Huge Donations to Wards that can't spend it fast enough

There are a few wards in our stake that receive sizable donations from from friendly non-members. The only instruction the donors give is "we want this donation spent on the young women and young men programs".

The wards have been putting the donations into the Other Account where it grows faster than they can spend it each year. One ward has an Other balance that is more than half of their budget amount.

I'm a relatively new stake clerk but it appears the wards are using this donated money as a slush fund of sorts, transferring money from Other to the budget to make up short falls. Even then there is plenty left over in the Other account from year to year.

This just seems all wrong based on my training. The wards' contention is they don't want to turn away the donations (understandably, for fear of hurting the relationship and rejecting the generous kindness of the donors). Yet the donors only wants their money used for YM/YW.

Should the wards place that money into the YM/YW line item and treat it from then on as part of the budget?

Since the money doesn't have a specific enough purpose, in my opinion, to stay in the Other account year after year, should the wards send the money on to HQ? Or is that specific enough to stay in Other?

It seems wrong to not use their donation per their wishes by sending it to HQ. But their wishes don't seem specific enough.

Any suggestions on how to deal with the donations and how to deal with the current status of the Other accounts is greatly appreciated!

On the tithing donation slip place it in the Other category with a note of Non-member donation for Youth.

The stake and wards should not be spending that money as it wasn't part of their given budget. CHQ should receive the funds and decide how it is used or authorize the stake to use it. CHQ makes no promise that donations will be used for the requested purpose, but they do try.

As a clerk if you even suspect inappropriate use of Church funds (once donated to the Church they are Church funds and not just stake/ward) you have to report this to Salt Lake as a financial discrepancy of fund handling. They will initiate the appropriate audit with the stake president and wards to determine if any correction needs to be taken.

I know this can be a sensitive issue, but the Handbook is clear. In Handbook 2, Section 13.2.8, it says: "Stake and ward budget funds should be used to pay for all activities, programs, and supplies." A couple of exceptions are mentioned, but those do not include donations from nonmembers. One other exception is mentioned in Handbook 2, Section 8.17.3; that deals specifically with funding for nonmember young men who participate in scouting.

Other than those exceptions, I don't see how the ward can possibly use such donated funds under Church policy. So the options are to pass the funds on to CHQ (which may offend the donors) or to politely decline the donations (which may also offend the donors).

A couple things to remember. First, as aebrown correctly pointed out, all activities are paid for out of the budget. Exceptions are limited and include annual camps for YM, YW, and Primary 8-11. If budget funds aren't enough, then the people who participate in these annual activities can be asked to help pay for it. If funds from the participants aren't enough, the bishop can authorize a fundraiser. Similarly, all equipment for the annual youth camps is paid for out of the budget. If budget funds aren't enough, the bishop can authorize a fundraiser. Fundraising activities should provide a meaningful value or service. Slush funds are totally out of bounds. Where on earth have the stake auditors been? You indicate this is an issue that spans multiple years. At least twice every year, an auditor should have been asking if all funds in the Other account have a specific purpose in line with church policy. Accounts that change their purpose after each activity ("let's see, we've paid for movie night, so now the funds are earmarked for the rafting trip) fail that test.

Second, if it's a donation, the donors can't specify what it can be used for. They give up control when they make the donation. That said, this isn't bring recorded as a donation. The donors aren't receiving credit on a tax statement, because the Other account is not a charitable activity.

So, your question is how to handle these funds, and by extension, the friendly non-members. You don't. You're the stake clerk. Your job is to train the bishoprics and clerks on the proper handling of authorized contributions. They should handle the friendly non-members by gently explaining that the YM/YW programs are designed to build strong men and women, not run activities. If these big activities are going to mean anything, the YM/YW should pay for it themselves. Have them get involved in creating work projects so that the YM/YW can earn their way. If group fundraising is authorized, invite them to the fundraiser, and make sure they get meaningful value or service out of their contribution. Raise your concerns in auditing training. You might need to get the Stake President involved.

