Fundraising on Facebook has become increasingly popular in recent years. With the click of a button, you can create a fundraiser for a cause you care about and share it with your network on Facebook. The funds raised go directly to the nonprofit organization you select. This provides a quick and easy way for people to donate to causes through a platform they already use.
However, when money changes hands there are always tax implications to consider. Do you have to pay taxes on the funds you raise through Facebook fundraisers? Here is a quick overview of how Facebook fundraisers work and what the tax rules are.
How Facebook Fundraisers Work
Facebook provides a tool that allows users to set up fundraisers for nonprofit organizations directly through the Facebook platform. Here is a quick rundown of how it works:
– You select a nonprofit that is registered with Facebook as an eligible nonprofit. Facebook has a database of over 1 million valid nonprofits that users can choose from.
– You give your fundraiser a title, set a fundraising goal amount, write a story to share why you are fundraising, and select a cover photo.
– You can share your fundraiser on your Facebook feed, in Facebook groups you are a member of, and through Facebook messaging. Others can donate directly through Facebook.
– The money raised goes directly to the nonprofit organization, not to you the fundraiser organizer. Facebook pays all credit card processing fees so 100% of the donation amount goes to the nonprofit.
– Facebook sends the funds raised to the nonprofit on a monthly basis. The fundraiser organizer does not handle any of the money.
So in summary, you are raising money directly for a charitable cause, but the funds are not passing through you. Facebook handles collecting the money and distributing it to the nonprofit.
Are Facebook Fundraiser Donations Tax Deductible?
Donations made to registered nonprofit organizations are generally tax deductible, meaning the donor can claim a deduction on their taxes for the contribution amount. This also applies to donations made through Facebook fundraisers.
When a donor contributes to a Facebook fundraiser, they will receive a tax receipt from Facebook that includes the nonprofit’s name and Employer Identification Number (EIN). The donor can use this receipt to claim a charitable tax deduction on their tax return.
One thing to note is that for donations under $250, receipts may be emailed separately based on the donor’s communication preferences. But Facebook will make sure documentation is provided for all donors to claim their deduction.
Do You Have to Pay Taxes on Funds Raised?
Now let’s get to the main question – do you as the fundraiser organizer have to pay taxes on the funds raised through a Facebook fundraiser?
The short answer is no. Since the funds do not pass through you, the money is not considered income for you. You do not receive any of the donated amounts directly. Therefore, you do not owe any taxes on the funds.
The money is legally considered income for the 501(c)(3) nonprofit organization that receives the donations. The nonprofit may have to pay taxes if the funds are not used for eligible charitable program expenses.
But as the fundraiser organizer, you have zero tax liability on the amounts raised through a Facebook fundraiser. You are simply helping raise money directly for the nonprofit you selected.
You Don’t Receive Any Funds
It’s worth reiterating that you as the fundraiser creator do not receive any of the funds directly. You don’t have access to the money at any point.
Facebook collects the donations and sends the total amount raised directly to the nonprofit on a monthly basis. This money is not legally considered income or assets for you in any way.
Therefore, you do not have to report Facebook fundraiser proceeds on your taxes and the amounts are not subject to income tax, capital gains tax, or any other taxes. The money simply passes through Facebook to the nonprofit.
You Don’t Own the Fundraiser
Another key point is that you do not own or control the Facebook fundraiser. It is administered completely through Facebook and the funds go to the nonprofit organization’s bank account, not yours.
At any time, Facebook or the nonprofit can pause or cancel the fundraiser. You do not have authority over the fundraiser or have access to the funds. For tax purposes, it is clear the fundraiser assets and income belong to the nonprofit alone.
This means you have no tax filing requirements in relation to a Facebook fundraiser you create. You don’t have to report anything about the fundraiser on your personal tax return.
What If You Withdraw Fundraiser Funds?
Facebook does not allow fundraiser organizers to withdraw or receive any of the money raised through a fundraiser. However, in rare cases, a nonprofit may choose to voluntarily send some of the money to you.
Technically a nonprofit could withdraw some of the fundraiser donations from Facebook and issue those funds to you outside the platform. This would completely go against Facebook’s fundraiser policies and would likely result in your fundraiser being shut down.
But in the unlikely event this was done and you received fundraiser contributions directly from the nonprofit, you would have taxable income to report. Any funds withdrawn and paid to you would be considered taxable income that you would have to report on your tax return. You may have to pay income taxes on these amounts.
Outside of this highly unusual scenario, you will not receive any taxable income from a Facebook fundraiser. The platform is designed so that all money raised goes directly to the selected nonprofit.
Reporting Fundraising Amounts
Although you don’t pay taxes on Facebook fundraiser proceeds, you may want to track and record the total amount you raise for each fundraiser. This provides helpful documentation and shows your ongoing support of the nonprofit.
