Donation to Ward for an Individual

Fellow Clerks,

I have run into something that I'm not sure how to handle, and admittedly, I have not looked at the CHI yet, so please forgive if the answer is in there. The situation is that an event occurred in the life of one of our ward members, and several members have donated money to the person by writing the check to our Ward.

How should I handle the donation? Most of the donations are marked to Fast Offering, but that just doesn't seem right to me. What's the correct procedure?

-thanks

jshawut wrote:I have run into something that I'm not sure how to handle, and admittedly, I have not looked at the CHI yet, so please forgive if the answer is in there. The situation is that an event occurred in the life of one of our ward members, and several members have donated money to the person by writing the check to our Ward.

How should I handle the donation? Most of the donations are marked to Fast Offering, but that just doesn't seem right to me. What's the correct procedure?

The bishop has to decide based on policy and the family's situation if the family's needs can be met through Fast Offerings. Only if it is within policy can the bishop write checks from the Fast Offering account. If so, then there is no direct linkage between the donations of the members and the support given to the family, but donations to Fast Offerings would be appropriate. However, it would be wise to be sensitive to public announcements of Fast Offerings support.

On the other hand, if there are any other needs the family has that cannot be handled using Fast Offerings funds, then the bishop should carefully consider whether the Church should be in the middle at all. Any such donations would have to go through the "Other" account and as such would not be charitable donations for tax purposes.

The important thing to be careful of with this situation is that the bishop isn't making any arrangements with the donors to give the family fast offering funds if the donations are going to fast offerings. He can encourage the donors to give generously to the fast offering fund if they wanted the tax credit. He would assist the family based on good welfare/fast offering policies regardless of the amount of the donations. He would not be obligated to give any of the donated funds to the family.

The donors would nullify their tax benefit if the money is put into the 'other' category. The ward would be obligated to use the money for the specific purpose the donors intended. Any excess could not be rolled into another 'other' sub-category. Budget funds would need to be used if the sub-category went into the hole.

I'd think running this though the other account would create a number of problems. How would the church administrate this? What are the guidelines? What are the tax/legal implications of collecting money and just handing it to another member? My own personal inclination is to run this though Fast Offering, with all the understanding of how that works, not not touch it at all.

On the flip side, I don't think monies donated to Fast Offering are refundable, so it may not possible to give the donors the funds back to give to the family in need.

RussellHltn wrote:I'd think running this though the other account would create a number of problems. How would the church administrate this?

That part is pretty simple; as with everything you run through the Other account, you create a subcategory for the specific purpose, deposit any donations into that subcategory, write any checks from that subcategory, and make sure that the expenditures match the deposits exactly. This is standard stuff that financial clerks do all the time. But the fact that it is easy to do doesn't make it appropriate....

RussellHltn wrote:What are the guidelines? What are the tax/legal implications of collecting money and just handing it to another member?

The tax/legal implications are where the bishop needs to be careful. Clearly, any donations to the Other account are not tax deductible contributions. The Church is not functioning as a charity in this case; it is simply passing through funds. But does this create any legal or tax problems on the Church side? I don't know.

RussellHltn wrote: My own personal inclination is to run this though Fast Offering, with all the understanding of how that works, [or] not touch it at all.

You can't "run this through Fast Offering"; there can be no connection between any donations to the Fast Offering fund, and any assistance given to members. I am not a lawyer, but I am certain that such a practice would put the tax-exempt status of the Church at risk. Fast Offering assistance is given to members according to strict guidelines for very good reasons. It's wonderful that members want to be helpful to those in need, but they can't control through their donations the assistance the Church gives to those in need.

RussellHltn wrote:On the flip side, I don't think monies donated to Fast Offering are refundable, so it may not possible to give the donors the funds back to give to the family in need.

As with charitable contributions given to the Church in any category, monies donated to Fast Offerings cannot be refunded, and the donor cannot specify how the funds are then used by the Church.

Alan_Brown wrote:You can't "run this through Fast Offering"; there can be no connection between any donations to the Fast Offering fund, and any assistance given to members.

