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Givzey Guidance: When Are Transaction Fees for Fundraising Events Tax Deductible?

Writer's picture: Kevin LeahyKevin Leahy

Givzey Guidance: When Are Transaction Fees for Fundraising Events Tax Deductible?
Givzey Guidance: When Are Transaction Fees for Fundraising Events Tax Deductible?

Question: When are transaction fees for fundraising events tax deductible?

Question: I am getting conflicting opinions on the tax deductibility of transaction fees that donors opt to pay. When someone makes a gift, we ask if they would like to increase their gift to cover the transaction fees we are charged by vendors. Most donors choose to increase their gift to cover the fees. For example, a $100 gift with an additional $3.00 to cover our fees, we record as a gift of $103.00. However, if someone pays $100 to attend an event with no tax deductibility and opts to pay the $3.00 transaction fee, I believe that the $3.00 should be processed as a charitable donation. I grant that means we need to split the $103 between event revenue ($100) and donation ($3.00) for the transaction fees. When are transaction fees for fundraising events tax deductible?

Answer:

If the donor/event attendee has the option of covering the transaction fees, those fees are tax deductible, because the person is making a gift to help defray your operating costs.  


If you or your vendor automatically charge the person a transaction fee, they are not tax deductible.  


Our advice: Most donors choose to cover the fees, by including the option for donors to do so, you defray operating costs and empower the donor to keep the entire expense around their gift tax deductible.

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