Yes, Smart Givers, it’s that time of the year again. Back-to-School season is here, and with it, a plethora of school fundraisers. Before you know it, your kid will be coming home accompanied by a host of specialty chocolates, colored cookie dough, and autumn pumpkin pie vanilla spice chai latte scented candles – for you to sell. Fear not, Smart Giving parent, we’re here to help!
First things first – we know how busy you are, but no, you shouldn’t just buy all five tins of candles and write it off on your taxes. One, they aren’t tax-deductible (we’ll explain), and two, there’s a better way to do it!
As we discussed in our last blog post, the IRS allows a tax deduction for donations given to “any school that does not operate for profit” (Janet Berry-Johnson for Forbes). This includes donations you make as part of school fundraisers. The basic principle when deducting your donations to fundraisers is Donation – Worth of good or service = Tax-deductible amount.
Donation – Worth of good/service = Tax-deductible amount
Hence why we don’t recommend just buying all of the fundraising items — you won’t be able to deduct those candles from your taxes, and you’ll never be able to get the pumpkin scent out of your house.
So, why not consider a creative alternative?
Instead of buying the stuff yourself, consider giving directly to the school instead. Often schools get a severely reduced percentage of the fundraiser profits anyway. Cutting a check directly to the school can be most effective on all fronts – more money for them, less time (and taxes) for you.
However, while you might not be able to write off a bunch of candles (because in this case, donation = worth of good), don’t write off all fundraisers. Berry-Johnson gives the example of a fundraising dinner: a $100 ticket to a dinner with a meal worth $25 leaves you with $75 that you can claim on your taxes. Nice, huh?
A few exceptions to note:
1. The cost of raffle tickets is never deductible.“The price of the ticket is considered equal to the chance to win a prize,” writes Berry-Johnson.
2. Donating auction or raffle items is also never deductible since technically the school is putting them to fundraising use instead of educational use. (Tricky!)
3. If the school gives you a “small gift of minimal value” – like a coffee mug – in exchange for your donation or services, you are not required to reduce your tax deduction.
So with that, go forth and give (or fundraise)!