There are ways for the friendly neighbors to help the YM/YW, they just can't give money directly to the church and put strings on the gift. As for the money itself, it should be returned. It shouldn't be sent to CHQ, because the donors are readily identifiable. Since this seems to be a substantial amount, and the appropriate action is to return ALL of it (including what has been inappropriately spent), Church Finance may need to be involved. The Stake President should definitely be in the loop. Good luck.

aebrown wrote:I know this can be a sensitive issue, but the Handbook is clear. In Handbook 2, Section 13.2.8, it says: "Stake and ward budget funds should be used to pay for all activities, programs, and supplies." A couple of exceptions are mentioned, but those do not include donations from nonmembers. One other exception is mentioned in Handbook 2, Section 8.17.3; that deals specifically with funding for nonmember young men who participate in scouting.

Other than those exceptions, I don't see how the ward can possibly use such donated funds under Church policy. So the options are to pass the funds on to CHQ (which may offend the donors) or to politely decline the donations (which may also offend the donors).

This is defiantly a sensitive subject I remember when the bishop showed me that in a the handbook when I was the YM's president. Our ward has 4 YM our budget was quite small!

Thanks for your input. We are finishing up our stake's (any my) very first audit which is why I'm trying to gather as much info as possible on the topic. Your comments have confirmed what I was thinking and we definitely will make sure this gets fixed immediately. Thanks!

allenjpl wrote: It shouldn't be sent to CHQ, because the donors are readily identifiable.

Quick follow up, per HB 1 14.4.9 "tithes and other offerings ... cannot be refunded... it is improper to refund contributions given to the Church"

So are these donations to the YM/YW programs considered offerings? I would consider them as such since they weren't for a specific use. But I can see the counter argument, that the intention of the well-meaning donors was to help fund those wards' particular youth activities. That makes is a bit greyer.

Thoughts?

paulhilbig wrote:Quick follow up, per HB 1 14.4.9 "tithes and other offerings ... cannot be refunded... it is improper to refund contributions given to the Church"

So are these donations to the YM/YW programs considered offerings? I would consider them as such since they weren't for a specific use. But I can see the counter argument, that the intention of the well-meaning donors was to help fund those wards' particular youth activities. That makes is a bit greyer.

Thoughts?

Tithes and Offerings are not kept by the wards. They are swept to CHQ. If it was treated as tithing or other offering, the ward would not have access to it. So the wards dropped it into the "Other" account. The "Other" account is mainly used as a pass-through account, meaning that funds are collected for a specific purpose and then disbursed for that specific purpose. Generally, funds deposited into the Other account are not donations, they are payments for services or benefits that are provided. Thus, Scouts can deposit their summer camp fees in the Other account, and the ward can cut a single check for the camp, but the Scout's payments are not a donation.

The training that used to be associated with the Other account (that training is no longer on the training page, for some reason) used the example of a Temple trip. After estimating that it would cost $50 per person to go on a temple trip, the participants paid that money into the Other account, and the expenses were paid. At the end of the trip, it turns out that there was $100 left in the account. When there is excess funds in the Other account, you either return it to the donors or, if the donors can't be identified, you send it to CHQ. In the training example, the extra was because 2 people didn't go, so the proper method was to return the money to the people who didn't go. If the donor couldn't be identified because, for example, it was the result of a fundraiser that raised excess funds, the proper method would be to send the money to CHQ.

In your case, people have given money to the wards, which the wards have then put into the Other account without a specifically defined purpose. These aren't donations at all (because YM/YW is not a category that can be donated to), but neither are they paid-for benefits. The contribution could not be accepted by the ward and should have been kindly declined. Given that they weren't declined, and the donor can be readily identified, the correct action is to return the money.

So could you solve this by creating a Bishop-approved fundraiser to the benefit of the non-member donor? For example, maybe after a windstorm, the scouts or YW or both could go and clean up debris for which the donor could make a contribution to the youth program. Is there any policy that forbids any donations in excess of the actual value of the service provided? If someone wanted to donate $1000 in exchange for shoveling snow off a driveway, is that OK? If not, then there have been many $20 or $30 plates of cookies or brownies auctioned off at our ward fundraisers that perhaps shouldn't have. I believe it's common for members (and non-members) to donate more than the actual value of the items or services, just to help out the youth. It seems like that's what this donor is doing in the OP's post; donating an amount of money toward the youth, whether or not they actually receive a tangible benefit. Maybe the youth can bake a $1000 plate of brownies for the donor.

funaddict wrote:Is there any policy that forbids any donations in excess of the actual value of the service provided?

