Charitable Contributions
Giving Policy for First Reformed Church, Lynden
Giving Policy for First Reformed Church, Lynden
INTRODUCTION
First Reformed Church (FRC) 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 1) undesignated giving, which supports the yearly budget of the church through our General Fund, or 2) 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. For purposes of this policy, the following terms are used:
• Tax Deductible or Charitable 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 (General Fund) 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. Such funds will be used to support the purpose for which they were originally intended until that purpose has been satisfied, after which any excess funds are used for other purposes consistent with the church’s ministry. Designated gifts for budgeted line item expenses (e.g. specific ministry or event) will be accepted in accordance with #2 below.
FUNDS AND DESCRIPTIONS
• General Fund – The General Fund supports our regular ministries and programs, mission work in the local and global community, and ensures that the operations of the church continue. This fund includes all undesignated gifts from our weekly tithes and offerings. Each year, the Finance Committee prepares a yearly budget for the General Fund that is approved by the Leadership Team (formerly called the Consistory). This budget will guide the disbursement of funds from the General Fund.
• Building Fund – This fund supports capital improvements and facility enhancements.
The administration of the fund, including all disbursements, is subject to the direction of the Leadership Team. The church recognizes that planning for future needs is a practice of good stewardship and has established this fund as an ongoing fund. Should at any time the Leadership Team choose to close this fund, all money in the fund at that time may be used for other purposes consistent with the church’s ministry, and such decisions would be communicated to the church family.
• Benevolent Fund – This fund supports compassion initiatives as directed by the Deacon Board. Through this fund, we are able to minister to those in need in our church, community, and around the world. The church recognizes the importance of meeting the physical and financial needs of those in crisis and has established this fund as an ongoing fund. Should at any time the Deacons choose to close this fund, all money in the fund at that time may be used for other purposes consistent with the church’s ministry, and such decisions would be communicated to the church family.
Note: Other funds for special projects may be created on a temporary basis as determined by the Leadership Team and/or the Administrative Team. Any money collected in excess of what is needed may be used for other purposes consistent with the church’s ministry, and such decisions would be communicated to the donors as we are able (see “Refunding a Charitable Contribution; Designated gifts for a special project” below).
GIVING POLICIES
1) All undesignated giving from our weekly tithes and offerings will be directed to the General Fund.
2) Any gift designated for a budget category or line item expense (under any fund) will be applied to the budgeted amount. Such gifts will be used to support the purpose for which they were originally intended until that purpose has been satisfied, after which any excess funds are used for other purposes consistent with the church’s ministry.
3) According to IRS regulations, in order for a gift to be considered a tax deductible contribution, the church must maintain full control over how the gift is used. Therefore, any gift that is clearly designated for and limited to the benefit of a particular individual, item, event, or fund (such as when the gift is accompanied by notations like “use for,” “funds for,” “only for,” “limited to,” etc.) cannot be accepted and will be returned to the donor.
4) The church encourages people to give directly to outside ministries that they would like to support, rather than using the church as a “conduit”.
5) The church is able to accept gifts of stock. Contact the administrator of the church 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 sell 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.
6) The value of personal services donated is not deductible as a charitable contribution and donations of this type cannot be reflected on the individual’s record of giving. The church relies heavily on volunteers to fulfill its ministry.
7) The value of donated goods to the church may be deductible as a charitable contribution, however, donations of this type will not be reflected on the individual’s record of giving. In the event that the goods exceed a fair market value of $250, a letter recognizing the donation may be requested from the administrator of the church. Only specific items will be itemized in the letter, as the fair market value will need to be reported to the IRS by the donor and substantiated by receipts.
8) On the occasion that a person is given pre-approval by a ministry leader to purchase items for a ministry and receive a reimbursement, the donor may not 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. But it can be challenging to establish an adequate trail to substantiate the gift as well as convert a ministry expense into a donation in our system. Instead, we ask these donors either purchase the ministry items they would like to donate on their own accord and donate them to the church. Or, the donor may submit a check request for the reimbursement (which must be pre-approved by the appropriate ministry leader), and then return the money as a contribution to the church.
