2

I am receiving some excellent feedback, so please bear with me while I give more details on the entire concept - as I am starting to think it may not be feasible without cooperation from the family?

A great friend and couple's family is facing extreme economic hardship. A group of us would like to establish an online fund and ask for donations on their behalf. I planned to open the fund and then send an e-mail out to a couple hundred family and friends directing them to the website over a period of time - say two months. When the period of time is over, we would like to transfer the total funds to the family anonymously.

  • If it was not anonymous, we feel they may not accept it.
  • Also, if I collected the monies personally in my bank account and avoided a donation site, which we hope will be over $20K, then I would have to claim the monies as income is my understanding and I can't do that and pay taxes on it. Similarly, I could not cash out the monies from the donation account and then send it anonymously via cashiers check, as it would still flow thru my bank account and look like I made the donation and be subject to gift tax?
  • I don't think the recipients need to worry about the monies being taxable to them as income as it is a gift. But still the aggregate amount would be higher than the gift tax ceiling, so even that may need to be established? I think gifts are ok under a certain amount ($13-14K?)

So a key question is whether any of these donation assistance sites will assist us by closing the account and sending a cashiers check from the site itself? Again, we wish this to be anonymous.

Also since it would be an anonymous gift, we would want to avoid sending a large sum of cash in an envelope if we did collect it externally from a website.

Note: This would not be set up as a 501c charitable organization and would not qualify as such.

p.s. We are in the state of Illinois in the U.S.

Improve this question
6
  • 1
    Regarding the tax implications, you say "taxable to them". By "them" do you mean the person cashing out/writing the check, or do you mean the family?
    – dg99
    Jan 2, 2015 at 22:52
  • Does the family have a religious community with which they are affiliated? Those will sometimes set up funds for aggregation donations to members in need.
    – Rick Goldstein
    Jan 2, 2015 at 23:40
  • 1
    What country is this in?
    – littleadv
    Jan 3, 2015 at 0:02
  • Legally, this is taxable in some way in many jurisdictions. Practically, depending on the amount, there's always the option of using cash.
    – Peter
    Jan 3, 2015 at 0:23
  • @paulg It looks like you've created two accounts. Visit this help page for instructions on what to do to merge your accounts.
    – Ben Miller - Remember Monica
    Jan 5, 2015 at 16:09

3 Answers 3

Reset to default
5

Regarding the tax implications half of your question ...

There seem to be a lot of articles that say there's not yet any established law concerning the tax treatment of crowdsourced funds.

Since your objective is gift-giving rather than business purposes, it would seem that the gift tax rules would apply, and gift taxes are charged to the donor not the donee. (But I am not a tax attorney.)

Improve this answer
2
  • Goes without saying, but since Paul G. is new to the stack: This is not a place for attorney or tax advise. Reader beware not to follow up based ONLY on advice from random strangers in the Internet.
    – Mindwin
    Sep 28, 2016 at 14:29
  • @Mindwin Yes, it "goes without saying" because (a) otherwise we'd have to paste that warning on every answer here and (b) I did paste that warning in my answer and (c) the OP was new to the site 1 year and 9 months ago.
    – dg99
    Sep 28, 2016 at 16:34
3

You mention that "A great friend and couple's family" which makes me think this is a couple. For gift tax concerns, you can give a couple 2 x the gift tax exemption ($28,000 in 2015). Your example of $22k would fit in this amount.

To give this money anonymously, I know that people have reached out to a pastor in the area who will deliver an envelope with the gift and not disclose the source. Talking to a pastor who has done this, he said the call came out of the blue and he was happy to be able to help.

Improve this answer
0

In the US the best way to solve the problem, IMHO, would be via a trust. Talk to a properly licensed trust/estate attorney and a tax adviser (EA/CPA licensed in your State).

Using intermediary who's not a 501(c) organization may pose income tax issues to that intermediary as providing support to the needy is not a valid business expense. It may also pose gift tax issues, since the aggregate amounts may exceed the statutory exemption limits.

Using a (non-revokable) trust you can avoid these issues, but others may come up (such as what to do with the trust income or undistributed moneys). Talk to the advisers about how to avoid them.

Improve this answer

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.