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What Fundraising Organizations Need to Know about Tax Reporting
Double Good
October 25, 2024 • Read 3 Min
Double Good makes the fundraising experience easy peasy for the organizers who schedule and run fundraisers for their organizations.
We want you to spend less time on paperwork and more time on the great things your organization accomplishes.
But fundraising of any kind involves money, and when it comes to money, the Internal Revenue Service has specific guidelines that must be followed.
And any time the IRS gets involved, things can get complicated or intimidating—and definitely not joyful.
This blog post will outline what you need to know about tax reporting for fundraising.
But please note that our expertise is in popping delicious popcorn and making fundraising easy. We’re not tax or legal experts, and if you have specific questions about your own tax situation, please consult your tax professional.
Your guide to this blog
How the IRS regards fundraising proceeds
The IRS considers funds raised for individuals (and not for an organization beneficiary) through Double Good fundraising campaigns to be the equivalent of Double Good paying a contractor to sell popcorn.
To be compliant with IRS regulations, we’re required to issue a Form 1099-NEC to individual fundraisers who are paid $600 or more in a year.
What is a Form 1099-NEC?
Form 1099-NEC is a document required by the IRS to report non-employee compensation.
The letters NEC stand for “non-employee compensation,” which refers to payments made to individuals who are not employees of the payer for services rendered as part of the payer’s business (in this case, selling Double Good popcorn).
Form 1099-NEC is not a tax bill, but it may mean that the individual recipient owes tax on the compensation that’s reported. This is a matter on which the individual should consult with their tax advisor.
Setting up your payout method
During your last Double Good fundraiser, you set up a payout method on the app to specify how your fundraiser’s proceeds would be delivered to your organization.
If you included your organization’s federal EIN (Employer Identification Number) in your payout information, you’re ahead of the game, and no Form 1099-NEC will be issued for your fundraising proceeds.
If you didn’t include your organization’s EIN—or if your organization doesn’t have one—the situation becomes more complex.
What is an EIN?
The EIN is a unique nine-digit number assigned by the IRS to business entities operating in the U.S. for purposes of identification and tax reporting. Think of the EIN as a Social Security number for a business entity, rather than for a person.
Double Good uses the EIN to confirm there’s an organization that’s benefiting from the fundraiser.
What if you don’t have an EIN?
What if you conduct your fundraiser as an individual beneficiary? You likely provide your own Social Security number as part of your payout information.
Let’s say the fundraising event you held resulted in a payout of $1,000, which exceeds the $600 Form 1099-NEC reporting threshold.
Because you entered your own Social Security number in your payout information, Double Good is required to send Form 1099-NEC to you, reporting that you received $1,000 in non-employee compensation.
That means that you, as an individual taxpayer, may owe tax on the $1,000 that was raised for your organization. As mentioned above, you should ultimately work with your tax advisor to determine whether you have a tax obligation under your individual circumstances.
Want more information?
Visit the IRS website to learn more about the Form 1099s required by the IRS. Or visit our help page to get more information.
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Now inspired. Let’s get fundraising.
Get ready to boost your fundraising game and create a Pop-Up Store that pops and helps you meet your goals.
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