Christmas Fund

We've had a bishop in our stake ask us if it would be appropriate to start a Christmas Fund within his ward. He has several families that want to donate money to anonymously help some of the needy families in the ward have a more enjoyable Christmas. The ward financial clerk would open up a subcategory in the 'Other' account where the money would be collected, and then the bishop would use those funds to provide holiday meals, Christmas trees or presents depending on each of the family's needs. Is this an appropriate use of the 'Other' fund?

john.orme wrote:We've had a bishop in our stake ask us if it would be appropriate to start a Christmas Fund within his ward. He has several families that want to donate money to anonymously help some of the needy families in the ward have a more enjoyable Christmas. The ward financial clerk would open up a subcategory in the 'Other' account where the money would be collected, and then the bishop would use those funds to provide holiday meals, Christmas trees or presents depending on each of the family's needs. Is this an appropriate use of the 'Other' fund?

Many wards do a sub-for-santa fundraiser at Christmas time to help make Christmas possible for disadvantaged families using this same mechanism. The bishop can authorize the use of the Other account. So long as the funds are collected in a manner that is approved (not solicited), I would think this is a great way for these families to celebrate Christmas. This is something they could do on their own, but I think the bishop is in a much better position to know who would benefit the most so it makes sense to do this through the him.

If they truly want to be anonymous, be sure to assign the donations to "anonymous".

crislapi wrote:Many wards do a sub-for-santa fundraiser at Christmas time to help make Christmas possible for disadvantaged families using this same mechanism. The bishop can authorize the use of the Other account. So long as the funds are collected in a manner that is approved (not solicited), I would think this is a great way for these families to celebrate Christmas. This is something they could do on their own, but I think the bishop is in a much better position to know who would benefit the most so it makes sense to do this through the him.

If they truly want to be anonymous, be sure to assign the donations to "anonymous".

A few things to note:

1) Other/AMFA payments will not show up on the Tax-valid statement as they are
usually used in a pass-through taxable manner, so be sure the donors know
that if they give a sizable amount they might need to generate their own
paperwork at tax time.

2) Like all Other/AMFA accounts, all of the funds collected should be spent for
the purpose collected. Leaving a balance in this account shouldn't happen.

3) Purchases should be traceable by receipt, even if it means more work for the
people involved. Too often, I've seen leaders use the money to give store
"gift cards" to the families in need. Last I checked, this was against policy.
All expenses should be properly documented, and gift cards are like giving
the people a blank check (also against policy, I'm told).

john.orme wrote:He has several families that want to donate money to anonymously help some of the needy families in the ward have a more enjoyable Christmas.

I think where the "anonymously" comes in can be important. Perhaps donors can speak privately with bishops, so donations to the ward are not anonymous, so that receipts and taxes and the proper accounting methods are always correct, and above question at audit/tax time, but the ward then keeps the giver anonymous.

john.orme wrote:We've had a bishop in our stake ask us if it would be appropriate to start a Christmas Fund within his ward. He has several families that want to donate money to anonymously help some of the needy families in the ward have a more enjoyable Christmas. The ward financial clerk would open up a subcategory in the 'Other' account where the money would be collected, and then the bishop would use those funds to provide holiday meals, Christmas trees or presents depending on each of the family's needs. Is this an appropriate use of the 'Other' fund?

Bishops are, by and large, friendly folk who really want to help others. When they see a need, like a struggling family with a very small (or nonexistent) Christmas, they want to fill that need. That said, there is nothing precisely on point in the training that expressly prohibits this, but it might be strongly implied that this is an improper use of the Other Account.

For example, in the old Other Account training, it warns

Occasionally wards or stakes create an "Other" subcategory to collect funds for national or international charitable causes. While many such causes are noble and worthy, members should normally be encouraged to contribute to the Humanitarian Aid or Fast Offering funds, not the "Other" category. This allows the funds to be carefully administered and used for the maximum benefit to those in need.

Although the Holiday account is spent locally instead of sent to a national cause, the principle seems to be the same. If the goal is to assist those in need, the right category is Fast Offerings or Humanitarian Aid, not a Holiday account. Otherwise, it turns into a petty cash fund, and that's completely outside policy.

As an example, consider the ramifications if the "Christmas Account" is somehow overspent. Because the deficit wouldn't come from money owed by members, the proper course of action would be to transfer money from the Budget to cover the deficit. Now you have Budget funds essentially going to go for gifts, etc. for a particular family. Does this strike you as proper?

