Payouts
Are Donations Through Pennygood Tax Deductible?
The short answer is no. Here's why, what it means in practice, and what your options are if tax deductibility matters to you.
By The Pennygood team · May 2026 · 8 min read
The short answer is no. Here's why, what it means in practice, and what your options are if tax deductibility matters to you.
Why contributions through Pennygood aren't tax deductible
In the United States, a donation is only tax-deductible if it's made to an organisation that holds 501(c)(3) status — a formal IRS designation for charitable organisations. These are nonprofits like the Red Cross, your local food bank, or a registered community foundation.
Pennygood is not a 501(c)(3) organisation. We're a for-profit technology company (MVPFCTRY LLC, registered in Wyoming). The people you back through Pennygood are also not nonprofits — they're private individuals doing something good in their spare time.
This means: if you back someone on Pennygood, you cannot deduct that contribution from your US federal taxes.
Does this apply outside the US too?
Similar rules apply in most countries. The UK, Australia, Canada, and most EU countries have their own charitable giving frameworks, and contributions to individuals or for-profit platforms generally don't qualify for tax relief under any of them.
If you're in a country with a specific gift-aid or donation tax credit scheme, contributions through Pennygood won't qualify.
Why doesn't Pennygood become a nonprofit?
It's a fair question. The answer is that the two models solve different problems.
A nonprofit structure comes with significant compliance overhead, governance requirements, and restrictions on how money can be used. It's the right structure for organisations running programs, employing staff, and operating with a formal mission. It's a poor fit for a payment platform trying to stay lean and move quickly.
More importantly, the people being backed through Pennygood are private individuals — they're not nonprofit entities either. Even if Pennygood were a 501(c)(3), contributions passing through to private individuals wouldn't be tax-deductible in the same way as contributions to the organisation's charitable programs.
What does this mean for supporters?
In practice, for most people, it doesn't change much. The contributions on Pennygood are small — $3 or $6/month. The tax benefit of deducting $36–72/year, even in a high tax bracket, is measured in single-digit dollars. The decision to back someone is unlikely to turn on that.
If tax deductibility is a significant factor in your giving decisions — if you're thinking about larger contributions or you're a high-income earner managing a giving strategy — Pennygood is probably not the right vehicle. A donor-advised fund, a direct contribution to a registered charity, or a matched-giving program through your employer would serve you better.
If you just want to support someone in your community who's doing something good, the tax status is unlikely to matter to you.
What about volunteers — is what they receive taxable?
Yes, in most jurisdictions, money received through Pennygood is taxable income for the volunteer. It's not a charitable gift to them — it's income from a platform, similar to freelance earnings. US-based volunteers may receive a 1099-K from Stripe if they exceed the reporting threshold.
Volunteers are responsible for reporting and paying tax on what they receive, according to the laws in their country. Pennygood doesn't withhold tax on their behalf.
We've written a separate guide on this for volunteers, available in the help centre.
If you want to make a tax-deductible contribution to community causes
Look for registered charities or nonprofits working in the area you care about. Many community organisations, volunteer coordinating bodies, and local foundations hold charitable status and accept tax-deductible donations. Give Well, Charity Navigator, and local community foundation directories are good places to start.
Pennygood is for a different kind of support — personal, direct, and community-driven. Both have their place.
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