Charitable Contributions to King of Grace Church
INTRODUCTION
King of Grace Church is a qualified charitable organization exempt from federal income taxes under IRS Sec 501(c)(3). Contributions to the church are deductible for federal income tax purposes under the rules and regulations established under the current provisions of the Internal Revenue Code.
TYPES OF CONTRIBUTIONS
Generally speaking, a contribution to the church is either
- undesignated, which supports the yearly budget of the church through our General Fund, or
- designated giving, which supports other approved funds or projects of the church (which may or may not be part of the yearly budget.)
The purpose of this policy is to set forth how both kinds of gifts will be treated in order to be considered a tax-deductible contribution. This policy does not deal with love offerings or gifts to employees. For purposes of this policy, the following terms are used:
- Tax Deductible Contribution – a gift of cash or property given to a qualified organization by a donor who receives no tangible benefits from the gift and gives up full control of the gift for the organization to use for its purpose and mission.
- Undesignated Gift – A gift that is given without designation. The yearly budget is funded primarily through undesignated gifts, and as such, donors are encouraged to give without designation.
- Designated Gift – A gift that is designated for a specific fund (other than the General Fund) or ministry project. Designated giving will be accepted only for funds or special projects that have been approved by the elders. Designated gifts for budgeted line-item expenses will be accepted in accordance with #2 under Giving Policies below.
- Fundraising – individuals are not permitted to raise funds in the name of the church without prior explicit permission from the finance team. Should a need exist, an individual should contact the finance team for authorization prior to any action being taken.
- General Fund – The General Fund includes all undesignated gifts from our weekly tithes and offerings and is used to support the ministry of the church. Each year, the Elders prepare an annual budget that is approved by the Elders. This budget will guide the disbursement of funds from the General Fund.
Note: other funds for special projects may be created on a temporary basis as determined by the Elders. Any money collected more than what is needed shall be added to the General Fund.
GIVING POLICIES
- The General Fund makes up the yearly operating budget of the church and is supported by undesignated giving. The church aims to allocate at least 10% of the undesignated gifts to missions. A designated gift for a special approved project under the General Fund will not increase the yearly budget but it will increase the available funds for that project.
- Any gift designated for a budget line-item expense (under any fund) will be posted to that line item and will not increase the annual budget, but it will increase the available funds for that line item.
- The church will not accept any Restricted Gifts whose use is restricted by donors. The church has no discretion in the management and disbursement of such funds. Whereas for Designated Gifts, the church will make every reasonable effort to honor designated gifts. However, according to IRS regulations, for a gift to be considered a tax-deductible gift, the church must maintain full control over how the gift is used.
- The church will not accept gifts for ministries outside of the church asking to forward the donation to that ministry UNLESS the church has taken up an offering for a specific purpose for a specific time frame. The church encourages people to give directly to outside ministries that they would like to support.
- The church can accept gifts of stock. Contact the Elders for details on how to contribute stock. The value reflected on your contribution statement will be equal to the value of the stock when we receive it. However, the deductible amount allowed by the IRS depends on information that you should obtain from your broker, so please confer with your broker as to the exact value that you can deduct.
- The value of personal services donated is not deductible as a charitable contribution. The church relies heavily on volunteers to fulfill its ministry. However, donations of this type cannot be reflected on the individual’s record of giving.
- We are often asked if one can just receive contribution credit for items bought for the church’s ministries instead of being reimbursed. We are always grateful for the generous spirit of our people and we want to do what we can to accommodate this request. We do have to establish an adequate trail to substantiate the gift, however. We ask these donors to go ahead and submit a reimbursement request to the finance team. Donors can then return the money as a contribution and designate it to the ministry that incurred the expense.
GIFTS TO INDIVIDUALS
Gifts designated to a specific individual do not qualify as charitable contributions under IRS regulations. Gifts designated as either a love offering or benevolence to a designated individual will be held until a decision is made as to whether the church can administer the funds. These gifts will not be reflected on the donor’s record of giving.
REFUNDING A CHARITABLE CONTRIBUTION
A charitable contribution (undesignated) will not be returned to the donor. To refund the gift would be contrary to the basic definition of a charitable contribution and could have possible tax implications to the donor and potentially cause a liability to the church.
Refunds on a designated contribution will be handled in the following manner:
- Mission Trip Designation – Gifts designated for individuals to cover mission trip expenses are considered tax deductible as long as the donor has the understanding that the designation is a suggestion, and the gift is ultimately under the control of the church to use as it deems necessary. Donors need to understand when they designate a gift for a specific individual, any funds given above and beyond what is needed for that individual will be used as the church deems necessary to further its mission and purpose. Therefore, no refunds will be given. This holds true if the donor is the person going on the mission trip. Although the gift was designated, refunding it may cause conflicts between those who gave and goes against the very definition of a charitable contribution.
- Designated gifts for a fund or special project – every reasonable effort will be made to use the designated gift for the purpose for which it was designated. However, if the fund or special project no longer exists, or has been fully funded, any extra money given will be added to the general fund.
CONTRIBUTION STATEMENTS
The church will provide, at least annually to donors, a record of cash contributions received in accordance with rules and regulations required by the IRS. Non-cash gifts will be acknowledged by letter as described above, in compliance with IRS rules and regulations.
YEAR OF CONTRIBUTION
The IRS provides clear guidelines regarding the date of posting contributions, which we follow carefully. All contributions received or postmarked by December 31 will be included in that year’s contribution statement. If the contribution is received or postmarked after December 31, it will be included in the contribution statement of the year in which it is received/postmarked—regardless of the date on the check.
CONCLUSION
The church respects the donor’s decision to give as led by the Lord. The above policies are meant to provide guidance to the donor and the church body as well as comply with the applicable tax laws. The church reserves the right to refuse contributions that are not related to the primary purpose of the church, not in the best interest of the church, or those not qualified for tax purposes. The church also reserves the right to amend these policies at any time.
Please direct any questions to the Finance Committee.