Fundraising Platforms (especially for mutual aid groups)

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Sorry if there’s a discussion of something related elsewhere, I did a search but may have missed something!

I’m posting a current predicament here, but anyone should feel free to use this thread to discuss pros and cons of different fundraising platforms in other circumstances.

I’m part of a DIY mutual aid/houseless outreach/harm reduction group. We’re not officially a nonprofit and don’t plan do be (both because of current scale and because of general anarchist values).

When I joined (fall of 2020) through maybe 6-8 weeks ago we were using a platform called GiveButter, but it was connected to one member’s bank account and couldn’t be transferred to a different bank account when that person left the group. That person shut down our fundraiser page. Then we heard that people with recurring donations were still getting charged. GB was pretty good about shutting things down and refunding folks when we reached out, but it sucked and it soured us on them. It feels like there could be no way that has never happened before for them and super negligent that they hadn’t already addressed that if it’s an honest structural flaw in their setup.

Some similar groups I know of use Venmo, but business Venmo will just tax the heck out of you for anything over $600 these days, and those I know who use personal Venmo have a person in the group who uses their personal Venmo for the group because they don’t use it for anything in their personal life. Everyone in or group we want handling money uses Venmo for other things in their life and a) can’t change their username to the group name and b) we don’t want to mingle donations with personal transactions.

We were looking at Open Collective, which seemed super promising. I woke up at 3am this morning unable to sleep and ready to set it all up, but I wasn’t familiar with Stripe, which it appears you have to use to accept anything but one-off direct bank transfers, and that is a thing designed for businesses, and appears to both a) charge a 2.9% transaction fee and b) assume you’re a business and send you a 1099 for anything.

Some groups similar-ish to ours use fiscal sponsors (basically an existing nonprofit takes you in as a side project and lets folks make tax-deductible donations through them and then you also aren’t taxed), and Open Collective has a similar feature where you can pair with a “fiscal host”. We’ve heard some stories about that kind of relationship not necessarily going well. It can also take kind of a long time to set up and find the right relationship. We’ve looked some already and there’s not an immediate great fit. We also need something set up like yesterday, as the person who left did so and shut down the old platform rather abruptly and we were left scrambling.

Anyway, we’re looking for something that will make it easy for folks to send us money, ideally including recurring donations. We don’t care if donors can get a tax deduction, but we’d love not to get hit with taxes ourselves, because we’re literally using everything we get to buy food and supplies for struggling folks in our community and then spending a good bit of our own money on top of that. I don’t know what the exact budget is, but it’s somewhere over the $600 that Venmo will now report to the IRS and under the $20k that used to be their reporting threshold (definitely on the LOWER end of that range).

IS there even a good solution to this? I would even be willing to go along with getting 1099 taxed and holding back money accordingly except that I think the 1099 would just go to a person, and given the way things are looking right now that person would probably be me, and even if it’s money from the group that paid the taxes, next year I’m trying to buy a house most likely and I don’t think I want weird ass income things on my financial history, right? Is the platform we used before worth another shot? We were very transparent with our supporters about what happened, and I don’t think anyone is pissed at us, though I would not be surprised if some were mistrustful of the platform.

Thank you for reading and for your thoughts!

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I was going to tell you to use PayPal, but I looked it up and it looks like the change to a $600 limit is an IRS change, not an internal policy.

https://www.washingtonpost.com/business/2022/01/21/venmo-paypal-new-income-reporting-requirement/

That’s saying that Zelle isn’t subject to the rules for some reason? The only other thing I can think is make sure you’re tagging all your transactions as personal, not business, but that’s going to be very hard to communicate to everyone involved.

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Yeah, the IRS made recent changes that make groups like ours MUCH harder to operate. I heard about it when things were changing but I wasn’t as involved in the group at that point so I didn’t fully realize how messed up it was and how much it would eventually impact me :sweat:

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I’ve been wondering how groups are handling this.

A vague anonymous group of which I have no affiliation on a publicly searched forum cough cough has stuck with personal accounts and not reported inflow/outflow to any entity outside the group, but the focus is much more on goods transferred rather than money. Sounds like your situation shouldn’t follow that example haha

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Haha, yeah, I always struggle with how much detail to share. I’m not trying to do anything too sketchy here, like, it seems like you just shouldn’t have to take a tax hit if people are essentially pooling money to buy basic supplies for people in their community who are struggling. We definitely accept donations (clothes, sometimes snacks and toiletries), but we need an easy way for people to send us money so we can buy food, snacks and toiletries to make up what in-kind donations don’t cover, socks and underwear, certain harm reduction supplies we can’t get from the city, etc.

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I wonder if you could get donations in the form of gift cards to the stores you usually buy things from.

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patreon? i donate to a couple of “creators” who take donations and redistribute them in their communities.