The main options for tracking fundraising totals include:
Facebook Fundraiser Reporting
Facebook provides fundraiser reporting and analytics directly through the platform. As the fundraiser organizer, you can log into your Facebook account and view real-time data on:
– Total dollars raised
– Number of donors
– Average and highest donation amounts
– List of all donations received
You can check these fundraiser metrics any time. Facebook also emails you updates as new donations come in. This is the easiest way to monitor your real-time fundraising progress.
Request Updates from the Nonprofit
You can also request updates directly from the nonprofit organization benefiting from your Facebook fundraiser. Many nonprofits have dedicated staff to help fundraisers track their progress.
The nonprofit has access to the full donation reporting and will receive the total amounts raised by Facebook monthly. Reach out to request periodic updates on dollars raised through your specific fundraiser.
Save Social Media Posts
As you promote your fundraiser across social media, save copies of key posts and photos showcasing your fundraising efforts. These can serve as helpful records to document your support. Make sure to download or screenshot social posts.
Having these records makes it easy to demonstrate how much you did to raise money for an important cause that matters to you.
Tax Deductions for Organizing Fundraisers
Because you are volunteering your time and effort to organize a Facebook fundraiser, you may be eligible to claim some related tax deductions.
Deduct Out-of-Pocket Expenses
If you incur any out-of-pocket expenses related to organizing a fundraiser, these may be tax deductible. Potential deductible expenses include:
– Postage, shipping, printing costs for fundraiser promotions
– Fees for posters, flyers, or fundraiser materials
– Travel expenses related to organizing or promoting the fundraiser
– Fundraiser website costs
– Ticket fees for charity events you organize
Keep careful records of any expenses you pay and obtain proper receipts. These would be claimed as charitable deductions on Schedule A of your tax return.
You can deduct expenses directly related to fundraising activities up to the amount they exceed 2% of your adjusted gross income for the year.
Deduct the Value of Volunteer Hours
You can also deduct the value of the time you spend volunteering for fundraising activities. This is based on the hourly wage you earn at your job.
Track the number of hours spent organizing the fundraiser, promoting it on social media, attending related events, etc. Multiply these volunteer hours by your typical hourly pay rate. The result is a deductible contribution at your highest tax bracket rate.
For example:
* You earn $25 per hour at your job
* You spend 10 hours volunteering for the fundraiser
* 10 hours x $25 per hour = $250
* $250 x your tax bracket rate (for example 22%) = $55 tax deduction
So be sure to track your volunteer time spent on fundraisers. The value of your time can add up to substantial tax deductions.
Summary
Running a Facebook fundraiser provides a great way to support a charity you care about. By tapping into your existing social network, you can help raise significant funds for nonprofit causes.
The key tax rules to remember are:
– You do not pay taxes on any funds raised through a Facebook fundraiser. The money goes directly to the selected nonprofit organization.
– Donors receive tax deductible contribution receipts from Facebook to use for their own taxes.
– If you incur expenses or volunteer time organizing the fundraiser, be sure to track these so you can claim them as charitable deductions on your tax return.
Following these guidelines will ensure you stay compliant with IRS rules. With strategic promotion, Facebook fundraisers allow almost anyone to make a meaningful fundraising impact.
Frequently Asked Questions
Do I need to report Facebook fundraiser amounts on my taxes?
No, you do not need to report Facebook fundraiser amounts on your personal tax return. The funds do not pass through you, so they are not considered taxable income. The full amounts raised go directly to the nonprofit.
Can I deduct my Facebook fundraiser donations on my taxes?
No, you cannot claim a tax deduction for donations you raise through a Facebook fundraiser, since they are not your own donations. The donors who contributed can claim deductions based on the receipts Facebook provides them.
How much can I deduct for volunteering for a fundraiser?
You can deduct the value of your volunteer hours based on your regular hourly wage. Track time spent volunteering for the fundraiser. Multiply those hours by your typical hourly pay to determine the deductible amount.
Do I have to track donations received through my Facebook fundraiser?
You are not required to track fundraiser donations for tax purposes. However, recording totals can help document your ongoing support for the nonprofit. Save fundraiser updates and social posts as helpful records.
What if the nonprofit sends me some of the fundraiser proceeds?
In the very unlikely event a nonprofit directly sends you fundraiser contributions, you would have taxable income to report. But Facebook prohibits nonprofits withdrawing funds, so this scenario is highly unlikely to ever occur.
Conclusion
Organizing a Facebook fundraiser can make raising money for charity incredibly easy. And you don’t have to worry about any extra tax paperwork or paying taxes on funds raised.
The key is remembering that you do not receive or control the fundraiser donations at any point. Facebook facilitates passing all money directly to the selected nonprofit organization. This removes any tax liability on your part as the fundraiser creator.
Keep good records of expenses and volunteer time you dedicate to the fundraiser. These may qualify as deductible charitable contributions on your own taxes. With the right promotion, a Facebook fundraiser enables you to leverage your network to support great causes.