Several people in the community at large have been sending a church regular gifts for a disabled member of the church. None of the donors are close relatives and none of them are her employers (she doesn't "work" for them). The church has been disbursing the money to her monthly. No Form W-2 or 1099 has been issued and there isn't anything that she's expected to "do" as a result. Is the above inappropriate? Alternatively, will use of the funds to pay her bills instead of giving it to her directly eliminate any concerns?
This appears to be a classic example of truly benevolent activity in the Scriptural sense--no motivations other than caring for a "widow (or disabled) indeed" (I Timothy 5.3). The church congregation has recognized a benevolent need, established a procedure to collect gifts, and controlled its disbursement in accordance with the congregation's directives. The form of the benevolent activities and the substance of the motivations for doing so are consistent. No one is compensating the needy person for services nor paying for benefits that they are otherwise obligated to provide. The situation described in the question appears appropriate. Payment of a recipient's bills never successfully disguises amounts that represent compensation for services. These are called "payment in kind." But it does not appear that that is what is occurring in the situation described here.
The same rules apply to other benevolent activities (for example, a church establishing a "wheelchair fund" designated to receive gifts to buy a wheelchair for a disabled teenager).
For more information, check out my December 20, 2008, posting entitled Benevolence Policies.
P.S. My January 20, 2009, Post may have created some confusion:
I said that non-deductible gifts "include contributions to a qualified organization if you indicate that your contribution is for a specific person. But you can deduct a contribution that you give to a qualified organization that in turn helps needy or worthy individuals if you do not indicate that your contribution is for a specific person."
The determination relates to control. If the church determines to provide benevolent assistance to a needy individual, then it is not the donor who is controlling its disbursement. He or she is simply responding to an invitation to give to a charitable cause. I understand the confusion that this can generate.