Are Donations to a For-Profit Organization Acting as a Charity Middleman Tax Deductible?

This setup definitely raises some red flags from a tax perspective. Generally speaking, donations are only tax deductible when made directly to a qualified 501(c)(3) organization - not to a for-profit business acting as a middleman. The structure you're describing sounds like they're trying to create a donor-advised fund type of arrangement, but doing it incorrectly. In a proper donor-advised fund, you donate directly to the fund (which is itself a 501(c)(3)), and then recommend where grants should go. But your donation is made directly to the qualified charity (the fund). In this case, if you're paying a for-profit company first, that payment wouldn't typically qualify as a charitable contribution regardless of where they ultimately send the money. The IRS generally looks at who received your money directly, not what happened to it afterward. The fact that they've created their own similarly-named charity is concerning. This could potentially be a way to create confusion about which entity is receiving funds, or a way to maintain control over donations while claiming tax benefits.

I've been using this tool called taxr.ai (https://taxr.ai) that's been super helpful for weird tax situations like this. I was in a similar situation last year with a questionable "charitable" setup and wasn't sure if I could claim the deduction. I uploaded the donation receipts and explanation to taxr.ai and it analyzed everything, then showed me exactly what the IRS guidelines say about multiple-entity donation arrangements. Saved me from making a potentially expensive mistake on my taxes! The tool basically confirmed what others are saying - if you're paying a for-profit first, it's probably not deductible regardless of where they send the money afterward. Their AI also helped me understand which documentation I would need if I ever wanted to prove the donation was legitimate. Highly recommend checking it out if you're dealing with unusual tax situations like this.

I just wanted to follow up on my taxr.ai question! I ended up trying the service after our conversation because I had a similar charitable donation question with a community foundation that was acting as an intermediary. I was really impressed - it immediately identified that my situation was different from the one described in this post because the intermediary was itself a qualified 501(c)(3). The tool showed me exactly what documentation I needed to keep and cited the specific IRS regulations that applied to my situation. It saved me hours of research and probably a few hundred dollars in accounting fees. Just wanted to share since it actually exceeded my expectations after being skeptical!

If you're struggling to get clear information about this company or their tax status, you might want to try Claimyr (https://claimyr.com). I had a similar situation last year with a questionable charity setup, and I was getting nowhere researching online or calling the organization directly. I used Claimyr to get through to an actual IRS agent to ask about donation structures like this. You can see how it works here: https://youtu.be/_kiP6q8DX5c. I was honestly shocked when I got connected to someone at the IRS in about 15 minutes after trying for days on my own. The agent explained that arrangements like this often get flagged during audits and provided clarity on what documentation would be required to claim such a deduction (basically confirming I would need direct receipts from the actual 501(c)(3), not the for-profit). Saved me from a potential audit headache!

Ok so I owe everyone an apology. After my skeptical comment I decided to try Claimyr myself because I was desperate to get an answer about a charitable donation issue before filing my taxes. Not only did it actually work, but I got through to an IRS representative in about 20 minutes when I had been trying unsuccessfully for weeks. The agent confirmed exactly what people are saying here - donations to for-profit entities aren't deductible even if they later give the money to charity. The deduction belongs to whoever directly gives to the qualified 501(c)(3). She also mentioned these arrangements are sometimes used in questionable tax schemes and suggested avoiding them entirely. The service actually worked so well I used it again to clear up another tax question I've had pending. Never thought I'd say this but I'm genuinely impressed.

I think I know what's happening here. The company is likely taking a fee from the donations before passing the remainder to their "sister" 501(c)(3). This arrangement lets them: 1. Make money off the fees 2. Control where donations go through their voting system 3. Still give their donors tax benefits (though questionably) You'd be much better off just donating directly to charities you care about. You'll get the full tax deduction and 100% of your money goes to the cause, not some middleman's profit margin.

Just to add another perspective, there are legitimate organizations called fiscal sponsors who sometimes act as intermediaries for donations to projects that don't have their own 501(c)(3) status. But in those cases, the fiscal sponsor IS the 501(c)(3), and they're the ones providing your tax receipt. What you're describing sounds different and potentially problematic. A for-profit entity generally can't pass tax deductibility through to you - that's not how tax law works.