Skip to main content

Benevolence Fund Receipts and Disbursements


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.


  1. So if the church gives cash directly to someone in need, how should that be documented?

  2. Good question...
    First, as I've worked with churches and participated as a church leader myself, I believe it's best to issue payment directly to the benevolent need. A number of years ago, I was dismayed along with other leaders to find that the church's benevolent check to help a needy family had been cashed at a tavern! We should have gone to the grocery store with the individuals, I guess.
    Second, I recommend that the church leaders keep minutes documenting their decisions so that there's proper accountability relating to the church's benevolent fund.


Post a Comment

Popular posts from this blog

Review: Form 1099 Payments to 501(c)(3) Organizations

Question: A church rented space from another church last year. Should it request a completed Form W-9 and issue Form 1099-MISC? Answer: Payments from one 501(c)(3) organization to another 501(c)(3) organization are not subject to Form 1099-MISC reporting. The IRS Instructions for Form 1099-MISC state that "payments to a tax-exempt organization" are exempt from reporting a Form 1099-MISC.  The following are typical examples of payments of $600 or more by a church which are subject to reporting a Form 1099-MISC: Rent paid to an individual (non-corporation) Payments for services rendered by individuals who are not employees (e.g. janitorial service, facilities, snow removal, guest speakers) Support sent directly to missionaries

Special Topic: U.S. Olympic Champion Ben Peterson's Autobiography "Road to Gold"

Road to Gold , by Ben Peterson We are privileged to serve our client Ben Peterson and Camp of Champs, the wrestling ministry he founded   and directs. Ben wrestled for more than 16 years, coached on a collegiate level for 28  years, and has directed Camp of Champs for more than 40 years. We have read his autobiography and found Ben's dedication to the sport and his faith to be inspiring. If you are looking for a good story we highly recommend Ben's  Road to Gold. In Road to Gold , Ben shares the lessons he learned throughout his upbringing and how they led him to achieve Olympic victory. Ben states a key element of his youth was the consistency of his parents. He was encouraged to read the Bible every day from an early age, which he now describes as the most stabilizing habit in his life. Throughout his story Ben also emphasizes the importance of confidence, solid goals, hard work, and consistency. These qualities helped Ben throughout his life and wrestling career, from learni

When you don't know what you don't know

Here at MinistryCPA, we recognize that many churches rely on volunteers and/or part-time treasurers and financial secretaries.  With this in mind, we seek to come alongside ministries in providing the much-needed support to ensure that they are operating in a manner that is both compliant with governing authorities and taking advantage of opportunities for improved stewardship of ministry and employer financial resources.  Please consider this brief checklist to determine if your ministry needs to look further into areas that could be classified as “We don’t know if we are compliant.” Please check all compliance requirements that are currently being met: File quarterly Form 941 or annual Form 944 with the IRS Issue Forms W-2 to all employees and File Forms W-2/ W-3 with SSA Ministerial Housing Allowance is only listed in box 14 of the Form W-2 – it is not included in box 1 Obtain Form W-9 from all individuals/businesses that are paid the cumulative total of $600 or more in the year f