June Walker, the lovely accountant for “indies” (who just might be returning to CFC in June 2013 to speak on deductible expenses for freelancers), recently wrote on her blog, The Confident Indie, a post about the tax implications of funding your project — personal or business — through crowdfunding sites like Kickstarter.com (which calls itself a “funding platform for creative projects”).
In it, she explains exactly what crowdfunding is and what she thinks of it. Then goes on to address the tax angle (excerpted here):
Backers are not donating money in the way one donates to a charity. The money someone gives toward a project is just that, a gift. The gift is not deductible on the donor’s tax return. There is an exception: If the project is classified as a 501(c)(3) not-for-profit organization then the donation is a personal — not business — charitable deduction on the donor’s tax return.
As a side note, you may be aware of how Colleen Wainwright (a.k.a. the communicatrix, who will most likely also return to CFC in June 2013 — start saving now! It’ll be a good one!) used one of these crowdfunding sites to raise more than $100,000 in honor of her birthday for a charity she supports (she tells the story in a TEDx talk here).
Anyone else out there tried crowdfunding? If so, let us know how it worked and what you learned. Lots of people want to try it.