Are School Fundraisers Tax Deductible?

Donating to school fundraisers is a common way to support education and community initiatives. Many donors wonder if their contributions to these events are eligible for tax deductions. The ability to deduct these donations depends on several factors, primarily related to the nature of the school or organization receiving the funds and any benefits the donor might receive in return. Understanding the specific rules can help individuals determine the deductibility of their generosity.

General Deductibility Rules for School Contributions

For a contribution to a school fundraiser to be tax-deductible, the recipient school or organization must be a qualified charitable entity. This means the organization is tax-exempt under Internal Revenue Code Section 501(c)(3). Public schools, as governmental units, also qualify to receive tax-deductible contributions. Contributions must be made directly to the qualified organization, not to specific individuals such as a student or teacher.

Donors can claim a deduction for charitable contributions only if they itemize deductions on Schedule A (Form 1040) of their federal income tax return. The deduction is limited to a percentage of the donor’s adjusted gross income (AGI), which varies depending on the type of contribution and the receiving organization. A key principle for deductibility is that the donation must stem from charitable intent, meaning the donor does not expect to receive a personal benefit in exchange for their contribution.

The Impact of Receiving Benefits from Fundraisers

Many school fundraisers offer donors an item or service in exchange for their contribution, such as a t-shirt, baked goods, or admission to an event. When a donor receives something of value in return for a contribution, this is known as a “quid pro quo” contribution. In such cases, the charitable deduction is limited to the amount of the contribution that exceeds the fair market value (FMV) of the goods or services received. Fair market value represents the price at which the item or service would sell to the general public.

For quid pro quo contributions over $75, the organization is required to provide a written disclosure statement to the donor. This statement must inform the donor that the deductible amount is limited to the excess of the contribution over the FMV of the goods or services received, and it must provide a good faith estimate of that value. Small, insubstantial benefits may be disregarded under “de minimis” rules, allowing the full contribution to be deductible.

Payments for raffle tickets, lottery tickets, or chances to win prizes are not considered tax-deductible charitable contributions. The Internal Revenue Service (IRS) views these purchases as gambling, where the buyer receives the chance to win a prize, rather than a pure charitable donation. Therefore, even if a raffle ticket is purchased from a qualified charitable organization, the cost is not deductible.

Documenting Your Charitable Contribution

Proper documentation is important for substantiating any charitable contribution claimed as a tax deduction. For cash contributions of any amount, donors should maintain a bank record or written communication from the organization. For cash contributions of $250 or more, a contemporaneous written acknowledgment from the school is required. This acknowledgment must state the amount of the cash contribution, specify any goods or services provided in return and their estimated value.

For non-cash contributions, a receipt from the school is needed. If the non-cash contribution is valued at $250 or more, a contemporaneous written acknowledgment from the school is necessary, describing the property and any goods or services provided. For non-cash contributions with a total deduction amount exceeding $500, donors must also file Form 8283, Noncash Charitable Contributions, with their tax return. If the value of a single non-cash item or a group of similar items exceeds $5,000, a qualified appraisal may also be required. Maintaining these records is important in case of an IRS inquiry or audit.