February 14, 2013

Church Contribution to Foreign Church Not Recognized as a 501(c)(3)

Question:

A church would like to send funds to a foreign church. This foreign church is not an Internal Revenue Code section 501(c)(3) organization; it is simply a small ministry in need of help. Is there a problem if the church donates to this foreign church?

Answer:

According to IRS Publication 526, deductible contributions may only be made to “qualified organizations.” The only foreign charities that are cited in the publication as permissible are charities in Canada, Mexico, and Israel. Often, U.S. missionaries in foreign countries will use some of their support to aid local ministries that they are associated with. These type of transfers from a US church through a U.S. missionary are not a problem.

Of course, since local churches in the United States are exempt from income taxes, they are not concerned about getting charitable deductions for their contributions directly to foreign religious organizations. However, a church is serving as an agent for its contributors. Care should be taken that a local church is not facilitating contributions which would otherwise be impermissible for its individual members. Obviously, some U.S. charities have made grave mistakes in this area (e.g. unwittingly supporting foreign organizations with purposes very incompatible with their own).

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