National Center for Charitable Statistics


Can you get a tax deduction for a gift to 'your own' nonprofit?

When you work for a nonprofit -- either for pay or as a volunteer -- you can make the same sort of gifts anyone else could make. There are people who make huge contributions to organizations they have founded or have developed a personal commitment to. People who incur unreimbursed out-of-pocket expenses or make cash gifts to eligible nonprofits are entitled to take a tax deduction on Schedule A when they file their personal income taxes.  The IRS regulations about substantiation apply, of course, which means that any gift over $250 must be acknowledged in writing by the organization. And it would seem sensible to be very careful that there is no suggestion that the claimed deductions are more for personal benefit than a genuine effort to create a public asset through the nonprofit's work. There are some rules that can affect the nonprofit's status if the gifts are very large; these rules differentiate between private foundations and public charties. Public charities must receive a significant proportion of their support from a wide range of sources; having just one major donor support most of an organization's work will, in the end, lead to a determination by the IRS that it is a private foundation (and hence has to operate under different and slightly more burdensome rules). "Major donors" are "disqualified persons" under the Intermediate Sanctions rules, which means that stringent standards must be met in situations where a conflict of interest might arise.