Yes. In Handbook 2, Section 13.6.8, it says: "If a fund-raising activity is held, it should provide a meaningful value or service." As your examples showed, if you eliminate or ignore that provision, fund-raising activities can become little more than a rationalization for making donations to increase the budget allowance. That is clearly contrary to policy.

So paying $30 for a $2 dollar plate of cookies shouldn't be allowed? What if the donor in the OP came to a fundraiser auction and bid $1000 for a plate of cookies? As far as fundraising activities becoming little more than a rationalization for making donations, IMHO, that's what most fundraisers are. Many people who purchase items or services from a fundraiser are rationalizing those expenditures by convincing themselves that it's going to a good cause, i.e. scout camp, girls camp, etc., which I believe goes to the other acct., not toward increasing the budget allowance. Most of us wouldn't pay $30 for a plate of cookies in the supermarket, and most of us probably wouldn't hire a handyman service to come and place flags on our front porch on national holidays, yet we frequently do these things for a fundraiser. My point is that much of the money raised in these fundraisers is above and beyond the actual value of the items or services, and/or are donated by people who don't really need or want those things, but donate anyway with the rationalization that they are donating to a "good cause".
I guess when I read that a fund-raising activity should provide a meaningful value or service, I assumed it meant that it (the activity) should be meaningful to the youth that were doing the fundraising, not necessarily the people buying the items or services. If the scouts shovel snow off someone's driveway and walks, is it any less meaningful if the person chooses to donate $20, $200, or $2000? Should any donation beyond the actual retail value be refused? If so then any fund raising auction must set hard limits on the bidding for each item. The key word is "chooses." The donor in the OP "chose" to donate toward the youth activities. I agree they handled it improperly, that's why I tried to come up with a way to make it proper within the rules of the handbook.

Handbook 2 Section 13.6.8 provides your necessary guidelines:

Fund-raising activities are not usually approved because expenses for stake and ward activities are paid with budget funds.

So the stake & ward budget (as outlined by the stake president and bishop with funds from CHQ not fun-raising) should always be used to pay for activities first. Once that budget is drained to $0 then

As an exception, a stake president or bishop may authorize one group fund-raising activity each year.

So 1 group fund-raising activity a year.

Such an activity may be held to raise funds for the following purposes only:

1. To help pay the cost of one annual camp or similar activity as outlined in 13.2.8.
2. To help purchase equipment that the unit needs for annual camps as outlined in 13.2.9

So spend all of the stake allocated funds first then use fund-raiser money for the approved activities as listed in the handbook. I'd create a separate custom budget category called "Youth Fundraiser" for the funds in each ward (or stake). At the end of year if you have excess funds you need to send them to CHQ by contacting the Church Finance office.

If the stake president expects outside donors to effectively pay for all youth activities he may decide to make the stake & ward youth budget from official Church funds (those given to the stake from CHQ) only $1. This should be done with consultation with the Church Finance office to ensure the stake doesn't risk the legal tax exemption status of the Church.

rbeede wrote:So the stake & ward budget (as outlined by the stake president and bishop with funds from CHQ not fun-raising) should always be used to pay for activities first. Once that budget is drained to $0 then
...
So 1 group fund-raising activity a year.

You skipped a step. If the budget is insufficient, then participants are asked to pay part or all of their share of the cost for the specific annual camps mentioned. Only if those funds are also insufficient is a fund-raising activity authorized.

rbeede wrote:I'd create a separate custom budget category called "Youth Fundraiser" for the funds in each ward (or stake).

Such funds should be tracked in a subcategory of Authorized Member Financed Activities (not Budget, as you suggested).

rbeede wrote:If the stake president expects outside donors to effectively pay for all youth activities he may decide to make the stake & ward youth budget from official Church funds (those given to the stake from CHQ) only $1. This should be done with consultation with the Church Finance office to ensure the stake doesn't risk the legal tax exemption status of the Church.

