GoFundMe. Tax Deductible?
Julianne Shenk
JBS Nonprofit Consulting
July 2015
In a word, No.
Nine times out of ten, No.
More often than not, No.
When I tell someone I am a nonprofit consultant, the first
question I am asked is, “What do you do?”
The second question is, “I gave a guy that I work with $50 for his dog’s
chemotherapy through a GoFundMe account, that is tax-deductible, right?’
The answer is…no.
Full disclosure:
this is not in every instance. However,
most donations on
GoFundMe are basically considered to be
“personal gifts”. Personal gifts are not taxed as income in the US.
Disclaimer: I am not discouraging
anyone from donating to a GoFundMe campaign. I have donated to several of them
myself. Just be aware that your donation is purely a giving gesture and not one
that can be deducted from your taxes.[1] I
have friends and acquaintances that have used GoFundMe with no issues. And, I
have happily donated. And, I will happily continue to do so if I believe in the
campaign, have the funds, and I am familiar with the individual or group
setting up the campaign.
The exceptions are donations that are made to legally
registered non-profits or charities. These donations may be considered eligible
for donors to claim as a tax
deduction. You will find however,
that most reputable nonprofits/charities will not use a GoFundMe campaign.
Again, there are always exceptions. Legally registered organizations will have
a designated method for donating. Please use those options before using a
GoFundMe option.
If you insist on using the GoFundMe forum for donating, note
that only donations made to a GoFundMe Certified
Charity campaign are guaranteed to be tax-deductible.
If you are unsure if you are donating to a Certified
Charity campaign, you can visit the campaign you donated to and look for the
Certified Charity icon:
If you don't see the “Certified Charity” icon on the charity
site that you donated to, then it is most likely a personal cause/campaign.
If you have any doubts about a charity that you donate to,
you should contact your tax professional.
This advice was offered via the Turbo Tax website:
Thank you for contacting TurboTax.
I would be happy to assist you. Unfortunately you will not be
able to deduct amounts donated through Go Fund Me.com. You can only
deduct amounts contributed to a qualified organization. Go Fund Me is not
a qualified organization. They are a business that matches people in need
of help with very generous people willing to give help. If a qualified
organization signs up with Go Fund Me and you donate to them through the
website you might be able to take a deduction. You will need to be
careful in this situation though since individuals can start a fund on Go Fund
Me for their favorite organization. Since it is an individual who
controls the account rather than the actual organization contributions would
not be deductible.
In your case the donation is not deductible because it was not
to a qualified organization and because it was for the specific benefit of an
individual. Any time you can determine the exact individual who benefits
from your contribution you lose the ability to take a deduction on your taxes.[3]
Recently I was forwarded an article discussing federal regulator’ s
intent to crack down on crowdfunding scams. They will pursue individuals/groups
who raise money through sites like GoFundMe and Kickstarter,[4]
but do not follow through on fund distribution.
One such case is detailed below:
“In its first case involving crowdfunding, the Federal Trade Commission
announced Thursday that it has settled charges against a man who raised
$122,000 through Kickstarter to produce a board game that never materialized.
According to the FTC, Erik Chevalier canceled the project and said he would refund
the donations but instead he used the money to pay his rent and move.”[5]
Bottom Line: Be careful when you are donating to a GoFundMe
campaign. The vast majority of the time, you will be donating to a personal
campaign and not an official IRS recognized charity.
I am not discouraging anyone from donating to a GoFundMe
campaign. I have donated to several of them myself. Just be aware that your
donation is purely a giving gesture and not one that can be deducted from your
taxes.
Rule of
thumb:
Unless an organization is a 501(c)(3) charitable organization, recognized by
the IRS, donations are not tax-deductible.
[1]
You will see this paragraph again. I promise. I really want to get this point
across. No discouragement, just information.
[2]
Supportgofundme.com
[3] https://ttlc.intuit.com/questions/2504057-can-i-deduct-gofundme-donations
[4]
Kickstarter is similar to GoFundMe. For a full explanation go to: https://www.kickstarter.com/hello?ref=footer
[5]
Flaherty, Annie, “Federal Regulators are Going After Crowdfunding Scams on
Kickstarter, GoFundMe,” Associated Press 11 June 2015 http://bigstory.ap.org/article/cc1b7a4b0cb84a3db4f9fda0b8f88baf/federal-regulators-go-after-crowdfunding-scam
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