Within days, crowdfunding websites reportedly
raised more than $2 million to support victims of the Boston Marathon bombing
tragedy.
While online giving provides a quick and easy way
to support those in need, donors should ask questions and know what to expect
when contributing through crowdfunding websites.
Crowdfunding websites
are established to allow solicitation of money for a variety of purposes. The
organizations or individuals to which the funds are given can be, but aren’t
necessarily charitable, according to the Better Business Bureau. Some
contributions through these sites may not be tax deductible as charitable
donations.
Donors should know
that crowdfunding websites usually take a percentage of the donation ranging
from 5 to 20 percent and may also deduct payment processing fees in
addition. A few of these sites may allow the donor to cover all such fees
but, in many cases, the recipient may not receive the full amount given.
Crowdfunding websites
can raise money for legitimate charities. However, if you want to be sure
that the charity receives the entire amount given, it’s a good idea to go to a
charity’s website and make a direct online contribution, the BBB advises.
Giving through established
charities has advantages including the requirement that they register with
state government authorities, must report on use of funds, and are subject to
the oversight of a board of directors.
Only certain types of
tax-exempt organizations are eligible to receive contributions deductible as
charitable gifts, according to the Internal Revenue Service.
Crowdfunding donations
made to support a specific individual or family are considered a “personal
gift” and not a charitable contribution. If charitable tax deductibility is
important to you, be sure to donate to an eligible organization as defined by the IRS.
Additional tips from
the BBB:
- Make sure the
crowdfunding websites you use to donate securely encrypt all transactions using
Secure Socket Layer technology. Look for https at the beginning of the website
address.
- Read the crowdfunding
site’s statement about its policies – including its terms, conditions, and privacy policy – to
understand how your donation and your personal information will be handled
before giving.
- Check out charities through www.bbb.org.
