As a nonprofit professional, you’re likely very familiar with the idea of individuals giving to charities to receive a tax deduction in return. This is a common driver for many supporters and it’s one of many reasons why organizations see a barrage of donations coming in during the final months of the year.
When it comes to Facebook fundraising, many behind-the-scenes aspects can seem confusing for nonprofit organizations. For example, how these gifts are processed, how fundraisers are discovered, and how nonprofits can build connections with these fundraisers are all common points of confusion. In a similar vein, the specifications surrounding tax deductions can throw nonprofits for a loop.
At GoodUnited, we’ve researched the Facebook fundraising process to help nonprofits just like yours raise more through the popular social platform. During that research, we’ve gotten to the bottom of how exactly tax deductions and donations receipts are handled. We’re passing this knowledge on to other fundraising professionals, like yourself, to help you better understand how to make the most of this important (and popular) stream of revenue.
We’re going to explore Facebook fundraising and tax receipts through the following points:
Are you ready to learn the ins and outs of Facebook fundraising and tax deductions? Let’s get started.
In short, Facebook donations— as with nonprofit donations processed through any other channel— are tax-deductible. These donations are considered “cash donations,” and the deductibility of them is considered in a similar manner to that of a donor writing a year-end check to your nonprofit.
With that in mind, in order to claim a deduction for Facebook gifts, donors need a bank record or other written communication that confirms the gift was made. This confirmation needs to include:
The specific rules governing charitable deductions are subject to change. If you’re curious, we recommend reviewing the IRS parameters here.
As we discussed earlier, for a donor to receive a tax deduction for a Facebook donation, they’ll need written confirmation of the gift. This is most often done through a tax receipt— which, thankfully, is readily available for Facebook donors.
Facebook automatically generates tax receipts for donations and sends them directly to the donor’s email address. This is the email address on file with their Facebook account, so it’s important that this information is up-to-date.
This receipt includes a few key pieces of information:
This information is sent whether your nonprofit is signed up for payment processing through Facebook Payments or Network for Good. Further, this information can also be found in the user’s own Facebook Payment history, if the email is lost. This should be all that Facebook donors need to receive a charitable deduction.
Why is it important for your nonprofit to know this information? Well, once your nonprofit fully opts-in to Facebook fundraising and begins hosting dedicated Facebook Challenges, there’s a decent chance you’ll receive a few questions in return. There are a few things we recommend to address those questions:
Now that we’ve covered the basics of Facebook fundraising and tax deductions, let’s dive a little deeper to see how this could impact your nonprofit’s fundraising efforts.
As a nonprofit professional, you’re probably already aware that the parameters around tax-deductible charitable donations can change year over year.
For example, in 2017, we saw the Tax Cuts and Jobs Act reduce the marginal tax benefit of giving to charity by about 25%, and raise the after-tax cost of donations by about 7%. It also capped state and local tax deductions at $10,000 and increased the standard deduction to $12,000 and $24,000 for individuals and couples respectively.
When this happened, it made little sense for many low and middle-income individuals to itemize their charitable contributions, and there was worry that this could change the motivation behind giving to charity on the whole.
On the other hand, in 2020, we watched the CARES Act emerge in response to the COVID-19 pandemic. With this, the adjusted gross income (AGI) limit for cash contributions was increased for both individual giving, now allowing donors to elect to deduct up to 100% of their AGI. And, a new above-the-line deduction was created, allowing donors that are not itemizing their taxes to deduct charitable gifts up to $300. This was a huge incentive to give.
Tax law can have a major impact on fundraising, especially when it comes to major gifts. Because of that, we’d bet your team closely monitors these changes.
That said, Facebook fundraising is one giving method that is usually unaffected by changes in tax law. This is because tax deductions aren’t the sole reason why donors give to Facebook fundraisers and Challenges.
While it’s good to know that Facebook donations are tax deductible, there is a chance your Facebook fundraiser donors aren’t particularly concerned about it.
Why is that? Well, it all comes down to why Facebook donors give— and, spoiler alert, it has nothing to do with tax deductions.
Facebook fundraisers and Challenges are essentially peer-to-peer fundraisers, a type of fundraising type built on the concept of social proof. Social proof is the idea that when we see other trusted friends and loved ones give to a fundraiser, we believe in its credibility and are motivated to contribute as well.
Consider the last time you gave to a Facebook fundraiser (or even just stumbled across one on the platform.) What was the messaging? And why did you give if you did so?
Maybe it was a birthday fundraiser hosted by your coworker, and you contributed in lieu of giving them a typical birthday present. Or, maybe it was a spontaneous fundraiser hosted by your childhood best friend, in which they shared their personal story of volunteering for the mission over the past few years. It may have even been a Facebook Challenge, and you gave in support of your cousin completing a hard physical task for a month straight.
Donors who give to Facebook fundraisers are motivated by their personal connections with the fundraiser, whether it’s to the organization itself or the user hosting it. They could be:
It’s important to understand what drives donors to give to Facebook fundraisers and Challenges. When it comes to Facebook, creating a positive association around giving to your organization can be the biggest factor in whether a donor gives or not.
Continue reading to learn how you can draw on these motivations to appeal to donors on Facebook.
We know that donors give to Facebook fundraisers because they are socially and emotionally motivated. They’re interested in providing support and making a difference, rather than securing a substantial tax break. So, how can your nonprofit use this knowledge to raise more?
In our work optimizing Facebook Challenges, we’ve learned that discovering fundraisers when they’re started and connecting with those who start them can be instrumental in bringing in additional revenue.
Here are a few main tips we’ve discovered in that realm:
Each of these steps gives your team some control over the fundraising narrative, which as we’ve seen, can be instrumental to inspire a donor to give via Facebook. Plus, the GoodUnited team can assist and help your team not only raise more, but build long-lasting relationships with donors for years to come.
At GoodUnited, we've discovered an innovative way for nonprofits to both raise funds and grow their social audience: Facebook Challenges.
Facebook Challenges are time-bound fundraising efforts that allow your nonprofit’s supporters to raise funds in a low-barrier to entry fundraiser.
During a Challenge, participants complete a task (such as walking 10k steps per day) while raising funds for your nonprofit using a Facebook fundraiser. These participants are added to a Facebook group, in which they can connect with other likeminded individuals and receive encouragement, tips, and more.
The GoodUnited team can manage your Facebook Challenges from start to finish, including running the ad campaign used to spread the word and moderating any associated Facebook groups.
Once the Challenge begins, we'll thank every user who has started a fundraiser on your behalf and invite them to opt-in to a discussion via Messenger. Then, we share custom messaging sequences full of encouragement and tips to help that user make the most of their efforts. With this strategy, we gain information about the user and their motivations, then start building a connection that lasts.
Finally, we synthesize the data released by Facebook regarding fundraisers conducted on behalf of your nonprofit. With this data, we help your team discover key insights about how to improve your Facebook Challenges going forward. To learn more, contact the GoodUnited team today.
For more information about Facebook fundraising and how your nonprofit can make the most of the fundraising channel, explore the following additional resources: