In general funds received through a crowdfunding platform are treated by organizations as individual contributions. Because most crowdfunding platforms charge a fee per donation for their service, when you record the contribution, and send an acknowledgement letter to each donor, make sure to note the contribution amount net of the service fees. If your organization does not have federal 501(c)(3) status, you may need to advise any donors to your crowdfunding campaigns that their donation is not tax deductible.
A federated campaign works differently from a crowdfunding campaign. Federated campaigns are fundraising efforts conducted by agencies called federated funds. Federated funds raise money from the general public, sometimes through direct paycheck deductions, and then redistribute the funds to nonprofit organizations. The most common of these federated funds are United Way and the Combined Federal Campaign.
Contributions from federated campaigns, even though they are based on funds raised from individuals, are treated differently from crowdfunding contributions because often the campaign agency decides how to distribute the money. In that way, they are similar to contributions received from Community Foundations, where a donor might designate a recipient, but the agency has the ultimate authority to make awards as it sees fit. In general, contributions from federated campaigns should be recorded as Foundation Contributions in the CDP. If your organization has used the Corporate Contributions line for these funds in the past because the donation comes from another nonprofit, continue using that line to be consistent. Contributions from federated campaigns may be restricted by the donor, so be sure to review your grant agreement thoroughly before recording the contribution.
In some cases, individuals give money to a federated campaign, but designate it for a particular organization. If you have received these earmarked funds where the federated campaign only acts as the intermediary, but has no say in who gets the money, record those funds as individual contributions.
As you record contributions from federated campaigns internally, you may want to create an account for federated campaign contributions because you need to report these separate from foundation and corporate grants on your IRS From 990. |