A stake president has a lot of leeway in administering his stake, but what you're suggesting here seems far outside what even a stake president can do. There is simply no provision in the Handbook for donors (inside or outside) to "effectively pay for all youth activities." The Handbook is clear: "Stake and ward budget funds should be used to pay for all activities, programs, and supplies." There are some very narrow exceptions allowed beyond that simple statement, but donations are not allowed.

aebrown wrote:You skipped a step. If the budget is insufficient, then participants are asked to pay part or all of their share of the cost for the specific annual camps mentioned. Only if those funds are also insufficient is a fund-raising activity authorized.



Such funds should be tracked in a subcategory of Authorized Member Financed Activities (not Budget, as you suggested).



A stake president has a lot of leeway in administering his stake, but what you're suggesting here seems far outside what even a stake president can do. There is simply no provision in the Handbook for donors (inside or outside) to "effectively pay for all youth activities." The Handbook is clear: "Stake and ward budget funds should be used to pay for all activities, programs, and supplies." There are some very narrow exceptions allowed beyond that simple statement, but donations are not allowed.

If I were the Church, I'd probably say the wards can take the money. It makes no sense to me - other than that this was obviously done with the inspiration of the Spirit - that they can't accept donations if those donations don't come from a fundraiser. The people who decided to donate have a right do just that.

Perhaps the donors should be asked, "Do you want your money back? Or do you want us to donate your money to a trusted, non-Church-sponsored charity?".

The First Presidency and Quorum of the Twelve direct how all donations to the Church are to be used.

A budget goes down to the stake president who divides it up among the wards/branches.

Even if a member donates money into say the temple fund that money could be used elsewhere although usually the Church tries to use it for the donated purpose.

In this case an outside donor wants to pay for almost everything. 10 years ago the Church allowed such types of funding or fundraisers. Now, however, to protect the Church's legal status (as a religious organization not just tax exempt) it has to be much more guarded in how money is collected and spent.

The stake president can talk with Church finance and the area authority about such large donations that are intended for the local youth in that stake. It just has to be handled in the correct manner to avoid legal issues for the Church.

rbeede wrote:Now, however, to protect the Church's legal status (as a religious organization not just tax exempt) it has to be much more guarded in how money is collected and spent.

There are certainly very rational reasons for the way the church handles donations, but do you have a source to confirm it's to protect our status as a church and not just a tax exempt org?

The classification as a religious organization is more affected in other countries outside the U.S. based on how financial contributions are collected. It has taken the Church years in some countries to be official recognized as a religious organization.

For the U.S. in order to keep its non-profit religious organization classification the handling of funds must be done appropriately. The IRS.gov website has a useful information document on how official religious organizations are automatically tax exempt without extra paperwork to be recognized as such. See http://www.irs.gov/pub/irs-pdf/p1828.pdf

paulhilbig wrote:There are a few wards in our stake that receive sizable donations from from friendly non-members. The only instruction the donors give is "we want this donation spent on the young women and young men programs".

Why can't these funds be deposited as tithing under the non-member's name? Since youth activities (in your ward and in the entire church) are funded by budget funds which come from redistributed tithing, this still covers their desire to help fund the youth activities. Plus, they can also get the benefit of a tax-deductible donation (whereas AMFA donations are not tax deductible).

If a ward has immediate needs for camp equipment or to cover costs for an Authorized Member Finance Activity, I don't see an issue with putting the donation in as AMFA and spending it appropriately and expeditiously. This would reduce or eliminate the need to do the oft-loathed fundraiser.

paulhilbig wrote:It seems wrong to not use their donation per their wishes by sending it to HQ. But their wishes don't seem specific enough.

Any suggestions on how to deal with the donations and how to deal with the current status of the Other accounts is greatly appreciated!

If you want a totally clean conscience, perhaps a member of the Bishopric should be sent to meet with the non-member and explain how youth activities are funded (centrally managed, redistributed tithing funds) and ask the donor if they'd like their donation to go into the general tithing fund (to possibly fund this ward's youth program or any other ward in the church) or whether they'd feel more comfortable contributing to Humanitarian Aid, Perpetual Education Fund, or other similar funds that also benefit youth throughout the world and still gives them the benefit/blessing of making the donation. Would be a great opportunity to bear testimony of the blessings of paying tithing as well.