Governance Issues

Definition of a Church

Under the Internal Revenue Code section 501(c)(3), charitable organizations, including churches and religious organizations, are exempt from federal income taxes and are generally eligible to receive tax-deductible contributions.

What is a church? What are the characteristics of a church?

According to **, "church" can be a noun or a verb. As a noun, a church can be defined as:

1. a building for public Christian worship.
2. public worship of God or a religious service in such a building: to attend church regularly.

#3 Contributions/Event - Communication to Donor is Important

In our 2 previous posts in the contribution/event series, we have discussed the common scenario of a non-profit solicitating contributions/revenues in exchange for a donor benefit. Donors often receive something in exchange for a contribution. Whether it is a meal, a book, a video, all of these items are treated similarly. Remember the criteria for financial reporting:

What has been communicated to the donor and what is the donor’s intended response?

Integrated Auxiliary - Defined

Several religious organizations have created integrated auxiliaries. What are these entitites? How should the information be reported?

According to Publication 1828, Tax Guide for Churches and Religious Organizations an integrated auxiliary of a church refers to a class of organizations that are related to a church or convention or association of churches, but are not such organizations themselves.

In general, the IRS will treat an organization that meets the following three requirements as an integrated auxiliary of a church. The organization must:

Senate Inquiry - Is it Appropriate?

According to the Tax Guide for Churches and Religious Organizations, the IRS may conduct civil tax inquiries and examinations of churches under IRC section 7611. The IRS may only initiate a church tax inquiry if the Director, Exempt Organizations, Examinations, reasonably believes based on written statements of the facts and circumstances, that the Church:

1. may not qualify for the exemption; or
2. may not be paying tax on an unrelated business or other taxable activity

Are WE Closed Yet?

In this series of posts, we have discussed our churches and ministries can prepare for year-end reporting. In our previous post, we discussed reconciling and closing property, plant and equipment (PP&E) accounts at year-end.

In this post we will determine the characteristics of an operating lease and a capital lease. This will assist you in making sure that all capital lease items are posted as an asset and a liability for the funds owed concerning the lease. See Exhibit D for assistance, too.

End of Year Reporting - Spring Filing Requirements

In our two previous posts we have discussed several filing requirements for tax exempt organizations. Here are several filings due this Spring...

Contributions - 6 General Requirements

According to a contribution is synomous for a gift, donation, or benefaction. Since a gift does not occur without an irrevocable exchange, a contribution is not considered an allowable deduction unless the contribution is unconditional. The donor receives no personal benefit in exchange for the gift.

IF the donor receives a benefit for the gift, the difference between the gift and the benefit is the amount that is deductible. Here's an example...

Contributions/Event - Continued

Contributions may be the most gracious form of expression that a donor can provide a Ministry to aid in its Vision. Yet, with gracious offerings can come many challenges when attempting to account for the funds. The following example is a scenario that most any Ministry will encounter:

Are WE Closed Yet?

In our last post we discussed reconciling cash, investments and the related income and expenditures in our closing procedures.

Basis of Accounting for Non-Profit Entities

Cash Basis - vs - Modified Cash Basis…What’s the Difference?