Governance Issues

Contribution - When to Record?

The following is a question that we have received from a controller of a large church in the north east.

Question - During the Watch-Night service, Bishop called for a cross-over offering that was taken after 12AM and the envelopes were dated 1/1/08. When is the contribution recorded? 2007 or 2008?

Answer - The contribution is recorded when delivered to the Church. The cross-over offering was delivered after 12AM and therefore should be recognized in 2008.

Charitable Contributions - Requirements - (1 of 6)

Contributions are typically the most significant source of income for a church or ministry. In order to be a deductible expense for a tax payer the contribution must meet six requirements. Our post today will discuss the first requirement:

Vehicles Contributed to a Church – (3 of 4)

Churches or ministries that receive a motor vehicle, boat or airplane contribution in excess of $500, should prepare Copy A of Form 1098-C. The form should be retained and filed with the IRS by February 28, 2008 along with a 1096 transmittal form. The Form 1096 must show the total number and dollar amount of all such 1098C (copy A forms) for the year. Remember, do not combine any of the under $500 donations in the 1098C-copy A totals.

The Picturesque Staff - (Mega-Church Series)

Personnel continue to be one of the greatest resources of a organization. Hiring the right person for the right position is important, however retaining that individual continues to be a strong challenge for a number of organizations.

The following are examples of policies directed for training, development and retention:

·Provide personnel with clear, current job descriptions and the resources they need to produce quality work.
·Support the education, development of and opportunities for growth and advancement of personnel.

Vehicles Contributed to a Church – (2 of 4)

If a church or ministry receives a vehicle valued greater than $500 and it is not sold, you must certify that it is used substantially in the church’s regularly conducted activities. Or, you must certify that the vehicle is to be transferred to a needy individual, at below value, to further the church’s charitable purpose. On Form 1098-C, a detailed description of the vehicle’s use must be supplied. Do not check box 7 or your donor will be limited to a $500 donation. The church/ministry must supply Copies B & C to the donor within 30 days of the contribution if no sale will take place.

The Picturesque Staff - (Mega-Church Series)

Maintaining and motivating staff is a challenge for most organizations, including churches. Having proper employment policies, staff training/development and retention plans are critical areas for churches.

The following are examples of employment policies that should be considered and implemented by non-profit organizations:

·Comply with all federal, state and local employment laws when hiring and employing personnel, including withholding and payment of payroll taxes. See IRS Publications 505 and 517 relating to payroll issues for employees and ministers.

Designated Contributions

We receive several questions each year regarding designated or restricted contributions. Designated contributions are contributions made to a church or ministry for a specified purpose or program. The donor may designate a specific project or a specific individual relating to the contribution. Whether or not the contribution is deductible for income tax reporting depends on the type of designation and whether the Church has control and discretion over the contribution.

The following are several examples...

Fair Value of Donation

Scenario: A church has determined that additional space is needed for a satellite location. A warehouse has been located, however significant renovations will be needed. A private individual (taxpayer) is willing to purchase the land and building and the church will finance the renovations. The church will rent the facility for three years and the rent will be $1 per year. In three years the taxpayer would donate the property to the church and receive a charitable deduction.

Question: Does the donor receive a deduction for the appraised value of the donated property?

Record Keeping for Ministers (3 of 3)

Avoid the last minute crunch of trying to organize your personal records for tax time. Maintaining your information, (receipts and payments) will make it much easier to estimate the taxes and prepare the information for the tax professional.

Keep track of Cash Donations – Tithes, offerings, and contributions. The IRS requires proof so be sure and write a check or get a written receipt from the organization you contribute to.

The Picturesque Staff - (Mega-Church Series)

As a pastor, imagine walking into your church and having an executive assistance that is proficient in typing, writing letters, using the phone system and keeping you on schedule with all appointments. This would be fantastic, but as you know for most churches it is hard to hire highly skilled administrative staff with starting salaries that are may be below the industry average.