Here’s how it happens: you know this family that’s fallen on tough times, finances are tight, yadda yadda. Something bad happens to their dog and as much as they want to, they
can’t pay for the care the dog needs.
So you decide your rescue can raise some money and pay for the dog’s care. After all, it’s a dog in need, right? And isn’t it better to get the dog the care it needs rather than have it suffer or end up in the shelter or put down?
The answer is – it depends.
If you’re doing it as an individual, have at it. Give ‘em some money. It’s called a gift, it’s not tax deductible for you, and they don’t have to pay taxes on it.
If your group is not a 501(c)3 tax exempt group, then you’re answerable to your Board. States may have their own rules for organizations that are state “non-profit” but are not IRS tax exempt groups.
But if you’re the director of a 501(c)3 organization – tread carefully. Mess this up and you run the risk of losing your tax exempt status.
At the heart of the issue is understanding that once your rescue is designated as a 501(c)3 tax-exempt organization, it is no longer “yours”. You may be appointed by the Board to run it – and it truth, it probably wouldn’t exist at all without you – but it is a public charity and accountable to the citizens who’ve decided the organization gets preferential tax treatment.
Your group CAN help individuals. BUT to do that, you’ve got to have written guidelines for who you help and why, a formal screening process, and a way to ensure that the public’s funds are being used for that purpose. You have to be fair, and open up that application process to anyone who wants to apply. You can’t play favorites and just help nice people or people you personally approve of. Your assistance program has to be in line with your mission. (By now I hope you’ve tumbled to the fact that my use of “you” in the last four sentences was a test. It’s the organization that does the helping – not you personally.)
This is entirely different from raising money for a dog that belongs to your group. It’s fine to raise money for individual dogs. If you’re wise, you’ll note that those donations go into the general operating funds and that any excess can be used to help other animals in your program.
So – here’s what I do. If it’s an individual or family that I want to help, I set up a youcaring.com fundraiser for them from my PERSONAL youcaring.com account. I have the PayPal funds go directly to that family or individual. If that’s not possible, it goes to my personal PayPal account and I write them a check.
If it’s a dog coming into rescue, At Risk Intervention sets up a youcaring.com in its account and pays the vet directly. We may, on occasion, send money directly to individuals as a contribution on the vet bill, but normally we’ll pay the vet directly.
To boil it down: if you’re running a 501(c)3 rescue, you can’t take magically turn money into a tax exempt donation by laundering it through your group’s accounts. Gifts to individuals are just that – gifts. Not tax deductible to the giver, not income to the individual. Donations, on the other hand, ARE tax deductible to the donor and are income to the nonprofit organization.
Clear as mud?
Now, some bright person is going to say, “Hey! Why don’t I just have them sign their dog over to our rescue, we’ll get it fixed up, then we’ll ‘adopt’ it back to them?” While this sounds like it’ll technically satisfy the rule of the law, it really doesn’t pass the smell test, does it? Would group guidelines allow this family to adopt if they couldn’t afford vet care for existing dogs?
What MIGHT be better is if your group makes this family a foster family and provides all the care needed for the dog. Even then, if your group isn’t making a good faith effort to place the dog in a home somewhere, it’s pretty questionable. But IF they foster the dog, later get back on their feet, and IF your group has tried diligently to place the dog and haven’t yet, and IF they would pass your normal stability requirements for adopting, well, then you’re golden. IF you can document all that.
Remember, once your group is a 501(c)3 tax-exempt organization, you no longer control it. You’re responsible to the public for being fair, even-handed – oh, yeah, and passing the smell test. If it stinks, don’t do it. If you’re worried about somebody finding out, don’t do it.