Accounting for educational institutions in Michigan

Crowdfunding in Education

CPAs & Advisors

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Crowdfunding, also known as crowdsourcing, was originally used by entrepreneurs and artists to raise money for creative projects and business endeavors; however, it has increasingly become a way for teachers to obtain classroom supplies or funding for projects. Education-focused crowdsourcing sites have been introduced to help teachers fill the gaps in funding provided by the school. It is important for districts to have the proper policies and procedures in place regarding these funds.

Crowdfunding policy

The policy should be broad and define what crowdfunding is, and make it clear which activities are allowable. Typically, this involves the use of an online service or website-based platform to host the fundraiser and a digital campaign to solicit funds. The specific details of the project management should be outlined in the district’s procedures manual.

Crowdfunding procedures

Key elements of the procedures surrounding crowdfunding include the following:

  • Platform approval – A list of websites/services permitted should be approved by an appropriate level of authority (i.e., the superintendent).
  • Application/pre-approval – An application should be submitted to the proper level of authority (principal, etc.) to review and determine if any issues are present. The application should include the following:
    • Budget for the project
    • Description of the project that will be used on the website, including any photos. This description should avoid 1) casting the district in a negative light, 2) specific student needs, and 3) implying that the funds are necessary for the students to be appropriately served and educated.
    • Copy of the personal profile that will be utilized by the staff member on the site
    • Confirmation that the funds raised and/or the items purchased by the crowdfunding site will go directly from the crowdfunding site to the Principal (or another appropriate body) of the school that will benefit
    • Description of any rewards, perks, or thank-you gifts that will be provided to donors, including the cost and source
  • Submission – Once approved, the project can be posted to the crowdfunding site.
  • Tax implications – The crowdfunding site should be a charitable organization (i.e., a 501(c)(3) entity) so that donations to it are tax-deductible to the donors. If not, the posting should make it clear that donors are responsible for any tax consequences.
  • Campaign – The staff member should keep the Principal informed of the status of the campaign as it progresses.
  • Conclusion – Once the funds and/or supplies/equipment are received by the district, they should be made available to the staff member responsible for the campaign and used specifically for the stated purpose of the project. Documentation should be submitted for any expenditures of the funds and a final expenditure report should be utilized at its conclusion.
  • Ownership – All funds raised and materials donated should be considered the property of the district. In the event the staff member who ran the crowdfunding campaign terminates his/her employment with the district, the funds/materials should remain with the district.

Please contact your local Yeo & Yeo professional if you have questions or need additional information about crowdfunding.


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