Skip to main content

Unsolicited Church Contributions Designated to Missionary

Question:

A church supports a missionary with a generous monthly disbursement to his mission agency. This regular monthly amount is disbursed from its general fund as a budgeted expenditure. A donor has made a contribution earmarking the same missionary with a designated gift. The church has not solicited or maintained a designated fund for this missionary. What alternatives might the church consider to handle the contribution?

Answer:

A church may apply one of two alternative policies to handle unsolicited designated contributions. 

1.) While every missionary family could certainly put additional funds to good use, the first alternative implies the assumption that the current monthly amount from the church provides a very minimal or insufficient amount to support his or her work. Hence, additional support enabled by designated gifts will be most welcome, encouraged, and solicited. Because the designated gifts are above and beyond the budgeted amount, a separate designated fund must be created. In this case, the amount is used to augment the missionary's budgeted support.

2.) The second alternative assumes that the church appropriates a monthly contribution to missionaries based on an awareness of their needs. Under this policy, the church will not create a designated fund for the gift. Instead, it will contact the donor to offer the following options.

        a) The contribution may simply be added to the general fund offerings used to pay the standard monthly support of many missionaries as voted upon by the church each year as part of its budget.

        b) If an additional need does exist, it might be brought to the attention of the church leaders who will consider whether to authorize and establish a designated fund to meet the specific need. All church members will then be made aware of this need and solicited to help meet it.

        c) The contribution may be returned to the individual who may choose to work directly with the missionary's agency.

In most cases, MinistryCPA recommends the second policy described as it ensures that the funds are carefully and thoughtfully distributed, going to those most in need. It places the burden of knowing the needs of each missionary on church leadership and strives to meet them as a congregation. 

See below for an example of how church leaders might communicate this policy to church members when an unsolicited designated gift is received.

Thank you for your generosity directed to the [missionary].

From time to time we become aware of additional needs on the mission field that have caused us to establish a designated fund for special contributions above-and-beyond our standard monthly support to a missionary family.

At this time, we are not aware of any additional needs the [missionary] has beyond our monthly support of $___. We do welcome your input if you are aware of extraordinary needs. But no designated fund has been authorized by the church for the [missionary] at this time.

Please indicate your wishes:
1. We normally simply include your contribution along with others that are intended to support our missions budget. This support is used to meet the standard monthly needs of many missionaries as voted upon by the church congregation each year.
2. Let us know about extraordinary needs and we will consider whether to authorize and communicate to the church body the establishment of a designated fund for purposes of meeting a need beyond our standard monthly support. That fund will then be announced at a public meeting and contributions will be solicited to add to your own.
3. We can return to you your donation amount and you may work directly with their mission agency.

We will be glad to discuss any questions or comments you have related to these important matters.


For more information on unsolicited designated gifts, see...

Substance Over Form-- Description and Example



Comments

Popular posts from this blog

Rental of a Church Parsonage to a Non-Minister

Question: A church owns a parsonage, but the pastor does not use it as he owns his own home. The church rents the parsonage to a tenant other than a minister or employee of the church. Will the church be responsible for paying income tax on these monies as Unrelated Business Income (filing a Form 990-T) even if the money is used to carry on the business of the church? Answer: Whether the money is used for church purposes is irrelevant.  IRS Publication 598  states: "If an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business." Fortunately, in the case of rental income from real property, such income is "excluded in computing unrelated business taxable income" (Publication 598). Caution: see content below regarding debt-financed property.  However, a second concern not a

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

Form 944 or 941 Filing for Churches

Question:   A new church filed for an employer identification number (EIN) recently. It received notification from the IRS about the EIN, stating that the church must file Form 944 by the following January deadline. The church has no non-ministerial staff members. Since income tax withholding is elective by ministers and none of the pastors has elected to request non-mandatory withholding is the church required to file Form 944 annually? Also, a quarterly Form 941 (rather than an annual Form 944) is required of some employers. Which IRS form, if any, should be filed? Answer: According to IRS Section 1402(c) and 3121(c), ministers are not subject to mandatory income tax withholding. Unless one or more ministerial employees request non-mandatory withholding, church employers with only ministerial employees do not need to file Form 941 or Form 944.  The IRS  Ministers Audit Technique Guide  explains in further detail a minister's treatments for social security, Medicare tax, Fed