Religious Mission Accounting

[Terry D EA]

This is a good question for M.Malody. A church has contacted me regarding the proper accounting for donations for religious workers who are going on a mission trip abroad. Some folks in the congregation want to allocate their donation to a specific individual. My take is the donor can do this but his donation cannot be deducted on the donor's schedule A as a charitable donation. The church should just record the donations as normal or setup a separate income account and allocate the expenses to the mission trip using the appropriate accounts. The church must pay for all expenses and not make payments to the workers going on the trip. To the best of my knowledge, the folks going on the trip are workers or volunteers of the church and not missionaries. If there is a better method, please let me know.

[Jack from Ohio]

If the donor assigns ANY restrictions to the gift, it CANNOT be deducted. You are correct in your assessment.

If the church establishes a "Mission Trip Fund" that is totally directed by the governing body of the church, donations to that fund can be deducted. Again, the donor cannot direct where the funds go. The donor would have to trust that the persons in charge of the fund will do the best thing with the monies.

The best way for people to be sure the donation helps a specific individual is to make the gift directly to the individual. This will also show if the donor is more interested in the tax deduction than the gift going to the right person.

I run into this all the time with our congregation. (I have been treasurer since Sep. 2011) and when I ask "Which is more important, your gift going to the person you choose, or the tax deduction?" it takes the problem away.

[Bart]

"folks in the congregation want to allocate their donation to a specific individual."

"pay for all expenses and not make payments to the workers going on the trip"

If no payments are made directly to any of the workers, how can the folks in the congregation allocate their donation to a specific individual?

[taxxcpa]

Years ago the United Fund allowed you to specify which organization you wanted your donation to go to. However, they deducted those donations from that organization's share of the pot from the total contributions. So it was impossible for any organization to receive more than the predetermined share of what the United Fund collected.

Designating an individual, however, would be designating a person, not a qualified organization.

[Don in Upstate NY]

Years ago the United Fund allowed you to specify which organization you wanted your donation to go to. However, they deducted those donations from that organization's share of the pot from the total contributions. So it was impossible for any organization to receive more than the predetermined share of what the United Fund collected.

I was the treasurer of a small food pantry, one of hundreds of 501c3 organizations in our area. The United Way 'pot' was directed to funding a handful of the major regional charities and developing new programs - our share of that pot was zero. A major source of our funding however did come through the United Way - the designated contributions of people who 'voluntarily' donated to the United Way because of agressive employer pledge campaigns. They were not motivated to donate to individual charaties directly ("we gave at the office"), but were quite willing to fill-in our organization name on their pledge card.

[taxxcpa]

When I worked for civil service, everyone got a card showing how much they "had" to give which was based on your salary.

One guy didn't want part of his money to go to an organization to which he had a religious objection.

Every day the boss called him into his office and hassled him about it.

The guy finally gave in and made his donation.

Another time when I was in the Air Force they had a big push to get everyone to buy US bonds.

Later, one day,, when I was auditing the Finance Office, I checked the base commander's pay card and found

that he was not having anything withdrawn from his pay for bonds.

In my opinion, donations should be made willingly and only to organizations you want to give your money.

[MAMalody]

This is a good question for M.Malody. A church has contacted me regarding the proper accounting for donations for religious workers who are going on a mission trip abroad. Some folks in the congregation want to allocate their donation to a specific individual. My take is the donor can do this but his donation cannot be deducted on the donor's schedule A as a charitable donation. The church should just record the donations as normal or setup a separate income account and allocate the expenses to the mission trip using the appropriate accounts. The church must pay for all expenses and not make payments to the workers going on the trip. To the best of my knowledge, the folks going on the trip are workers or volunteers of the church and not missionaries. If there is a better method, please let me know.

If a donor stipulates that a contribution be spent on a designated individual, no deduction ordinarily is allowed unless the church exercises full control over the donated funds. That is, the church has full authority to ensure those funds are spent per it's wishes for the furtherance of their mission or exempt purpose.

[jainen]

>>The church must pay for all expenses and not make payments to the workers going on the trip.<<

I agree with your suggestion, subject to the donors' wishes of course. There is no such thing as payments to a volunteer. Regardless of the source of funds, if the church gives money to the workers it also has to give them a W-2.

[Terry O]

I think the real question here is whether or not the money is going to the volunteers. My understanding is that if the money is going towards travel for the volunteers, and not for their time (ie income), then it may be deductible. While you cannot earmark the dollars to go DIRECTLY for "Joe" - -you can donate towards the fund that may choose "Joe" as their representative.

[BulldogTom]

We have moved to a new city and are attending different churches looking for a new church home. Saw this on an envelope just this Sunday and thought it was brilliant. "While we try to honor your wishes, we cannot guarantee your gifts will be used as designated".

Tom

Hollister, CA

[MAMalody]

I have been recommending similar statements for years for churches. I do like the phrasing.

[kcjenkins]

"While we try to honor your wishes, we cannot guarantee your gifts will be used as designated".

That is an excellent way to deal with it. If the contributor is not satisfied with that, he's not making a true 'donation'.