Is Fundraising for Ministry School Tax Deductible?

Donations to a non-profit ministry school are federally tax deductible.

Ministry schools serve educational and religious purposes – two characteristics that meet the criteria for becoming an IRS-qualified organization eligible to receive tax deductible donations. However, only non-profit ministry schools qualify for a tax deduction. The IRS publishes a list of approved organizations and institutions in Publication 78, though donors may contact the IRS directly to find out if a particular ministry school qualifies.

Limitations

Only donors who itemize deductions for federal tax purposes may take a deduction for contributions to a qualified ministry school. Furthermore, a donor may only deduct the total amount of ministry school contributions and other qualified charitable donations to the extent of 50 percent of adjusted gross income. Amounts that exceed 50 percent of adjusted gross income do not qualify.

Documentation

Anyone who makes a tax-deductible donation to a ministry school must keep proper documentation of the contribution. Many schools provide tax receipts for cash donations received. If a school does not provide a donation receipt, donors should pay with a check or money order made out to the school. Bank card and credit card donations also qualify, so long as the ministry school charges the account. Donors may not deduct undocumented cash donations.

Incentivized Contributions

Donors may only deduct contributions to the extent that they do not receive anything in return for them. For example, a donor who purchases a ticket to a ministry school fundraising dinner may only deduct the amount of the purchase that exceeds the value of the dinner served at the event. In other words, if the school serves a meal valued at $10, but sells tickets for $100, attendees may deduct $90 against federal income taxes.

Personal Tuition

Money raised to pay for personal tuition for ministry school, rather than for the direct benefit of the school, is not tax deductible. However, a tax deduction may apply for ministry school tuition paid by the student, the student’s spouse, or a person who claims the student as a dependant for federal tax purposes. According to IRS Publication 970, up to $4,000 of tax deductions are available for low to moderate-income taxpayers who pay qualified tuition expenses for an eligible student, at the time of publication. Additionally, tax credits, such as the American Opportunity Credit and the Lifetime Learning Credit, may help reduce overall tax liability by as much as $2,500 annually.

References

• Internal Revenue Service: Publication 526 - Charitable Contributions
• Internal Revenue Service: Tax Topic 506 - Charitable Contributions
• TurboTax: Charitable Contributions
• Internal Revenue Service: Publication 970 - Tax Benefits for Education

Resources

• Internal Revenue Service: Search for Charities
• Internal Revenue Service: Lifetime Learning Credit
• Internal Revenue Service: American Opportunity Credit