9) Gifts designated to a specific individual do not qualify as charitable contributions under IRS regulations and should be avoided. In situations where a name appears in regard to a gift, unless clearly designated otherwise (see #3 above), such gifts will be accepted with the understanding that the donor was making a non-binding suggestion only. Such gifts will be utilized as the church administration deems advisable (exercising its discretion and control) and not necessarily as suggested by the donor.
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. In addition, individuals participating in a mission trip who wish to make a designated gift towards their trip should be able to take tax deductions for their gift because we lead our trips in a manner to be consistent with tax-exempt regulations. Donors need to understand when they designate a gift for a specific individual (or themselves), 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, trip funds are non-refundable. In the event of an extenuating circumstance where a team member must withdraw from a trip or a trip is cancelled, an appeal may be made to the Missions Team for a transfer or refund of the individual’s deposit and/or contribution towards their trip, but only if the trip will not suffer a financial hardship as a result of the refund. If a refund is granted, the individual needs to be aware of the possible need to file an amended tax return if the contribution is refunded and the deduction was claimed in a previous year.
• Designated gifts for a special project – Every reasonable effort will be made to use the designated gift for the purpose in which it was designated. However, if the need for funding of a special project no longer exists, the church will make every reasonable effort to contact the donors of such gifts. The purpose of this is to give the donor the option of re-designating the gift to a different project or fund, or refunding it. The donor needs to be aware of the possible need to file an amended tax return if the gift is refunded and the deduction was claimed in a previous year. Obviously, this procedure is only appropriate for those donors who can be identified. Donations that cannot be identified will be redirected towards other purposes consistent with the church’s ministry.
CONTRIBUTION STATEMENTS
Donors will receive an end of year giving statement confirming the amounts, donation accounts and date of gifts, documenting such gifts as deductible contributions for income tax purposes in the United States. Each donor is advised to consult their personal income tax advisor for the applicability of such contributions in their own circumstance.
YEAR OF CONTRIBUTION
The IRS provides clear guidelines with regard to 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 contact the administrator of the church for clarification or questions regarding our policies.
Established by the Finance Committee on: 5/24
Approved by the Leadership Team on: 5/24
First Reformed Church (FRC) 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 1) undesignated giving, which supports the yearly budget of the church through our General Fund, or 2) 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. For purposes of this policy, the following terms are used:
• Tax Deductible or Charitable 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 (General Fund) 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. Such funds will be used to support the purpose for which they were originally intended until that purpose has been satisfied, after which any excess funds are used for other purposes consistent with the church’s ministry. Designated gifts for budgeted line item expenses (e.g. specific ministry or event) will be accepted in accordance with #2 below.
FUNDS AND DESCRIPTIONS
• General Fund – The General Fund supports our regular ministries and programs, mission work in the local and global community, and ensures that the operations of the church continue. This fund includes all undesignated gifts from our weekly tithes and offerings. Each year, the Finance Committee prepares a yearly budget for the General Fund that is approved by the Leadership Team (formerly called the Consistory). This budget will guide the disbursement of funds from the General Fund.
• Building Fund – This fund supports capital improvements and facility enhancements.
The administration of the fund, including all disbursements, is subject to the direction of the Leadership Team. The church recognizes that planning for future needs is a practice of good stewardship and has established this fund as an ongoing fund. Should at any time the Leadership Team choose to close this fund, all money in the fund at that time may be used for other purposes consistent with the church’s ministry, and such decisions would be communicated to the church family.
• Benevolent Fund – This fund supports compassion initiatives as directed by the Deacon Board. Through this fund, we are able to minister to those in need in our church, community, and around the world. The church recognizes the importance of meeting the physical and financial needs of those in crisis and has established this fund as an ongoing fund. Should at any time the Deacons choose to close this fund, all money in the fund at that time may be used for other purposes consistent with the church’s ministry, and such decisions would be communicated to the church family.
Note: Other funds for special projects may be created on a temporary basis as determined by the Leadership Team and/or the Administrative Team. Any money collected in excess of what is needed may be used for other purposes consistent with the church’s ministry, and such decisions would be communicated to the donors as we are able (see “Refunding a Charitable Contribution; Designated gifts for a special project” below).
