A Classical Conversations (CC) Director posted in a public social media forum this problem regarding fundraising:
Our CC campus looked into fundraising but most
avenues did not work for us because we didn’t have nonprofit status. We
specifically looked at Chick Fil A.
Another CC Director replied with this comment:
We just had a fundraising event at Chick Fil A for my daughter’s class who are taking a trip to Washington DC. Initially not being a nonprofit organization looked to be an issue, but working with the marketing people, we had to provide specific details on what we were raising funds for and they allowed us to do it. No one at CFA said anything about reporting income.
My reply:
Chick Fil A cannot be expected to give income tax advice to its customers. That’s why “No one at CFA said anything about reporting income.” I’m sure Chick Fil A asked who to write the check out to. The CC Director would have given her name (or the CC Community’s name) since she is the owner of the Community. She should report the fundraiser income on her business tax return as taxable income.
If a group of parents tried to offset their CC costs by selling candy bars or hosting car washes, they each should report their share of the money is raised as taxable income on their tax returns. It’s taxable, earned income just like a job. The fact that it is called “a fundraiser” doesn’t make it tax free to the parents (it wold be tax free if a nonprofit with tax exempt status held the fundraiser)
Bear in mind that most people do not contribute to a for-profit business, or to your personal homeschool expenses. If Walmart put out a box asking for a “donation” to pay for their employees or utilities, would you contribute? Probably not!
So be honest and upfront with the vendor (Chick Fil A in this case) about the fact that you are raising money as a business for a group of homeschooling parents. Many fundraising organizations simply want customers and do not care if you are organized as a business or nonprofit. Then be honest again and report the fundraising income as income on your tax return.
Carol Topp, CPA
HomeschoolCPA.com
For more information please see my ebook on Taxes for Homeschool Business Owners It was written with CC Directors in mind!
