Tax aspects of charity through crowdfunding

Crowdfunding as a dominant means of peer-to-peer charity has certainly become a huge social trend with widespread implications. This article discusses how crowdfunding has actually replaced the church’s role in this arena. The removal of a “middleman” or “gatekeeper” to charity funding is a complex social issue, according to those who write about the topic. I ave mixed feelings and limited understanding of the social implications so should perhaps limit my comments to the area I know best: tax implications.

Peer-to-peer charity through crowdfunding is not tax deductible. At first, it would seem to be a major deterrent. But a blog post I put out last year explains that most people get no tax benefit from a donation to a charitable organization anyway, so maybe it is not as big a deal as we might expect.

Besides the facts, I suspect that there are two other issues at play: 1) the psychological benefits and perceptions about charitable transactions matter far more than actual tax law, 2) despite what the tax law says, people who donate through crowdfunding will deduct their small contributions on their tax return anyway if they have the chance.

I have another blog post on tax implications of crowdfunding that covers a much wider range of tax-related issues beyond the charity discussion.



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