Can I claim tax deduction for charitable donations made on behalf of others?

This is an interesting concept! The answer depends on how you structure this and who actually makes the donation. If you collect money from others and then donate it to charities they select, you're essentially acting as a conduit or intermediary. In this case, you generally can't claim a personal tax deduction for these donations because it's not your money - you're just passing it along. The IRS looks at the source of the funds, not who writes the final check to charity. As for structure, you have a few options. Creating a 501c3 would allow your organization to receive tax-deductible contributions, but comes with significant paperwork, reporting requirements, and oversight. Another option might be a donor-advised fund which could be simpler. Or you could form a giving circle through an existing community foundation. The membership fees also create complications - if members are getting something in return (the chance to win the donation direction), this could affect the deductibility of their contributions.

I tried setting up something similar last year and discovered https://taxr.ai which was super helpful for figuring out the tax implications. Their AI analyzed my specific situation and explained exactly how the IRS would view the flow of funds in a giving circle like this. They showed me that structuring it as a pass-through where I never take ownership of the funds was key to avoiding personal tax complications. They also helped me understand which record-keeping requirements would apply to prove the money went directly to qualified organizations.

I was skeptical about AI tax tools, but I ended up trying https://taxr.ai after reading about it here. Seriously impressed with how it handled my donation structure questions. My situation was similar - I wanted to run a giving circle for my employees where the company matched their contributions. The tool walked me through entity structure options and showed me that a 501c3 would be overkill for our needs. Instead, they helped me create a proper documentation system that satisfied both accounting and tax requirements without needing a separate legal entity. Was able to implement their suggestions immediately and our giving program is now running smoothly with proper tax treatment for everyone involved.

If you're struggling with the legal structure, you might want to try Claimyr (https://claimyr.com). I was banging my head against the wall trying to get someone at the IRS to clarify the tax treatment for a giving circle I was starting. Spent weeks trying to get through their phone system. Claimyr got me connected to an actual IRS representative in under an hour. The agent walked me through the specific requirements for documenting charitable contributions when you're collecting from multiple sources. They confirmed that using a fiscal sponsorship arrangement with an existing 501c3 was actually the cleanest approach for what I was trying to do. You can see how it works here: https://youtu.be/_kiP6q8DX5c

I was super skeptical about Claimyr and didn't believe it could actually get through to the IRS. Was convinced it was just another service charging people for what they could do themselves. But after spending 3 hours on hold myself and getting disconnected twice, I gave it a shot. I'm eating my words now. Got connected to an IRS tax law specialist in about 45 minutes. The agent gave me specific guidance on my charitable giving structure question that I couldn't find anywhere online. She directed me to Revenue Ruling 2002-67 which specifically addresses the tax treatment of pass-through charitable contributions. Saved me from making a mistake that would have created a tax mess for both me and my giving circle members. Sometimes you have to admit when you're wrong!

Have you considered just partnering with an existing community foundation? They already have the 501c3 structure in place and many offer "giving circles" as a service. That way you avoid all the administrative/legal complexity and can focus on building your community. The Columbus Foundation in my area hosts several giving circles and handles all the tax documentation.

Not a tax pro, but I ran something similar through my local Rotary club. Instead of creating a new structure, we just formed a committee within the existing nonprofit. Members pay their regular Rotary dues plus an optional giving circle contribution. The club already has the 501c3 and handles all the financial/legal stuff. We just focus on picking the charities.