“Crowdfunding” may not be the most familiar term, but the concept is becoming increasingly important. You may have heard about sites like Kickstarter and GoFundMe, which make it easy to ask friends, relatives, social media contacts and even strangers for startup cash for a new business enterprise. Chuffed and CrowdRise are examples of sites that do similar work for nonprofits. Basically, you identify the project or cause, set up a site, and spread the word. If you’re lucky, people will be interested enough to commit funds to your idea.
Wouldn’t it be great if you could do that for your kids’ college savings account? Until now, you basically had to tell your friends and loved ones about the existence of the account and hope they’ll remember when birthdays or holidays roll around. You might remind people, but you might feel pushy doing so.
Until now, when you set up a 529 tax-free college savings plan, you were basically assuming you would have to fund it yourself.
These days, however, 529 plans are getting online to take advantage of crowdfunding opportunities. More than half of the 49 states that sponsor 529 plans have an online gifting platform, according to the Associated Press.
Ascensus College Savings provides recordkeeping, distribution and/or program management services 529 plans in Washington, D.C., and 18 states, including in Ohio. Three years ago, it launched an online gift platform called Ugift. Before that, the only way to use the Internet to collect gifts was to send emails to friends and family.
In the last year alone, Ascensus says, $120 million in contributions were raised through the Ugift program. That’s up by 38 percent over 2015.
Ohio’s plan provides tax advantages to state taxpayers who contribute to 529 plans through CollegeAdvantage, the state’s program. You can use the Ugift online giving tool by asking for your friend or loved one’s Ugift code. You can also write a check. Either way, the plan allows you to print out a gift certificate so the recipient will receive something concrete.
To start crowdfunding a 529 plan for yourself or a family member, you only need $25. You will need the recipient’s Social Security number and contact information. Make a note of the Ugift code and send your friends and loved ones a link to the Ugift website, www.ugift529.com.
There’s no guarantee you’ll receive any contributions, of course. Even if you receive a few dollars here and there, though, every bit helps.