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I’ve heard good things about Open Collective, despite the hurdles you’ve highlighted. If you’re interested to give it another shot, I could introduce you to people from a local civic technology org who could both share their experiences using OpenCollective and what they use for fiscal sponsorship, and likely help with the Stripe stuff.

There are also a few progressive councilmembers’ or state reps’ offices who might be interested & able to help you navigate various regulations. I didn’t know this until recently, but “constituent services” is a major thing for local elected reps since if they do it right, you’ll tell your friends to vote for them.

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Yeah, the new IRS rules make this tricky. Anything with actual group protections is going to assume you have some kind of nonprofit or business structure. Similarly, anything that flouts those IRS rules is probably a sketchy payments startup that doesn’t have good protections in case e.g. the account admin quits the group.

I would also not do the fiscal sponsor thing.

I think cash or gift cards is probably the way to go for ease of use.

Otherwise my vote would have been Paypal + a shared gmail account as the owner.

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I think some people would be willing to do that to some degree, but a lot of folks who used to donate to us really like the ease of just sending a few bucks online, especially a set and forget it monthly payment. We do things in a pretty public area, so folks who didn’t really know us and didn’t really have cash on them would sometimes send a few bucks too. I don’t know that they would take the extra step of purchasing a gift card, even an online only one. It certainly couldn’t hurt to advertise that that’s a great way for folks to help us though, as even if a few people did it it would be better than nothing!

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I think we’d get hit with taxes the same way as other things, but I’ll look into it more.

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Does Cashapp have the same reporting thresholds? I’m seeing some community fridges request Cashapp donations only. Could be a short-term solution.

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Hmm, a friend of a friend worked for a local representative and facilitated getting us some donations when people sent things that weren’t what they’d asked for their way following an emergency. I can see if they might be able to help.

If you’re comfortable with it I’d love to connect with your contacts who use OC. If we can find a way to use it it definitely does sound like a cool platform, and I’m certainly interested in learning more about how we might be able to make it work for us!

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Right! Cashapp! I think someone told me Cashapp has some pretty major security issues re. like getting hacked and stuff, and not being able to resolve things when there are issues with payments. I have never used it though. It might be a good thing for the short term.

The fridge network I’m most familiar with now uses Open Collective, lol, but they do it via a fiscal host.

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I HUGELY appreciate everyone’s input on this <3

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I uh… please don’t try to avoid taxes. You’ve got to be scientology rich to bully the IRS into leaving you alone. I get you don’t want to have an organized structure, but whats more counterculture than using the man’s rules to stick it to him? Not jail is the best place.

The cost to buy crypto and have a solidly secure email and send crypto and convert it back to fiat currency, you might as well pay taxes unless you’re selling something that has an absurdly high profit margin and as pretty illegal.

Cash in mail? It’s weird, but the losses are probably less than other methods.

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Let me find out who the exact contact person is for finances and I’ll send you a DM!

Also, it looks like Venmo’s reporting is only for goods or services sold. I would think that community fridge activities are gifts, or reimbursements for gifts, and they wouldn’t count. I think you would have to have all funds sent as “friends and family” payments, if that is doable. (I am not a lawyer so not 100% confident this works, but this is the type of detail that a local official’s office would be good at triple-checking.)
https://help.venmo.com/hc/en-us/articles/4407389460499-2022-Tax-FAQ#:~:text=Starting%20the%202022%20tax%20year,receive%20a%20Form%201099-K.

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Definitely not trying to avoid paying taxes on legit income. Just trying not to have to pay income tax on money I can’t see a valid way to define as income.

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Through personal experience, fiscal sponsorship is both the easiest route for small groups like yours, and also a gigantic pain in the ass. Mostly that pain comes from misaligned values and leadership of both orgs butting heads. I will say that a lot of that frustration comes from a group or organization staying in a fiscal sponsorship long after they have grown out of one.
There are a couple of funds you might want to look into that help folks build mutual aid groups like yours and could navigate you through their best practices - I’d reach out to the folks at https://www.emergentfund.net/ they are a great group of people that have done amazing work. (I hate one of their board members with a burning rage, past roommate and pure evil… but other than that they are awesome!)
There’s also Mutual Aid Hub https://www.mutualaidhub.org/resources
Forgive me if you’ve already plumbed their resources, but I think there’s some stuff in there about the logistics of setting up lending circles that might be useful.

I will also say that when I was heading up a small org, we were in the process of switching from a fiscal sponsorship to filing our 501c3 and we had the same internal struggle, being a part of a system we were trying to buck and that was incredibly unfair, but it allowed us to get a business bank account and that was incredibly helpful. Before that, we were using personal bank accounts and it got messy very quickly.

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So Venmo is a problem because you can only have one personal account per phone number and everyone who is willing to be involved with money in the group uses their personal Venmo already, and that would get messy plus not look like it was being donated to the group. Business Venmo auto sets to business transactions. If there’s a way to designate payments to a business account as personal, it’s not going to be the default and I think people would miss it most of the time.

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