Correct. clerker explained it well in the post just prior. That's what I meant by "with all the understanding of how that works".

In the end, it's not unlike donating to say the Red Cross after a big storm.

Thanks everyone, I knew when it came it that it didn't smell right, just wasn't sure where. I was able to review the CHI and it clearly explains

Members should contribute fast offerings without designating how the funds should be used. Bishops may not enter into arrangements or make commitments to give a member's fast-offering contribution to an individual or family or to use it for a special purpose that the donor designates.

I voiced my concerns to the Bishop last night and we're on the same page, he's going to follow up with the person.....

Alan_Brown wrote:The tax/legal implications are where the bishop needs to be careful. Clearly, any donations to the Other account are not tax deductible contributions.

If I may digress a little from the original question, I want to say that this statement may not be entirely correct.

There was a "Sub for Santa" event in our ward where members were invited to donate money to help some of the less fortuate families have a more merry Christmas. We used the Other category for this activity.

There was one member who donated a significant amount and was surprised to see that it did not show up in his official tax statement. When I asked CHQ about this, they said that the church cannot officially say one way or the other whether something donated to the Other category is tax deductible, and that is why it does not show up in the tax statement. Certainly, the intention of the donation was a charitable one. But whether it is indeed tax deductable is a question for the IRS. And in this case, the church can only suggest that the member seek advice from their tax advisor.

Greggo wrote:

Alan_Brown wrote:Clearly, any donations to the Other account are not tax deductible contributions.

If I may digress a little from the original question, I want to say that this statement may not be entirely correct.

There was a "Sub for Santa" event in our ward where members were invited to donate money to help some of the less fortuate families have a more merry Christmas. We used the Other category for this activity.

There was one member who donated a significant amount and was surprised to see that it did not show up in his official tax statement. When I asked CHQ about this, they said that the church cannot officially say one way or the other whether something donated to the Other category is tax deductible, and that is why it does not show up in the tax statement. Certainly, the intention of the donation was a charitable one. But whether it is indeed tax deductable is a question for the IRS. And in this case, the church can only suggest that the member seek advice from their tax advisor.

I was speaking of the context of the position of the Church, not the individual. Anyone can claim anything is tax deductible and resolve any disputes with the IRS (in the US). It would have been clearer if I had said "Clearly, any donations to the Other account will not be included in the donor's year-end Tax Statement."

Thanks for the clarification.

I have often wondered about the statement that anything put into the "other" account is not tax deductible. When I was the ward clerk, one of our elderly members used to add $5 to his donations strictly in other under Boy Scouts. Since we couldn't put it into one of the "budget" accounts, we always added the $5 to the other Boy Scout account. The donation wasn't targeted towards any event that the elderly member was going to partake in so why would it not be tax deductible?

Around a year ago we had one of the regional auditors (responsible for Colorado area) visit and give a presentation. He made the same comment that anything put into the "other" account cannot be tax deductible. I just have to politely disagree. It may not show up on the end donation statement at Tithing Settlement, but what I described above, certainly would pass any sanity test if the IRS were to audit the return of the elderly member.

Jim

Pilotfly wrote:I have often wondered about the statement that anything put into the "other" account is not tax deductible.

With the caveat that I am not an IRS agent, I believe the situation you describe would be a valid US tax deduction if the member itemizes deductions on Schedule A.

In general, in Church financial circles, we say that anything in the Other category is not tax deductible. This is not correct. Most things in the Other category will appear on the donor statement as non charitable contributions.

However, donations to specific other categories, such as the Temple Construction funds, Humanitarian Aid, and the Perpetual Education Fund will show up on donor statements as Charitable contributions, even though they are in the other category.

lajackson wrote:With the caveat that I am not an IRS agent, I believe the situation you describe would be a valid US tax deduction if the member itemizes deductions on Schedule A.

Agreed. I'm also not a IRS agent or tax lawyer, but U.S. members wanting to take a tax write-off on donations made to "other" should read page 8 of Instructions for Schedule A.