Sunday, August 22, 2010

Keeping Your Church Legal With Its Contributions

I subscribe to a monthly newsletter from the Christian Law Association (CLA). In the August issue they had a “Ministry Q & A” which I found very interesting. Here’s what it said:

Q: Why does my church need to put the phrase ‘All donations are non-binding suggestions’ on their giving envelopes?

A: Alerting contributors that their designated offerings are considered by the church to be non-binding suggestions helps both the church and the contributor. It allows churches to use the designated funds for a possible church financial emergency without violating legal requirements for implied trusts. An implied trust is the legal requirement to use any designated funds only for their designated purpose. Even if a church were to borrow designated contributions for a financial emergency and later replace the entire amount, the legal requirements for implied trust would be violated.

Treating designated contributions as suggestions also assures that the contributor will be able to get a tax deduction for the gift. Unless the church has full control of donated funds and has the discretion to use the funds as needed, the monetary gift may not be tax-deductable for the contributor.

If you’d like to know more about this issue you can contact the CLA office at 727-399-8300.  You can find their website here.

No comments: