Starting a donations based project?

My friends and I have come up with the idea of buying an old beat up van and fixing it up as the ultimate tailgating vehicle. We want this to be a donations based project. We plan on creating a website to track progress and collect the donations. My main concern is taxes. Would we claim the donations as taxable income, or is there a special way we would have to file. Is a project like this even taxable? We know the project at most would cost around $5000. I know there is an exemption of up $10000 that can be claimed as a gift. Anyway, does anyone have any experiences with this? Suggestions and ideas are welcomed.