What it is
Crowdfunding means gathering many small gifts from many people, usually through an online fundraising platform. Donors give to a person, a group, a cause or an organization, and the money is passed along to the people running the campaign.
Tax treatment depends on the recipient. In general, only gifts to organizations that the IRS recognizes as charities may be deductible for donors who itemize. Gifts to individuals, private campaigns, or groups without that status usually are not.
Because a campaign page can look similar whether it is run by a charity or by a neighbor, the label "donation" does not settle the question. Donors and organizers each have different things to check.
How it’s traditionally been approached
Traditionally, people who wanted a deduction gave directly to an established charity and kept the receipt or acknowledgment. Charities are typically able to explain whether a gift qualifies and what paperwork they provide.
Individuals raising money for a personal need, a team, or a community project have often done so informally, with the understanding that supporters were giving as a gesture of goodwill rather than for a tax benefit.
Organizers who want to offer deductible giving have often worked with an IRS-registered charity or an arrangement where one receives the funds. Rules for this, along with charitable-solicitation registration, vary by state, so organizers commonly consult a qualified professional.
How the right organizer may help
The right organizer may help you sort out which kind of campaign you are running: a personal fundraiser, a club or team effort, a civic education project, or a campaign connected to a registered charity. Knowing this up front can help set honest expectations with supporters.
A good organizer may also help you word your campaign page clearly, so donors understand who receives the money and are not led to assume a tax benefit that may not exist. They may explain how fees and payouts work on the platform you choose.
When you speak with one, you might ask: Is the recipient an IRS-registered charity? What do I need to check in my state? Do I need a qualified tax or legal professional? How are funds received and reported? Donors can verify a charity using the IRS Tax Exempt Organization Search.
The bigger picture
Tax questions can create worry for both givers and organizers. Donors want to feel good about where their money goes, and organizers want to avoid surprises later. Getting clarity early may bring some peace of mind.
Being open with supporters builds trust, which matters as much as the money itself. If the stress of managing a campaign feels heavy, Providers.plus may be a helpful place to explore additional support. No approach is wrong; the best fit depends on your goals and situation.
Keep in mind
- Donations are not automatically tax deductible just because they were made online or through a campaign.
- Only gifts to IRS-registered charities may be deductible, and donors can check status with the IRS Tax Exempt Organization Search.
- Charitable-solicitation registration, raffle and gaming rules, and legal-defense-fund rules vary by state, so check your state's rules and speak with a qualified professional.
- On this platform, the terms are a 6% platform fee per donation, payouts on the 15th for the prior calendar month, and plans of Free, Grow at $99 per month, or Done-for-you outreach at $1,500 per month.
Not sure where to start? Answer a few gentle questions and choose who you’d like to hear from.
Frequently asked questions
Are crowdfunding donations tax deductible?
Not automatically. Gifts may be deductible only when they go to an organization the IRS recognizes as a charity, and even then it depends on the donor's situation. Gifts to individuals or private campaigns are generally not deductible. A qualified tax professional can give advice for your case.
How can I tell if a campaign is run by an IRS-registered charity?
You can look up the organization in the IRS Tax Exempt Organization Search. If the campaign is not clearly tied to a listed charity, it is best to assume gifts may not be deductible and to ask the organizer directly.
Can an organizer promise donors a tax deduction?
No, organizers should not promise or imply a deduction unless they are a registered charity or working with one and have confirmed it with a qualified professional. Clear wording on the campaign page helps avoid confusion.
Do fees change whether a donation is deductible?
Fees do not decide deductibility; the recipient's status does. On this platform, there is a 6% platform fee per donation, and payouts are made on the 15th for the prior calendar month. Donors who want to know how fees affect a receipt should ask the charity or a tax professional.
Are donations to a legal defense fund tax deductible?
Not necessarily. It depends on how the fund is set up and who receives the money, and rules for legal defense funds vary by state. Check your state's rules and speak with a qualified professional before making any claims to donors.
Do I have to report money I raise on an online fundraising platform?
It may depend on how the money is received, what it is used for, and your circumstances. This page cannot give tax advice, so a qualified tax professional is the right person to ask about reporting and records.
Educational resource. 2A Support shares general information and connects people with independent organizers. It is not professional advice. Talk with a qualified professional about your own situation.