What should I know about crowdfunding websites or companies?
Most crowdfunding companies are for-profit. The companies also charge a fee for their services, typically between 5 and 10 percent of the total funds raised, plus credit card fees. This can decrease the total funds available for the project. For example, if the project owner seeks to raise $5,000 and succeeds in doing so, he/she will receive a net amount ranging from $4,500 to $4,750 depending on the fees charged by the company used.
Are contributions to a crowdfunding project considered charitable gifts?
Typically, no. Individual contributions to a crowdfunding project are almost always made via a for-profit company and thus are not considered tax-deductible charitable gifts under Internal Revenue Service rules. If the crowdfunding company sends the funds directly to the UW, then the crowdfunding company is the donor of record (the donor of record would receive the charitable gift credit).
My colleague/friend/parent wants to support my project and wants to make a tax deductible gift? Is this possible?
If a UW or other institutional gift budget has already been designated, and there are no compliance issues with funding the work in this way, then it may be possible to make a gift directly to the University. Check with your department administrator and/or faculty supervisor as applicable.
If you have not yet launched your crowdfunding appeal and/or your timeline is longer or your project ongoing, it may be preferable for your prospective donors to choose another mode of giving to the University, such as making a gift online through the UW Foundation website, rather than a crowdfunding website. Gifts given in this manner are-tax deductible, and the entire amount of the gift benefits the project. Once a budget is identified, UW Medicine Advancement can provide you with a link that you can share with those who wish to make gifts directly to that budget.
I raised money via crowdfunding, and I can’t or don’t want to put the funds in my entity’s budget. What should I do?
If the project is related to the project leader’s work or professional duties, or promoted as a UW or UW Medicine project, the project leader cannot accept the funds personally. These funds must be placed in an institutional budget account. If you already have a budget, work with your department administrator/director and UW Medicine Advancement to ensure that the crowdfunding funds are placed in the appropriate budget account.
Accepting funds on a personal basis from a crowdfunding site may be allowed if the project is personal in nature and has no relationship to the project leader’s UW or institutional duties. However, the project leader cannot promote the project as UW or institution-related and must clearly state the personal nature of the project. No institutional resources, including staff time, computers, or e-mail can be used in this activity. Please note that accepting money personally may have tax implications, and the project leader may wish to consult his or her own tax advisor. Personal crowdfunding activities also need to be reviewed and approved through the workforce member’s entity’s outside work process.
Can I use my institution’s email to promote my project? To whom should I mail?
As long as the project is a work-related project (part of your duties as a UW or UW Medicine employee), you may use your institution’s email within reasonable limits to inform your friends and colleagues of the project and ask for their donation. Keep in mind that the use of this resource should not have an overwhelming number of recipients, such that the institution’s email system is negatively impacted. The use of social media to promote your UW-related project is also permitted. However, it is only permitted for use related to the project and must be discontinued once the project is completed. You cannot send e-mails to your or UW Medicine patients and you cannot solicit any vendors or commercial entities. You also cannot use internal UW or institutional distribution lists. Work with UW Medicine Advancement staff to develop a strategy and identify appropriate recipients.
What crowdfunding projects are likely to be most successful?
Successful projects typically fall in the $2,500 to $25,000 range. More importantly, projects must have a clear and tangible outcome, a well-defined fundraising goal, a clear pitch or request and a distinct timeline that demonstrates a sense of urgency. Also, crowdfunding requires ongoing support and promotion by the project leader that leverages existing relationships and social media to achieve good results.
How were the preferred crowdfunding sites for UW Medicine Advancement selected?
These sites were selected because they satisfy the University’s requirements for the processing of contributions and the identification of donors and have a reasonable fee structure. For a current list of preferred crowdfunding sites, please contact firstname.lastname@example.org.
What happens if the crowdfunding effort falls short of its goals—is the money refunded back to the donors, or can we keep the funds for our project regardless of whether we reach our fundraising goal?
It depends on the specific crowdfunding company used. Some will refund the money to the donor and others will send you whatever funds were raised.