May 14, 2011

Church Planting--Mother/Daughter Contributions

Question:

Our church is a non-profit incorporation and we have founded an affiliated church. What is the status for donations made to the affiliation church?

Answer:

I'm guessing that the question relates to a church planting activity by one local church that has identified a geographic area needing a local church. The established congregation (the "mother" church) aids a group of people wishing to start a new church (the "daughter" church) similar to it.

Typically, the mother church provides financial oversight including paying initial ministerial salaries or renting facilities. Donations are collected by the daughter church, but managed by the mother church. Offerings are deposited into a mother church bank account, but accounted for as gifts designated to the new ministry. Contribution records and reports are managed by the mother church. Donors to the daughter church receive year-end giving statements from the mother church. Accordingly, the tax-deductible status of donations given to the mother church designated for the daughter church is secure.

Once the church plant is formally chartered as a new church (it establishes a constitution, recognizes members, applies for a federal employer identification number, opens bank accounts, adopts a budget, etc.), then the financial oversight and help is removed and the autonomous body becomes responsible for documenting and reporting its donations.

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