>I am not sure you understand how accounting works. You have a tax liability. Now, you donate a million dollars (let's assume money for the sake of simplicity). How is this donation reflected in your balance sheet? Well, your bank owes you a million dollars less, and at the same time, you owe the state 250000 dollars (or whatever it is) less. Now, if the fact that your bank owes you a million dollars less means that you paid the donation, then the fact that you owe the state 250000 dollars less also means that the state has paid you a quarter of a million dollars of your donation back. Or in other words: That part of the donation is paid for by other tax payers.

If you donate money you donate actual money, the deductibles are for potential profits from your revenue.

Say I donated 1M to charity these 1M are gone they aren't mine any more, this means that my buying power has been reduced by at least 1M and considering credit even more, and I've just lost any potential ROI on that money.
What I can potentially get in return is the ability to deduct some of that amount from my tax future tax liability this means that if I make enough money to pay tax I could deduct a portion of the tax I would have to pay based on that donation.

No one in this scenario gave me money, I've gave out 1M, I might get some of it back however this isn't additional money that the tax payer has to pay that just money that is gone from the tax system.

By this logic a company that operates at an operational loss or an individual that their assets have resulted in a capital loss some how increase your tax liability which is simply not the case.

Now you might say that if people lose money all the time and not pay taxes eventually the Government will have to balance it out by taxing you more but this doesn't really happen that often as organization will not exist in operational loss which defers any tax liability on their account indefinitely same goes for people which their assets continuously lose value.

And while you might say but hold on a second Charity allows you to get some tax deduction and you can do that indefinitely well no no amount of charity will cancel out your tax liability, the cap ensures that the amount which can be deducted will always be considerably.

But you also need to remember that charity means that money goes to causes that in most cases would be funded by public funds (with Religious institutions being the only exception in some countries) this means that if you donate 1M and get 250K in deductibles the banks owes you 1M less, you have much less credit, you owe the state 250K less potentially but the state just got 1M in surplus because it doesn't need to allocate funding.

Charity (when people actually donate money, goods or labor) in most cases works exceptionally well when you actually donate to decent causes and not to some Kony2012 BS (and before you complain about remember that to pass the budget they US government ends up spending 100's of millions on nonsense like investigating the effects of beavers on moose mating calls and the economical implication of anti trust investigations against ice cream cartels in Guatemala on US foreign interests) to the point where some countries either do not put caps on charitable donations or are looking into removing them.

You need to understand that charity isn't a tax loop hole even with 100% deductible.
If I earned 2M paid 50% of that in taxes in a given year (n) I now have 1M$, if I donate all of that to charity the government has technically received 2M from me instead of 1M as it now doesn't have to pay out additional 1M to fund various project because I have done so in their place.

Not only that but technically depending on what I've donated too I've actually increased their tax revenue potentially even more since some of my donation could end up paying for goods (VAT/Sales tax), salaries, microloans for businesses etc, housing (deed stamp tax (not sure if you have that in the US) etc.

Now I'm out of 1M$ and i get it as a deductible and I carryback this deductible to the next year to get my money back I need to make just as much as I did last year while paying no taxes, so if I make 2M again I will have 2M which is exactly the amount of money I would've have if i donated 0 to charity and paid the full tax for each year (if i do not donate to charity I could potentially have more money from capital gains).

This is pretty much the definition of a zero sum game or well to more accurately put it equivalency - Charity is pretty much paying more "taxes" if your deductibles are capped (especially at a percentage rather than a flat sum) or extending credit / giving a tax free loan to society if you can deduct the full amount (given you can make sufficient revenue or carryback the deductible over subsequent years).

There is no case in which when Money Inc LLC or Richie Rich give 1M to charity Johnny Bluecollar ends up paying more tax to in order to cover for them.