Are your fundraising donations tax-deductible? The answer to this common question depends upon the details of each donation that you made. We always recommend that you feel comfortable and confident about a cause before you make a donation, and that includes understanding how your donations affect your taxes. Here’s what you need to know.
Crowdfunding Donations and Tax Considerations
When someone is struggling and asks for financial help, most supporters make donations without thinking about tax considerations. So what if your compassion and generosity may not end up on your tax return? Your crowdfunding donations make a tremendous difference in helping people recover, heal and regain hope in times of need.
In the US, the same Internal Revenue Service rules apply to crowdfunding donations as to any other financial assistance you provide to people or groups.
Donations That Are Tax Deductible
A donation is tax-deductible if made directly to a charitable organization that the IRS has designated as a qualified organization. Other than churches and governments, most charitable organizations must complete IRS processes to become qualified, such as attaining 501(c)3 nonprofit status.
Donations That Are Not Tax Deductible
Donations to individuals are not eligible for tax deductions. For example, if you gave cash to a neighbor whose house was damaged in a fire, you cannot claim a tax deduction for that gift.
Neither are donations to non-qualified charitable organizations. This category includes many organizations located in other countries.
Resources for Tax Questions
Before you decide to support any cause, feel free to ask whether or not fundraising donations are eligible for tax deductions. Qualified organizations usually promote tax-deductible status clearly, both in their requests and in receipts that document your contributions.
You can learn more about relevant tax rules and exceptions on this IRS webpage of resources for donors. It includes quick tips, videos and a database you can search online to check an organization’s eligibility to receive tax-deductible charitable contributions. It’s also wise to reach a tax advisor with any questions you have about fundraising donations.