1. Understanding Church Contributions

2. Understanding Church Contributions Doug Lohrey Associate Executive Director/CFO Colorado Baptist General Convention

3. Let’s talk about Contributions

4. Commercial Helps
Church and Nonprofit Organization Tax and Financial Guide by D. Busby
Church Law & Tax Report (bimonthly)
Church Finance (bimonthly)

5. Definition of a Charitable Contribution §170
A gift of cash or other property
Delivered to church before the close of the year
No conditions on payment
No personal benefit to the contributor
Made “to or for the use of” qualified organization
Not in excess of the amounts allowed by law
Subject to substantiation

6. Tax Helps From IRS Charitable Contributions Publication 526

7. How Do We Safeguard Contributions?

8. How to receive/deal with an offering
Receive the offering
Put it in a safe place
Not a room where people can play with it
Not an unlocked room
Needs to be a counting committee
Deal with it that day
Count it all and give totals to treasurer
Deposit right after you count it
Give deposit slip to treasurer, as well as supporting documentation
She/he should do all the work in the checkbook from deposit slip
Pay checks/write
Approved by proper people
Two signature checks
Mail out
Do reconciliation of checkbook
Present financial statement to church

9. Let’s distinguish between Designated and General Contributions?

10. What IS a Designated Contribution?
The church must ordain (set-up) the fund.
The individual must give to this ordained fund.
The individual then receives a contribution credit.

11. What is NOT a Designated Contribution?
The individual cannot just ordain his/her own fund
The individual does not get contribution credit in this instance

12. You could be “laundering” money?

13. Sample Contribution Policy
Gifts to the church designated for the use of a specific individual or individuals are to be discouraged. Such gifts will not be reflected on the donor’s record of contributions. However, gifts designated to the church benevolence fund, administered by the church benevolence committee, will be reflected on the donor’s record of contributions if no “strings” are attached to the gift.
The church will accept most types of non-cash gifts such as corporate stocks, land, furniture, clothes, books, art, etc. A letter from the church will be sent to the donor, acknowledging the date of receipt and providing a brief description of the property or items donated. However, the acknowledgement letter will NOT provide an estimated fair market value of the property donated and neither will the donor’s record of contributions reflect receipt of the non-cash gift.
To be included in a given year’s record of contributions, the contributions must be received by December 31, or if mailed, the envelope must reflect a postmark no later than December 31.
The value of time or services contributed by an individual to the church will not be valued by the church or posted to the donor’s record of contributions.
Used by Permission

14. Sample Contribution Policy - Continued
Gifts to the church designated for the use of a specific individual or individuals are to be discouraged. Such gifts will not be reflected on the donor’s record of contributions. However, gifts designated to the church benevolence fund, administered by the church benevolence committee, will be reflected on the donor’s record of contributions if no “strings” are attached to the gift.

15. Sample Contribution Policy-Continued
To be included in a given year’s record of contributions, the contributions must be received by December 31, or if mailed, the envelope must reflect a postmark no later than December 31.

16. Sample Contribution Policy - Continued
The value of time or services contributed by an individual to the church will not be valued by the church or posted to the donor’s record of contributions.

17. How to Handle Non-Cash Contributions

18. Sample Contribution Policy - Continued
2. The church will accept most types of non-cash gifts such as corporate stocks, land, furniture, clothes, books, art, etc. A letter from the church will be sent to the donor, acknowledging the date of receipt and providing a brief description of the property or items donated. However, the acknowledgement letter will NOT provide an estimated fair market value of the property donated and neither will the donor’s record of contributions reflect receipt of the non-cash gift.

19. Sample Contribution Letter for Cash Donation
The First Church of Best Town 777 Hopeful Drive Best Town, My State December 31, 2016 John D. Smith 1234 Main Street Best Town, My State Dear Mr. Smith We, The First Church of Best Town, would like to acknowledge receipt of your donation. Thank you for supporting the ministries at First Church. Listed below are your gift for tax purposes. Date Gift Purpose 1/7/16 $ 300 Building 3/21/ General 9/9/ Missions $ 1,250 Summary: General $500 Building $300 Missions $450 This donor received no goods, services or other items in exchange for this donation. Sincerely, Pastor Joe Jones Administrator

20. Sample Contribution Letter for Non-Cash Donation
The First Church of Best Town
777 Hopeful Drive
Best Town, My State 77888
June 1, 2016 
Mrs. John D. Smith
1234 Main Street
Best Town, My State 77777
Dear Mrs. Smith
We, The First Church, would like to acknowledge receipt of your donation of Mustang on 3/21/16 . Thank you for supporting the ministries of The First Church.
This donor received no goods, services or other items in exchange for this donation.
Sincerely,
Pastor Joe Jones
Administrator

22. The $250 Substantiation Rule §170(f)(8)
The Acknowledgement Must:
Be in writing
Clearly identify donor by name
Give date and amount of each $250 or more donation
Describe any non-cash property or “out of pocket” expense with no stated value or amount
Provide information on the value of any goods or services (if any) provided by the church in return for the contribution
Be furnished “contemporaneously” to the donor

23. The Vehicle Donation Acknowledgement Rule
Effective January 1, 2005
Applies to donation of cars, boats, and aircraft valued over $500
General Rule – Donors deduction is limited to gross proceeds from sale by church

24. The Vehicle Donation Acknowledgement Rule
Exceptions to General Rule
Allows donor to claim fair market value of vehicle, even if:
Church gives the vehicle to needy individual
Church sells the vehicle to a needy individual at a significantly below-market price
Church makes significant intervening use of the vehicle prior to sale
Church makes material improvement to the vehicle prior to sale

25. The Property Disposition Rule – §6050L
Applies to Disposition of Donated Non-Cash Property (except publicly traded stock) valued at $5,000 or more
Sold or Exchanged
Within 3 years of receipt
Form 8282 due to IRS within 125 days of disposition – copy to donor
For the donor to get tax credit, a church employee must sign the 8283

26. Questions? Doug Lohrey dlohrey@cbgc.org
If you have any questions, please call me.
Doug Lohrey
ext. 224