Making Grants to Crowdfunding Campaigns During Disasters

You may wonder whether you can make grants to GoFundMe campaigns that are supporting localized efforts during disasters. Proceed cautiously: GoFundMe and many similar crowdfunding platforms are not registered 501(c)(3) public charities, and therefore you need to examine carefully if the campaigns hosted on these sites are charitable in nature.

How Can Foundations Make Grants to GoFundMe and Other Crowdfunding Platforms?

If the page and account was set up by a charitable organization to benefit that charitable organization, you can make a grant just like you would any grant to any other charity. In this case, the charity is using the platform as a method to accept contributions for themselves. For GoFundMe, such pages will have a green check mark and a note that all contributions are 100% tax-deductible.

On the other hand, if the campaign was set up by an individual, or a non-charitable entity, with the intention that the money raised would go first go to the individual/non-charity who would then disperse to other organizations, you would treat this as a grant to a non-charity. In this case, you would need to collect documentation to show how your grant served a charitable purpose. Such documentation could include checks and transmittal letters from the individual/non-charity to charitable organizations matching the amount of your grant, or documentation of an objective and nondiscriminatory program of making grants to individuals in need. However, if your grant came from a donor-advised fund, you would need to exercise full expenditure responsibility.

Tip for your nonprofit partners: Individual donors sometimes create fundraising campaigns for their organization and unwittingly make life difficult for the charity in question. We recommend that you help your nonprofit partners understand the need for campaigns to be set up in their name, not in the name of the individual supporter.

 

Note: There are some charitable crowdfunding platforms, such as GlobalGiving, where this issue is not relevant.