Donations and crowdfunding for small schools: what's tax-deductible and how to raise money honestly

Not tax advice. Your donors' deductions are between them and their tax preparer. Never promise a deduction you can't back up.

The one rule that matters most

IRS Publication 526: "You can deduct your contributions only if you make them to a qualified organization." Pub 526 describes qualified organizations as "nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose."

What that means in practice:

Tuition is never a donation. Pub 526 says you "can't deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools." A required payment instead of tuition isn't deductible even if it is "designated as a 'donation.'"

If your school is an LLC: raising money honestly

You can still ask for support. Just be clear about what it is.

• Call it what it is: "support," "a gift to our school," or "help us buy X." Never say "tax-deductible" or "donation receipt."
• Sell something real. Sponsorships with a logo on your website, a fundraiser event, or a "buy a book for our library" wish list.
• Borrow from your community at 0% through Kiva (US loans $1K–$15K). You must first get 5–40 people you know to lend.
• Use a platform that takes for-profits. Givebutter says "Thousands of nonprofits, schools, community groups, sports teams, and startups use Givebutter." It does not support "Individual (personal) fundraising accounts."
• Consider a companion nonprofit or fiscal sponsor for a charitable piece, such as a tuition-help fund. Talk to a CPA first. See Fiscal sponsors and companion nonprofits: can a for-profit school get nonprofit grants?.

If you're a 501(c)(3) or church school

• Register before you solicit. Arkansas requires charities to "register with the Secretary of State prior to engaging in" soliciting. There's no fee. Exemptions (Form EX-01) cover some religious entities, accredited educational institutions, and all-volunteer groups under $50,000 a year.
• Acknowledge gifts in writing. Your receipt should say what you received and whether the donor got anything back. Ask your CPA for the wording the IRS expects for larger gifts.
• Give people a reason. A specific goal, such as "$3,000 for a reading library," beats "please give."

Crowdfunding platforms: what they say about themselves

• GoFundMe. Its own blog: "your donation may not count as tax-deductible unless it's to a qualified organization." Teachers can raise money for "classroom supplies, sports booster clubs, and prom," and GoFundMe adds, "talk to your school's leadership to determine how funds should be withdrawn." Only a charity fundraiser for a 501(c)(3) is deductible. A personal GoFundMe for your school generally isn't.
• Givebutter. Built for organizations, nonprofit or not (above).
• DonorsChoose. Not available: "DonorsChoose does not serve private, parochial, non-profit, or home schools."
• Arkansas Gives (a statewide giving day) ended in 2017. Its old address now leads to an error page.

Scholarship tax credits: donor money that helps your families

These don't go to your school directly. Donors give to a scholarship organization, and students use the scholarships for tuition.

• PIAK (Arkansas): donors get a 100% state tax credit. Students need family income at or below 200% of the poverty guidelines.
• Federal Scholarship Tax Credit: donors can claim up to $1,700 starting January 1, 2027, and Arkansas has opted in. The scholarship organizations for Arkansas aren't listed yet. See Scholarship tax credits: Arkansas PIAK and the new federal credit (2027).

A simple, honest donor page (template)

1. What we're raising money for, and how much.
2. Who we are (legal name and structure).
3. Tax status, stated plainly:
4. LLC: "Gifts to [School] LLC are not tax-deductible."
5. 501(c)(3): "[School] is a 501(c)(3); gifts are deductible to the extent allowed by law."
6. How we'll report back.