"Does a church need to distribute Form 1099 to donors that receive refunds of donations to a building fund. The building will no longer be built, and the church has sent notice that the money in the building fund can either be applied to the debt of the church or returned to the donor. Since these were designated donations, I don’t believe they would have been deductible in the first place, but the church has no way of knowing how individual taxpayers handled this."
First, designated donations to a building fund are typically deductible. A refund will, then, have tax ramifications that each donor's tax professional will need to address. However, the church has no requirement to issue Form 1099.
Richard R. Hammar in his 4/23/2009 post on Church Finance Update (Bottom-Line Training: Refunds of Charitable Contributions; What do we do if a member wants to take back their contribution?) provides an excellent treatment of this subject. I cannot improve upon it.
Also, Hammar provides free e-mail newsletters that reader will find well done and useful.