Nina Pham, the 26 year old nurse who contracted Ebola while treating Thomas Eric Duncan just before his death, has been declared virus-free. She told reporters at the National Institutes of Health:
I feel fortunate and blessed to be standing here today. Throughout this ordeal, I have put my faith in God and my medical team.
Pham tested positive for Ebola just 13 days ago. She was one of 70 people who treated Duncan at Texas Health Presbyterian Hospital; another nurse at the hospital, Amber Joy Vinson, was also diagnosed with the disease. The day after the country learned that Pham had contracted Ebola, her friend, Sarah Strittmatter, launched a fundraising campaign on Go Fund Me to help Pham and her family pay expenses. While Texas Health Presbyterian is covering the costs of Pham’s medical care, Strittmatter noted that, “[e]verything Nina owns has been destroyed in effort to avoid any contamination.”
The goal of the campaign was to raise $70,000. It’s pretty amazing how quickly folks responded: the site has raised $89,132 and is no longer accepting donations. Now, Pham requests that donations be directed to Doctors Without Borders to help combat Ebola abroad. One of the doctors associated with the program, Dr. Craig Spencer, recently returned to New York City from West Africa and has been diagnosed with the disease.
While folks may make donations for lots of non-tax reasons – such as simply doing a good thing – the tax consequences of those donations will vary depending on where those donations are going.
Donations that were earmarked for Pham under her GoFundMe account won’t qualify as tax-deductible. The fund is not registered as a qualifying charitable organization under the Internal Revenue Code – and it wouldn’t qualify even if Strittmatter had made application to the Internal Revenue Service. To be considered charitable, an organization generally has to benefit a class of persons, not an individual, even if the underlying cause feels charitable. Helping Pham pay her expenses may be a terrific cause but it won’t result in a tax deduction.
GoFundMe reminds donors as much, saying, “Additionally, only donations made to a legally registered non-profit or charity may be considered eligible for donors to claim as a tax deduction… Again, every situation is different so please consult with a tax professional in your area.”
(Psst: that last bit is really good advice.)
In contrast, Doctors Without Borders is a 501(c)(3) tax-exempt organization eligible to receive tax-deductible charitable contributions. You can find out more about their status on their website: you can even review their forms 990. And while Doctors Without Borders makes their information available on their site, if you’re ever not sure, you can always check with IRS directly using EO SelectCheck.
Since it’s tax-exempt, when Doctors Without Borders receives donations from taxpayers, those funds are not considered taxable income to the organization so long as they’re used to further the organization’s tax-exempt mission. If the funds are used for some other purpose not related to the mission, it would be considered unrelated trade or business income (UTBI) and would be taxable to the organization.
But Pham isn’t tax-exempt – so what do those funds from the GoFundMe campaign mean for her? Nothing, at least for federal income tax purposes. Those donations are considered gifts to her: with a cash gift, there is no federal income taxable to the recipient.
On the deduction side, Texas Health Presbyterian is covering Pham’s medical expenses so it’s likely that she won’t have enough additional expenses to reach the 10% of AGI threshold for medical expenses on a Schedule A. The rest of those expenses cited by Strittmatter – like replacing Pham’s belongings – are probably considered personal in nature and not deductible (though she might be entitled to a casualty loss deduction).
Gifts are subject to federal gift tax if they exceed the annual exclusion. For 2014, that amount is $14,000 per person. There is no limit to the number of people that you can make gifts to without triggering federal gift tax: it makes no difference if you give $14,000 to one person or to one million people. Gifts in excess of the annual exclusion are subject to the federal gift tax and are payable by the person making the transfer or the gift, not the recipient. So, Pham will not have any gift tax consequences; a donor, however, would have gift tax payable if their donations top $14,000 to Pham.
Gifts to charitable organizations aren’t subject to gift tax. That’s probably a welcome relief to Facebook founder and CEO Mark Zuckerberg and his wife, Dr. Priscilla Chan, who recently donated $25 million to the Centers for Disease Control (CDC) Foundation to be used for the CDC Ebola response effort. Other big donations to the CDC Foundations include $9 million from the Paul G. Allen Family Foundation (the Allen Family Foundation has pledged $100 million in total to various organizations in the fight against Ebola) and $2 million from the Bill and Melinda Gates Foundation (the Gates Foundation has pledged an additional $48 million to various organizations in the fight against Ebola). Additional big dollar gifts to the CDC Foundation include $1 million each from the Robert Wood Johnson Foundation and the Hospital Corporation of America; $1.5 million from the William and Flora Hewlett Foundation; $250,000 from Exxon Mobil; and $80,000 from the Alcoa Foundation.
Overall, gifts from individual donors to the CDC Foundation have tripled since the announcement of Zuckerberg’s gift but remain quite low overall. That’s the word from many charitable organizations assisting in the fight against Ebola: the pace of fund-raising has remained slow. That’s likely to change as more and more cases of Ebola are reported both in the U.S. and worldwide.
Before you contribute to any campaigns – either through crowdfunding campaigns on sites like GoFundMe, individual solicitations, or charitable organizations – do your homework. There are more than 100 campaigns on GoFundMe alone right now allegedly raising money for Ebola-related causes. Make sure that the campaigns are legitimate (the GoFundMe campaign for Amber Vinson has been labeled a fake and the Better Business Bureau is reporting a spike in fake Ebola charities) and the funds are going where they’re supposed to. Here are a few more tips to help:
- When donating to a charitable organization, check out sites that evaluate those organizations such as Charity Navigator and Give.org (the charity reporting arm of the BBB).
- Ask questions about what the money will be used for: if you’re not sure whether the funds will go directly to Ebola relief, ask about earmarking funds.
- If you pay by credit card, be sure to do your homework BEFORE you give out your financial information. Don’t give out information over the phone or via email without verifying the organization’s identity.
- If you’re hoping to take a tax deduction for your efforts, check to make sure that the funds are directed to a qualifying charitable organization (check the IRS website) – and get a receipt.
If you donate, be generous but more importantly, be smart.