Do GoFundMe Donations Count as Charitable Contributions?

GoFundMe is a popular platform for raising and contributing funds to various causes, from personal emergencies to community projects. Many individuals wonder if donations made through this platform qualify as tax-deductible charitable contributions. Understanding the criteria for tax deductibility and how GoFundMe campaigns are structured is important for both donors and organizers. This article clarifies when GoFundMe donations may or may not be considered charitable contributions for tax purposes.

What Qualifies as a Charitable Contribution

For a donation to be considered a tax-deductible charitable contribution by the IRS, it must be a voluntary gift made to a qualified organization. This means the donor cannot receive goods or services of equal value in return. Qualified organizations are tax-exempt under Section 501(c)(3), including most public charities like religious organizations, educational institutions, and hospitals.

Contributions must be made to these recognized tax-exempt entities, not directly to individuals. If a donor receives a benefit, they can only deduct the amount that exceeds the benefit’s value. This is known as the “quid pro quo” rule, and organizations must provide disclosure statements for contributions over $75 where benefits are received. Donations can be in the form of cash or property, and proper substantiation is required.

How GoFundMe Campaigns Are Structured

GoFundMe campaigns are structured based on how funds are collected and who receives them. The platform supports both personal campaigns and campaigns for qualified non-profit organizations. Understanding these structures is important, as the flow of funds determines potential tax implications for donors.

Personal campaigns raise funds directly for an individual or family, often for medical bills or emergencies. The money is transferred to the individual’s personal bank account. GoFundMe also facilitates campaigns where funds are directly transferred to a registered 501(c)(3) non-profit organization.

A third structure involves campaigns managed by a third party or a fiscal sponsor. Funds are initially collected by an individual or group for a project without its own 501(c)(3) status. These funds are then transferred to a qualified non-profit organization, which acts as a fiscal sponsor and distributes the money to the intended project or individual.

Deductibility Based on Campaign Type

The tax deductibility of a GoFundMe donation depends on the campaign’s nature and the recipient of the funds. Donations to personal campaigns, even for medical expenses, are not tax-deductible. These are considered personal gifts to an individual, not donations to a qualified charitable organization recognized by the IRS.

Donations made to GoFundMe campaigns directly benefiting a registered 501(c)(3) non-profit organization are tax-deductible. When a campaign is for a qualified charity, the funds transfer directly to that organization, which provides necessary tax documentation. Donors should look for explicit mention of the organization’s 501(c)(3) status.

Donations through a fiscal sponsorship arrangement are also tax-deductible. In this model, a donor contributes to an established 501(c)(3) organization that manages funds for a project or individual without direct tax-exempt status. The donation is legally made to the qualified fiscal sponsor, which maintains discretion and control over the funds for charitable purposes.

Documentation for Donors

Proper documentation is essential for donors claiming a tax deduction for GoFundMe contributions. For tax-deductible donations, such as those to qualified non-profits or through a fiscal sponsor, donors must maintain a record of their contribution. This record could include a bank statement, credit card statement, or a receipt from the charity.

For monetary contributions of $250 or more, the IRS requires a contemporaneous written acknowledgment from the qualified organization. This acknowledgment must include the amount of the cash contribution, a statement indicating whether any goods or services were provided in return for the donation, and a good faith estimate of the value of any such goods or services. The acknowledgment should come directly from the 501(c)(3) organization receiving the deductible donation, not from GoFundMe or the individual campaign organizer.