California Attorney General’s Guide to Online Charitable Giving
In an effort to promote informed charitable giving, the Attorney General’s office recently issued a list of guidelines to Californians who choose to donate to charities through online charitable fundraising platforms.
What are Charitable Fundraising Platforms?
Charitable fundraising platforms are third-party internet-based platforms that allow the donor to give to charities listed on the platform. Examples of fundraising platforms include Amazon, Benevity, Charity Navigator, CrowdRise, eBay, Facebook, GoFundMe, Google, GuideStar (Candid), Lyft, Overstock, and PayPal.
Online Donation Guidelines
Attorney General Becerra recommends that, when donating through charitable fundraising platforms, donors should be aware of how the donation process works for indirect methods of charitable giving. Online donations are permanent and non-refundable. Prior to submitting a charitable donation using a charitable fundraising platform, donors should research and confirm the following:
Who is the intended recipient of your donation?
On most charitable fundraising platforms, donors actually make donations not to the charity they select, but instead to the charitable fundraising platform or its partnering platform charity. The expectation is that the contribution will eventually get to the intended charity. If that is unclear, find another way to support the intended charity, such as contacting the charity directly.
Will the charity receive the donation?
When donations are made to the charitable fundraising platform or its partnering platform charity, custody and control over the donation remains with the platform. The platform may retain the right and discretion not to give the donation to the charity you recommended.
How long will it take for the charity to receive the donation?
Check to see if the platform has a disbursement policy that clearly explains how long it retains donations before granting them to the charities chosen by donors.
How much of your donation does the charity receive?
Fees may automatically be deducted from your donation, such as credit card processing fees or other transaction fees. Be sure to research and inquire about fees that may not be disclosed.
The Attorney General’s Guide for Online Charitable Giving contains a complete list of guidelines, including guidelines on the duties and best practices of charitable fundraising platforms. Another valuable resource to charitable organizations is the Attorney General’s Guide for Charities.
Don’t Forget - Check the Tax Status!
Avoid tax confusion: Know the difference between “tax-exempt” nonprofit and tax-deductible. Being a nonprofit does not mean the organization is exempt from taxation, or that your donation is tax-deductible. There are many different types of nonprofit organizations, and generally, a tax-exempt organization is not required to pay tax on its income and gifts, but not all could offer their donors a charitable tax deduction for their contributions. The fact that an organization has a “Tax ID Number” or provides a receipt that says “Keep This Receipt for Your Records” does not mean the organization is a charity, that it is tax-exempt, or that your donation is tax-deductible. A few tax-exempt organizations, most notably those given the Internal Revenue Code section 501(c)(3) tax-exempt status, are able to offer charitable tax deductions for your donations.
How to Check Federal Tax Status of a Nonprofit Organization
Prior to making a charitable donation, donors should check the federal tax status of the nonprofit organization. Donors may obtain the federal tax status of an exempt organization by visiting the IRS’ EO Select Check or by calling the IRS at (877) 829-5500.
Questions regarding charitable fundraising platforms? We can help!
If you are a tax-exempt organization and have questions regarding charitable fundraising platforms, our experienced attorneys can help. Please contact our team of nonprofit attorneys at Henderson, Caverly, Pum & Trytten LLP. We regularly assist clients with matters concerning online contributions. We can be reached at (858) 755-3000 or email us via the contact button below.