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Why Donations to Occupy Wall Street Are Tax-Deductible
Now that Occupy Wall Street has raised more than $450,000 in its first month—and donations of cash and goods continue to pour in—more attention has focused on an issue few people noticed before: that the donations are accepted through a charity, and that means donors can get a tax break for supporting the effort.
The Alliance for Global Justice, a Washington group, serves as a fiscal sponsor to accept the contributions and provide oversight to ensure the money is used in ways that comply with IRS rules on charitable donations. For instance, money donated to charities can’t be used for partisan politicking.
The alliance frequently serves in the role of fiscal sponsor to progressive groups that are in the early stages of operation or don’t want the administrative burdens that come with accepting charitable donations and filing with the Internal Revenue Service.
The alliance in September volunteered to be the fiscal sponsor for the protest, which means that it will provide oversight and accountability of all money donated to Occupy Wall Street.
Reasonable Fees
Greg Colvin, an expert on fiscal sponsors reviewed the way the Occupy Wall Street Web site explains the fiscal-sponsor role and said it’s clear that the alliance understands its legal role.
“The alliance seems to know that it must exercise discretion and control over all expenditures to ensure that they are charitable,” said Mr. Colvin, a San Francisco lawyer and author of Fiscal Sponsorship: 6 Ways to Do It Right. “Donations are restricted to support of the purposes of Occupy Wall Street, but the alliance retains the right to decide who gets the money to further those purposes.”
The relationship between the alliance and Occupy Wall Street has drawn some criticism from The Blaze, a conservative Web site, because the alliance is collecting a 7-percent fee for processing donations to Occupy Wall Street.
But Mr. Colvin said the fee is lower than what many other fiscal sponsors charge for processing donations.
“The administrative fee is quite reasonable. Other fiscal sponsorships may charge 8 to 10 percent,” Mr. Colvin said.
'Touching a Nerve’
Because the average donation is just $50, it’s unlikely that donors are giving to get a tax deduction, said Nick Allen, a consultant to nonprofits who previously served as chief executive of Donordigital, an online fund-raising consulting company.
“The occupiers are touching a nerve in a lot of people who are really concerned about how bad the economy is. They’re seeing people doing something about it, who have the gumption to get out there and do something,” said Mr. Allen, who added that he has given $25 to the movement. “Maybe they can’t go to New York City, but they want to help. So most people who give probably don’t care if it’s tax-deductible or not.”
The Chronicle of Philanthropy, By Lisa Chiu, November 4, 2011
