocation dynamic by allowing the card issuer to adjust the portion of fees allocated to charity based on various factors. The allocation ratio can change over time based on the card issuer's operational costs, the charity's needs, and the cardholder's usage patterns, enabling the system to maintain reliability while maximizing charitable effectiveness.

Inventive Principle:

Principle #15Dynamics

Solution Approach 2:

The patent changes the parameter of fee allocation by introducing variable allocation ratios rather than fixed amounts. The card issuer can adjust the percentage of fees going to charity based on operational requirements, ensuring system continuity while optimizing charitable contribution effectiveness through parameter flexibility.

Inventive Principle:

Principle #35Parameter changes

3Ease of manufacture

If the card issuer collects most transaction fees, then the card issuer can provide services, but the charitable contribution amount becomes negligible compared to total fees

Engineering Contradiction:

Improveservice provision capabilityVSAvoidcharitable contribution proportion

Core Design Contradiction:

Ease of manufactureVSQuantity of substance

Solution Approach 1:

The patent applies partial action by having the card issuer collect only the necessary portion of fees to cover operational costs, rather than collecting all fees. This allows the card issuer to provide services while allocating a larger proportion of fees to charity, improving both service capability and charitable contribution proportion simultaneously.

Inventive Principle:

Principle #16Partial or excessive action

Solution Approach 2:

The patent converts the card holder's fee payment, which would normally be a pure cost to the charity, into a beneficial charitable contribution. By structuring the fee allocation so that the cardholder's payment directly contributes to the charity after covering necessary operational costs, the system transforms a potentially harmful situation (high fees reducing charitable proportion) into a beneficial one (fees becoming charitable contributions).

Inventive Principle:

Principle #22Blessing in disguise (Convert harm into benefit)

Data Source

PatentUS20100191587A1Transaction system for charitable fund raising, with tax benefit

Publication Date: 2010.07.29 DUERR DONALD JEFFREY

AI summary

A system for using financial transactions to raise funds for charitable purposes. A party who uses the system for carrying out financial transactions agrees to pay fee-like contributions for use of the system, such that a portion (up to 100%) of a contribution will be allocated to a charitable entity on behalf of the user. A business entity that facilitates the financial transactions records the details of the transactions and then reports to each user the charitable contribution the user has made through the system. This allows the users to obtain tax benefits on their respective contributions.