GIVING POLICIES
1) All undesignated giving from our weekly tithes and offerings will be directed to the General Fund.
2) Any gift designated for a budget category or line item expense (under any fund) will be applied to the budgeted amount. Such gifts will be used to support the purpose for which they were originally intended until that purpose has been satisfied, after which any excess funds are used for other purposes consistent with the church’s ministry.
3) According to IRS regulations, in order for a gift to be considered a tax deductible contribution, the church must maintain full control over how the gift is used. Therefore, any gift that is clearly designated for and limited to the benefit of a particular individual, item, event, or fund (such as when the gift is accompanied by notations like “use for,” “funds for,” “only for,” “limited to,” etc.) cannot be accepted and will be returned to the donor.
4) The church encourages people to give directly to outside ministries that they would like to support, rather than using the church as a “conduit”.
5) The church is able to accept gifts of stock. Contact the administrator of the church 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 sell 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.
6) The value of personal services donated is not deductible as a charitable contribution and donations of this type cannot be reflected on the individual’s record of giving. The church relies heavily on volunteers to fulfill its ministry.
7) The value of donated goods to the church may be deductible as a charitable contribution, however, donations of this type will not be reflected on the individual’s record of giving. In the event that the goods exceed a fair market value of $250, a letter recognizing the donation may be requested from the administrator of the church. Only specific items will be itemized in the letter, as the fair market value will need to be reported to the IRS by the donor and substantiated by receipts.
8) On the occasion that a person is given pre-approval by a ministry leader to purchase items for a ministry and receive a reimbursement, the donor may not 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. But it can be challenging to establish an adequate trail to substantiate the gift as well as convert a ministry expense into a donation in our system. Instead, we ask these donors either purchase the ministry items they would like to donate on their own accord and donate them to the church. Or, the donor may submit a check request for the reimbursement (which must be pre-approved by the appropriate ministry leader), and then return the money as a contribution to the church.
9) Gifts designated to a specific individual do not qualify as charitable contributions under IRS regulations and should be avoided. In situations where a name appears in regard to a gift, unless clearly designated otherwise (see #3 above), such gifts will be accepted with the understanding that the donor was making a non-binding suggestion only. Such gifts will be utilized as the church administration deems advisable (exercising its discretion and control) and not necessarily as suggested by the donor.
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. In addition, individuals participating in a mission trip who wish to make a designated gift towards their trip should be able to take tax deductions for their gift because we lead our trips in a manner to be consistent with tax-exempt regulations. Donors need to understand when they designate a gift for a specific individual (or themselves), 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, trip funds are non-refundable. In the event of an extenuating circumstance where a team member must withdraw from a trip or a trip is cancelled, an appeal may be made to the Missions Team for a transfer or refund of the individual’s deposit and/or contribution towards their trip, but only if the trip will not suffer a financial hardship as a result of the refund. If a refund is granted, the individual needs to be aware of the possible need to file an amended tax return if the contribution is refunded and the deduction was claimed in a previous year.
• Designated gifts for a special project – Every reasonable effort will be made to use the designated gift for the purpose in which it was designated. However, if the need for funding of a special project no longer exists, the church will make every reasonable effort to contact the donors of such gifts. The purpose of this is to give the donor the option of re-designating the gift to a different project or fund, or refunding it. The donor needs to be aware of the possible need to file an amended tax return if the gift is refunded and the deduction was claimed in a previous year. Obviously, this procedure is only appropriate for those donors who can be identified. Donations that cannot be identified will be redirected towards other purposes consistent with the church’s ministry.
CONTRIBUTION STATEMENTS
Donors will receive an end of year giving statement confirming the amounts, donation accounts and date of gifts, documenting such gifts as deductible contributions for income tax purposes in the United States. Each donor is advised to consult their personal income tax advisor for the applicability of such contributions in their own circumstance.
YEAR OF CONTRIBUTION
The IRS provides clear guidelines with regard to 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 contact the administrator of the church for clarification or questions regarding our policies.
Established by the Finance Committee on: 5/24
Approved by the Leadership Team on: 5/24