Wednesday, January 27, 2016
WHAT IS GOFUNDME?
I had never heard of gofundme.com before. I learned of it recently when a client emailed to ask if a donation made via this site would be deductible.
Gofundme advertises itself as “The World's #1 Personal Fundraising Site” with over $1 Billion raised. Wikepedia tells us –
“GoFundMe is a crowdfunding platform that allows people to raise money for events ranging from life events such as celebrations and graduations to challenging circumstances like accidents and illnesses.”
My client wanted to make a contribution to help with a friend’s medical expenses. He was told one way to do so was via the gofundme “John Doe’s Cancer Fund” (this is obviously not the real name of the fund).
The initial answer I gave my client was –
“You cannot deduct money given or donated to a specific individual as a charitable contribution, regardless of how needy the person or how charitable your intent. It is a gift and not a charitable contribution. There would have to be a special fund-raising activity sponsored by an existing organized church or charity and you would then contribute to that particular church or charity.
The usual example is you cannot deduct the value of a coat you give directly to a specific homeless person - you must give the coat to the Salvation Army or similar organization that gives clothing to the homeless.”
I looked at the webpage for “John Doe’s Cancer Fund” and could find no indication that this was a legitimate charitable organization.
A Google search led me to “Is my donation tax-deductible?” at the site’s Help Center, where I was told –
“Donations made to a GoFundMe Personal campaign are generally considered to be personal gifts and are not guaranteed to be tax-deductible. You can always check with a tax professional to be sure. Only donations made to a GoFundMe Certified Charity campaign are guaranteed to be tax-deductible.
Not sure if you donated to a Certified Charity campaign? You should've received a tax-deductible receipt from our charity partner FirstGiving. You can also visit the campaign you donated to and look for the 'Certified Charity' badge. Here's how it looks:
If you don't see the 'Certified Charity' badge on the campaign you donated to, then it's likely a Personal campaign. You'll need to consult with a tax professional in your area to see if your donation is eligible to claim as a tax deduction.”
There was no such “badge” anywhere on the “John Doe’s Cancer Fund” page, so I told my client that any contributions he made would not be tax deductible.
I told the client that I was unfamiliar with gofundme, and to be safe if he wanted to give money to his friend to help with medical expenses he should just write a check to “John Doe”. This way he knew all the money would go directly to “John”.