Fundraising Now Fee For Service
Starting July 4, 2016 4 Paws for Ability will be required by IRS determination to eliminate their tax deductible family fundraising requirement in place of a fee for service. Beginning the same date the fee for service will be $17,000.
4 Paws for Ability was selected for an audit in 2015. During this audit, the IRS determined that they consider the former fundraising requirement as an “exchange of service”, even though the donors to each child’s fundraising do not receive anything in exchange for their donation. We are required to be listed with the IRS as a fee for service organization and donations that benefit a child directly are no longer eligible for a tax deduction for the donor.
Clients with applications submitted prior to 4 July 2016 will abide by their contract which states donations towards their child’s service dog are tax deductible. Language on the Make A Dream Come True pages will not change for pre-July 4 applicants and language will gradually shift to a fully fee for service language as older applicants complete their fundraising and only post-July 4 applicants remain.
At this time we are also implementing a change to the way fees for future service dogs are calculated. If a family has received their dog prior to January 1, 2017 they will fund raise half the current fee for service at the time that they seek their second service dog. Families who receive their service dogs January 1, 2017 and after will receive a 1/3 discount when the family pays the fee for service/begins fundraising for a second service dog. Families who have questions about what a second service dog from 4 Paws will cost them can contact 4 Paws directly to discuss.
Ultimately, we do not agree with their decision and we believe that other organizations are able to operate in ways such that donations are made directly to support a specific person and remain tax deductible. However, if we were to appeal the decision and we lose that appeal, the IRS will revoke our 501(c)3 status making all donations not tax deductible and perhaps damaging our credibility with the un-researched donor. In the overall best interest of our clients, donors, volunteers, and friends we will proceed with their determination.
We are confident that our families will continue to fundraise in their communities with limited to no impact on duration or success. We will maintain our fundraising support system for them and work with them as we progress through this transition together. The Indiana University Lilly Family School of Philanthropy has been studying what motivates donors and philanthropists for years. Topping their list year after year are reasons such as “belief gift can make a difference” and “personal satisfaction”. However, giving to receive a tax benefit is consistently at the bottom of the list, coming in 11th with just 34% of donors in both 20131 and 20152. While donors get their feathers ruffled when Congress tries to reduce or eliminate charitable donation tax law, overall most donors “insist that they’d still give the same amount even if they received no income-tax deduction for charitable giving,”. 4 Paws’ experience is consistent with these findings based on how many donors request tax deductible donation receipts at the end of each year. It appears that just a small portion of our donor base itemizes their taxes and makes use of the charitable deduction option each year.
All other donations to 4 Paws remain tax deductible, including donations supporting children and veterans (unnamed donations), our building fund, naming opportunities, administrative expenses, veterinary care, dog supplies, and undesignated donations. If you have any questions about if your donation will be tax deductible, please contact us directly at firstname.lastname@example.org
1. Lourosa-Ricardo, C. (2014, December 14). How America Gives to Charity. Retrieved July 01, 2016, from http://www.wsj.com/articles/how-america-gives-to-charity-1418619046
2. Blackman, A. (2015, December 12). The Surprising Relationship Between Taxes and Charitable Giving. Retrieved July 01, 2016, from http://www.wsj.com/articles/the-surprising-relationship-between-taxes-and-charitable-giving-1450062191