Tax Deductibility of Volunteer Expenses

[rickmck]

What is the name of your state (only U.S. law)? Virginia.

I’ve read IRS Publication 526, Charitable Contributions, but I’m still confused.

Here’s the situation. A U.S.-based 501(c)3 charitable foundation is going to fund a research scientist’s project (wildlife conservation oriented). The project will be conducted in Africa. I’ve signed up with this scientist to assist him on a volunteer basis (I have an appropriate educational & career background to be able to plausibly assist). The project budget is not sufficient to support the costs of my participation, so I have to pay my own way. The first phase of the project requires airfare to and within Africa, and living expenses (basically room and board at a cooperating lodge) for 30 days. The costs to me will be roughly $1500 round-trip international air, $1000 internal African air, and about $2500 for 30 days lodging & board. Roughly $5k total. This project requires real work & I will have substantial responsibilities, but it will not require a full day’s work on all days (probably 5 working days per week).

Can I donate $5k to the charitable foundation, deduct that contribution, and have the foundation buy my airfares and pay my lodging & board costs?

Alternatively, can I retain my airfare receipts, get a receipt from the lodge to substantiate my lodging & board costs, and deduct those costs as travel expenses associated with volunteer work?

From my (layman's) reading of Publication 526, I think it could be done either way. What do you think? If both ways are OK, is one preferable to the other? Would either one likely trigger an audit?

Thanks...What is the name of your state (only U.S. law)?

 

[FlyingRon]

Either way would work. Keep good records and a letter from the non-profit detailing that you were there supporting them and that they provided you no renumeration or other gifts in kind in exchange for your outlays. I get one of these letters from a charity I do volunteer travel on my own nickle for. The issue would more likely come up as to whether the travel has some recreational value over the work you do for the charity. Obviously it doesn't sound like this is the case. The fact that you enjoy doing the work does not negate the charitable aspects of it.

 

[HappyWanderer]

You certainly can't do the first as it would not be a charitable contribution until you reduce whatever benefit you received.

As to the second, I'm not sure. That does not seem a volunteer contribution to the charitable organization or to its use. While an out-of-pocket, reimbursed expense incurred in rendering services TO a charitable organization is clearly deductible, you aren't really doing that here are you? Is it really "on behalf" of the 501(c)(3)?

You also have the problem of a significant element of personal pleasure, recreation or vacation to overcome. You framed the question backwards. It's not the fact of the services you perform, its the down time you have to deal with. That seems a facts and circumstances argument which no one can tell you the answer unless you got an official letter from the IRS on the exact question.

I don't think anyone can tell you if it will trigger an audit, but I bet there would be at least a letter sent to a taxpayer asking for an explanation of a $5K volunteer expense.

 

[LdiJ]

What is the name of your state (only U.S. law)? Virginia.

I’ve read IRS Publication 526, Charitable Contributions, but I’m still confused.

Here’s the situation. A U.S.-based 501(c)3 charitable foundation is going to fund a research scientist’s project (wildlife conservation oriented). The project will be conducted in Africa. I’ve signed up with this scientist to assist him on a volunteer basis (I have an appropriate educational & career background to be able to plausibly assist). The project budget is not sufficient to support the costs of my participation, so I have to pay my own way. The first phase of the project requires airfare to and within Africa, and living expenses (basically room and board at a cooperating lodge) for 30 days. The costs to me will be roughly $1500 round-trip international air, $1000 internal African air, and about $2500 for 30 days lodging & board. Roughly $5k total. This project requires real work & I will have substantial responsibilities, but it will not require a full day’s work on all days (probably 5 working days per week).

Can I donate $5k to the charitable foundation, deduct that contribution, and have the foundation buy my airfares and pay my lodging & board costs?

Alternatively, can I retain my airfare receipts, get a receipt from the lodge to substantiate my lodging & board costs, and deduct those costs as travel expenses associated with volunteer work?

From my (layman's) reading of Publication 526, I think it could be done either way. What do you think? If both ways are OK, is one preferable to the other? Would either one likely trigger an audit?

Thanks...What is the name of your state (only U.S. law)?

I have some concern because you are going on this trip to assist the scientist who is being funded by the organization. Is the scientist being paid for his services, or is he volunteering his services? Do you have a connection to the scientist? Will you receive some kind of benefit from this trip?

 

[rickmck]

Hmm... Off to an interesting start with FlyingRon thinking it's OK and HappyWanderer apparently having serious doubts.

Today 03:46 PM
HappyWanderer
That does not seem a volunteer contribution to the charitable organization or to its use. While an out-of-pocket, reimbursed expense incurred in rendering services TO a charitable organization is clearly deductible, you aren't really doing that here are you? Is it really "on behalf" of the 501(c)(3)?

