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Nonprofit Law/charitable contribution deductions for volunteer program fees


QUESTION: We are a 501c3 in California. One aspect of our work is sending volunteers to go work on projects abroad. We charge them a small fee for accommodations, food, airport transfer, etc. which goes directly to the local host organization - we call this Base Costs.  We also ask for a small donation for the project.

We tell volunteers that if they pay us directly out of their own pocket, they only get a charitable contribution deduction for the donation portion, since the Base Cost is like a quid pro quo contribution. Is this correct?

What happens then if they fundraise for the Base Cost and their donors contribute directly to us? Do the donors get a charitable contribution deduction in this case?  They are not getting the benefit of the goods and services as in the case of the volunteer.

ANSWER: It appears from what you wrote, that the primary purpose of the people traveling abroad is to do some charitable, educational or religious work on behalf of your 501(c)(3) organization.  Therefore, if you do not require a donation from the travelers, they may donate and your organization would give them an acknowledgment of the full donation.

See the IRS Publication "Charitable Donations --- Substantiation
and Disclosure Requirements"
on pdf page 5:
"A donor cannot claim a tax deduction for any single
contribution of $250 or more unless the donor obtains
a contemporaneous, written acknowledgment of the
contribution from the recipient organization. An organization that
does not acknowledge a contribution incurs no penalty; but, without
a written acknowledgment, the donor cannot claim the tax deduction.
Although it is a donors responsibility to obtain a written
acknowledgment, an organization can assist a donor by providing a
timely, written statement."

on pdf page 13 details of the "quid pro quo" rules, but they would not apply in this situation as whatever accommodations (Base items) that they are receiving is coming by arrangement before any donation. Now, if the facts are different and your organization has a history of not sending people who do not give the donations, let me know and I will reply further.

As to the fundraising see IRS Publication 526 "Charitable Donations"  which is available at:
on page 6 where the IRS lists as not deductible "Contributions to
individuals who are needy or worthy. This includes contributions to
a qualified organization if you indicate that your contribution is
for a specific person."  It appears the arrangement you have is that the workers are soliciting funds that would be used for them.  Then the contributions are not deductible to the donors and the collectors may need to declare the income.

In June of 2011 the IRS wrote:
---Start of Excerpt--
If a booster club confers a benefit on a participant in return for
their fundraising activities, such as by crediting amounts raised
by a participant toward that participant's dues requirement, or by
crediting amounts raised against the cost of a trip, the booster
club is providing a private benefit to that participant.
Consequently, such practices could result in the organization
failing to be described in 501(c)(3).
---End of Excerpt---

The IRS continued in the next paragraph, "It is also possible that
amounts credited to a participant's account due to fundraising
would constitute income from services, and could result in
employment taxes."

That would apply to your organization also (not just to booster organizations.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.    

---------- FOLLOW-UP ----------

QUESTION: Thx for the quick reply.  It's true the the volunteers are doing charitable work on behalf of the 501c3. We send people regardless of whether they make the suggested donation portion - in theory. So far, everyone has donated at least the suggested amount if not more.

However the Base Cost portion is a fixed amount based on a daily rate charged by our local host organizations. If a volunteer pays $300 and his Base Cost is $280 ($20/day x 14 days), then wouldn't I write on the receipt "Goods and services valued at $280 were received" and so the volunteer just gets the $20 deduction?  I realize it's a bit moot because the volunteer can deduct the $280 as an out of pocket volunteer travel expense if s/he didn't take a holiday on that trip. But I'm more concerned with doing the right thing on behalf of the 501c3 even if the end result is the same for the volunteer.

I'm confused about the latter part where you say that donors' contributions to the a specific volunteer's Base Costs are not deductible as there are several 501c3 orgs in the US who claim that these types of costs are. Example: - see Fundraising for your Quest As a 501(c) 3 non-profit organization, donations made to United Planet on behalf Volunteer Quests are tax-deductible for the donors and directly offset the cost of your Volunteer Quest.

How do these guys get around this ruling then?

I need to clarify.  I used the word "donation" in "as whatever accommodations (Base items) that they are receiving is coming by arrangement before any donation." After that there is a donation.  I did not write that the required payments were donations, but they could be treated as out-of-pocket expenses necessary for their charitable work for the organization for which they are not-reimbursed.

See IRS Publication 526 "Charitable Donations" which is available
starting at the bottom of page 4 under the heading "Out-of-Pocket
Expenses in Giving Services" we see that you could deduct the
unreimbursed expenses that you paid for the use of the charitable
organization when the expenses you had only because of the
services you gave.  The details are found on page 19 of the record-
keeping requirements in the middle column under the heading "Out-
of-Pocket Expenses" where you see you would need the organization's
written acknowledgment to deduct.  Details of the acknowledgement
are also found on pdf page 11 at:

The IRS has an opinion that differs from that of United Planet. See starting in the middle of page 21 "(4) A 'Peace' Remedy To The Davis Case" as to missionary programs down to the end, on page 26. On page 21:
--- Start of Excerpt ---
The funds collected go to a commingled general fund. The organization then distributes the funds to each mission where it is used as needed. By using this system, the parents and relatives will be donating more or less than the actual expenses of their son or daughter. They are donating to the missionary effort the average cost of supporting a missionary worldwide rather than the actual cost of supporting their child.
---End of Excerpt---

That plan was approved, but see page 22:
--- Start of Excerpt ---
TAM 94-05-003 dated November 12, 1992, held that the taxpayers'
contributions to a religious ministry (Ministry) were not deductible under IRC 170
because the contributions were earmarked for a student and the Ministry did not
have full control of the donated funds.
---End of Excerpt---

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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