Facebook Vice President David Marcus is the face of the company's Libra digital currency, but the original driving force was a 26-year-old female corporate-development...Technologyread more
Amazon's new policy for account suspensions doesn't go far enough to protect sellers from potentially unfair and wrongful suspensions, merchants say.Technologyread more
There is no end in sight to the Boeing 737 Max grounding after two fatal crashes, prompting airlines to rethink their growth plans.Airlinesread more
After a year of flooding, Midwest farmers face a stifling heat wave that's spreading across the U.S.Agricultureread more
A quarter of the S&P 500 companies report earnings next week, and that could buffet the market as investors await the July Fed meeting.Market Insiderread more
Moving lots of data to a public cloud over the internet can take months or years. CNBC got an inside look at how AWS transfers data to the cloud for its clients.Technologyread more
Iran's Revolutionary Guard claims a British tanker it still holds, Stena Impero, failed to follow international maritime rules.World Newsread more
"It troubles me that the most important political office in the world is becoming the face of racism and exclusion," Kaeser said in a Twitter post.Politicsread more
Silver's rally could be losing its shine after the precious metal reached its year-to-date high, futures experts warn.Futures Nowread more
Some 40% of Americans would struggle to come up with even $400 to pay for an emergency expense. Just how are so many Americans so short on cash? Blame debt.Personal Financeread more
Amazon hires Trump-allied lobbyist Jeff Miller as battle for Pentagon contract heats up.Politicsread more
If the spate of recent national tragedies has tugged at your heartstrings and encouraged you to donate to a charitable crowdfunding campaign, beware: you're entering dicey legal territory.
That's because, in some cases, you may be required to file a gift-tax return, even if your donation was small in size, according to Martin Shenkman, founder of Fort Lee, New Jersey-based Shenkman Law.
Charitable crowdfunding campaigns have exploded in popularity in recent years.
According to a 2016 Pew Research Center report, 22 percent of American adults have contributed funds to crowdsourced fundraising project. The market for crowdfunding is expected to grow to greater than $300 billion by 2025, according to Fundly, a crowdfunding website that promotes itself as a platform to "raise money for anything."
Yet the realm of charitable crowdfunding is a legal Wild West, and rife with pitfalls for donors and recipients.
Shenkman said the gift-tax conundrum may arise when campaigns are organized by a friend or relative of the ultimate recipient, and the recipient will not be the one who withdraws funds.
Although the gift-tax exclusion allows individuals to give up to $14,000 to a given recipient, in 2017, without filing a gift-tax return, the money must be immediately available to the recipient to qualify for this exclusion (in legal parlance, it must be a gift of "present interest"). If crowdfunding donations can't be immediately withdrawn by the recipient, they may not pass this test, Shenkman said.
"You have this absurd result, that people who are giving small dollar amounts may actually have a gift-tax reporting requirement that they may violate," said Shenkman.
Another headache for donors: their contributions aren't deductible unless they donate to a qualified organization such as a 501(c)(3) nonprofit. That means you can't deduct an amount you donated to assist with an individual's medical bills, for example. Medical fundraising is the fastest-growing category on YouCaring, a platform for "compassionate crowdfunding," according to the company's website.
Crowdfunding websites provide varying levels of assistance to donors trying to navigate tax rules.
GoFundMe maintains a list of "Certified Charities" that have been verified as nonprofits, and automatically sends donors tax receipts for contributions to campaigns that benefit one of those charities. But the platform also allows recipients not on that list to describe their campaigns as a "charity" on its website.
The website of Generosity, a platform for "socially conscious fundraising" owned by Indiegogo, states that donors should contact campaign organizers to determine if donations are tax deductible. The website advertises campaigns that claim to benefit registered nonprofits alongside campaigns that make no such claims.
Donations can even create unintended headaches for recipients.
If a beneficiary receives means-tested government benefits such as Medicaid or Supplemental Security Income, then receiving a large cash inflow from a crowdfunding campaign could cause him or her to lose government benefits, said Jonathan Blattmachr, a principal at Pioneer Wealth Partners in New York and director of estate planning for Peak Trust Company. That could mean that, for example, funds from crowdfunding pay for medical expenses that Medicaid would otherwise have covered.
"You might think you're helping the recipient, but you're actually hurting her," Blattmachr said.
Raising funds on behalf of a supplemental or special needs trust, for individuals seeking help with medical bills, would circumvent the problem, Shenkman said.
Perhaps the biggest problem for donors, however, is the difficulty in evaluating whether funds will actually be used for the purposes described in a crowdfunding campaign's pitch.
GoFundMe, Indiegogo's Generosity and YouCaring all have procedures in place to guard against misuse of their platforms, according to spokespersons for each of the companies. But it's impossible for crowdfunding companies to thoroughly vet every organizer and recipient who uses their platforms, said Daniel Borochoff, founder of CharityWatch.
"It's convenient, and it's powerful because you can reach a lot of people quickly, but whether or not the money actually goes to its intended purpose is certainly not guaranteed," Borochoff said.
Borochoff said donors should only contribute to a crowdfunding campaign if they trust the organizer, such as if it is someone they personally know or a respected community leader. If donors want to contribute to a non-profit organization, they should do so directly through the organization itself rather than through a crowdfunding website, which may collect its own fees from donations, he said.
In contrast to crowdfunding campaigns, Borochoff said, tax-exempt nonprofits are subjected to oversight by a board of directors and by regulators, and must submit annual filings to the Internal Revenue Service. Traditional nonprofits may also have more experience in vetting potential recipients, he said.
"With a lot of these websites it's very easy to feel good donating money," said Borochoff. "But whether you're doing good can be unclear."