I dunno... It's the 501(c)(3)'s money that is funding the project, so doesn't that make it the 501(c)(3)'s project? And, therefore, work on the project is "on behalf" of the 501(c)(3)?

Today 03:46 PM
HappyWanderer
You certainly can't do the first as it would not be a charitable contribution until you reduce whatever benefit you received... You ... have the problem of a significant element of personal pleasure, recreation or vacation to overcome.

No doubt, on the "off" days I would be looking to entertain myself with hikes, overnight camping trips, driving around, etc., but the bottom line is the volunteer work can't be done without first flying to Africa and then maintaining a continuous onsite presence -- I can't "commute" to the work site in the African bush. Maybe keeping a diary of daily activity and only deducting 5/7 (or whatever the ratio is) of the $5k donation or the total out-of-pocket cost?

Today 03:55 PM
LdiJ
I have some concern because you are going on this trip to assist the scientist who is being funded by the organization. Is the scientist being paid for his services, or is he volunteering his services? Do you have a connection to the scientist? Will you receive some kind of benefit from this trip?

I'm not sure whether the scientist is being paid or not. Why would it matter one way or another? Are you thinking along the lines of HappyWanderer's thought that I might be working "on behalf" of the scientist and not "on behalf" of the 501(c)(3)?

The scientist is an acquaintance of mine. He works extensively in Africa and has previously helped me arrange vacation travel there.

Aside from the personal satisfaction of the work, I suppose I receive the "benefit" of being in Africa and being able to enjoy local activities (as noted above) on the "down" days.

Thanks again for your thoughts and opinions...

 

[FlyingRon]

The key would be the charity stating that the work you are doing is FOR them rather than your own recreation (or the furtherance of the researcher's interest). Just because someone is contracted by a charity doesn't mean that work done for the contractor is a charitable act.

So, if the charity is willing to make the statement that they are obligated to under section 170(f)(8) that you were doing the volunteer work for them, and a substantial amount of the trip is for the volunteer work under 170(j) it's deductible. If you do some extra traveling or sightseeing it starts to question the expense, but if you travel solely to do the charitable work EVEN THOUGH you may find it fun to do exotic work in far away places, it still should be deductible.

Like I said originally, if you get the letter from the charity and your trip expenses are directly in support of the work, it should not be an issue. I travel for charitable work annually. It's never even been an issue, and the organization I volunteer for is large and I've never heard of anybody having issues with the tax deduction. Their legal department gives pretty good guidance on what they feel is "substantial" effort (just showing up for a few hours and going on your way is not enough). We're talking 35 hours of documented labor over a one week period.

 

[LdiJ]

Hmm... Off to an interesting start with FlyingRon thinking it's OK and HappyWanderer apparently having serious doubts.



I dunno... It's the 501(c)(3)'s money that is funding the project, so doesn't that make it the 501(c)(3)'s project? And, therefore, work on the project is "on behalf" of the 501(c)(3)?



No doubt, on the "off" days I would be looking to entertain myself with hikes, overnight camping trips, driving around, etc., but the bottom line is the volunteer work can't be done without first flying to Africa and then maintaining a continuous onsite presence -- I can't "commute" to the work site in the African bush. Maybe keeping a diary of daily activity and only deducting 5/7 (or whatever the ratio is) of the $5k donation or the total out-of-pocket cost?



I'm not sure whether the scientist is being paid or not. Why would it matter one way or another? Are you thinking along the lines of HappyWanderer's thought that I might be working "on behalf" of the scientist and not "on behalf" of the 501(c)(3)?

The scientist is an acquaintance of mine. He works extensively in Africa and has previously helped me arrange vacation travel there.

Aside from the personal satisfaction of the work, I suppose I receive the "benefit" of being in Africa and being able to enjoy local activities (as noted above) on the "down" days.

Thanks again for your thoughts and opinions...

If you take a vacation in Africa and do a little charitable work while you are there, then the primary purpose of the trip is your vacation, and only additional expenses relating to the charitable work would be deductible.

If you volunteer for a project in Africa and its a Monday thru Friday project, and you do recreational things and side trips on the weekends, then the primary purpose of the trip is volunteer work, and only your weekend, additional expenses are non deductible.

If your boyfriend is volunteering for a month in Africa, and you want to go along, and you "assist" him, it may not be considered as deductible.

Really the whole thing boils down to whether or not the charitable organization recognizes you as volunteering for a project in Africa and you are officially working under their auspices.

 

[HappyWanderer]

For a detailed discussion of the matter and how the courts would apply the facts and circumstances to the law, see:

Harry T. Cavalaris v. Commissioner, TC Memo 1996-308.

An online listing is at:

Tax Attorney Resources - Harry T. Cavalaris - Page 1 - US Tax Court Opinions

But, it is broken up into little bits and is hard to get the whole sense of the case; so if you can get a friend with a database access or have a law library close I'd go there.