Note: I am not a grinch. I applaud the caring and generous spirit of those who would like to help others. I just don't think the Other account is a good way to do it. A Christmas list kept by the bishop, where particular needs are identified (i.e. toy for 4-5 year old girl, modest tree, Christmas goose, etc), and the individual members generously fulfill those needs, and the Bishop/Relief Society President then goes out and delivers the results, might be one way of helping others, and at the same time allowing the members to know exactly what was spent without knowing the identity of the recipients. But just contributing cash to an Other account has too many problems and not enough checks and balances to work well. At least in my opinion.

allenjpl wrote:A Christmas list kept by the bishop, where particular needs are identified (i.e. toy for 4-5 year old girl, modest tree, Christmas goose, etc), and the individual members generously fulfill those needs, and the Bishop/Relief Society President then goes out and delivers the results, might be one way of helping others, and at the same time allowing the members to know exactly what was spent without knowing the identity of the recipients. But just contributing cash to an Other account has too many problems and not enough checks and balances to work well. At least in my opinion.

This is the method I would advise. My family has done this in the past:
Contact the Bishop for gender/ages/clothing sizes of a needy family.
We purchase the gifts and wrap them.
We deliver them to the Bishop for him to have distributed.

As the Ward Clerk, I am in the meetings where family needs are usually discussed, but it is good for my children to sacrifice for someone they do not know who can benifit. Also, having them involved with finding/making the gift is better than their parents just donating cash.

Just my 2-cent's worth...

atticusewig wrote:A few things to note:

1) Other/AMFA payments will not show up on the Tax-valid statement as they are
usually used in a pass-through taxable manner, so be sure the donors know
that if they give a sizable amount they might need to generate their own
paperwork at tax time.

Under the current US Tax Code, donors are no longer allowed to generate their own paperwork and use it for a tax deduction. And, as you mentioned, any contribution of this type through AMFA will appear as a non-charitable contribution on the statement the Church gives the member in January.

So, as worthy as it may be, this will not be a charitable contribution as far as the US IRS is concerned.

allenjpl wrote:Bishops are, by and large, friendly folk who really want to help others. When they see a need, like a struggling family with a very small (or nonexistent) Christmas, they want to fill that need. That said, there is nothing precisely on point in the training that expressly prohibits this, but it might be strongly implied that this is an improper use of the Other Account.

For example, in the old Other Account training, it warns Although the Holiday account is spent locally instead of sent to a national cause, the principle seems to be the same. If the goal is to assist those in need, the right category is Fast Offerings or Humanitarian Aid, not a Holiday account. Otherwise, it turns into a petty cash fund, and that's completely outside policy.

As an example, consider the ramifications if the "Christmas Account" is somehow overspent. Because the deficit wouldn't come from money owed by members, the proper course of action would be to transfer money from the Budget to cover the deficit. Now you have Budget funds essentially going to go for gifts, etc. for a particular family. Does this strike you as proper?

Note: I am not a grinch. I applaud the caring and generous spirit of those who would like to help others. I just don't think the Other account is a good way to do it. A Christmas list kept by the bishop, where particular needs are identified (i.e. toy for 4-5 year old girl, modest tree, Christmas goose, etc), and the individual members generously fulfill those needs, and the Bishop/Relief Society President then goes out and delivers the results, might be one way of helping others, and at the same time allowing the members to know exactly what was spent without knowing the identity of the recipients. But just contributing cash to an Other account has too many problems and not enough checks and balances to work well. At least in my opinion.

The problem is, if the bishop says gifts are needed for a 4 year old girl, a 7 year old boy, and a 13 year old girl, it would be obvious in my ward which family the gifts were going to. When only 1 or 2 families need help, specifying ages without names doesn't mask who it is that the presents will be ear-marked for. For that reason, I don't see how the bishop can tell members what presents to buy without breaking confidentiality.

crislapi wrote:Many wards do a sub-for-santa fundraiser at Christmas time to help make Christmas possible for disadvantaged families using this same mechanism. The bishop can authorize the use of the Other account. So long as the funds are collected in a manner that is approved (not solicited), I would think this is a great way for these families to celebrate Christmas. This is something they could do on their own, but I think the bishop is in a much better position to know who would benefit the most so it makes sense to do this through the him.

If they truly want to be anonymous, be sure to assign the donations to "anonymous".

What I see often is members wanting to be anonymous that give cash directly to the bishop to be spent for Christmas for whatever families he feels are needy. That seems somewhat dangerous, since there is no accountability anywhere over how or if those funds are spent. But most of us trust our bishops, and it seems like a nice way to go that makes it easier to make and distribute purchases without all the extra accounting and paperwork. Because of that, it seems to be a common practice in many wards. Are there any policies that we should teach that would discourage this common practice?

Any donations given to the Bishop that is not handled in accordance with Church procedures (entered into MLS, etc.) is not a charitable contribution and is not given to a charitable organization, the Church. Funds given to the bishop outside the charitable umbrella of the Church becomes liable to the laws governing gifts to individuals and could, based on applicable law, be taxable to the bishop.

The Church's guidance for donations can be found in Handbook 1, Stake Presidents and Bishops (I do not have the specific reference on hand.).

jdlessley wrote:Any donations given to the Bishop that is not handled in accordance with Church procedures (entered into MLS, etc.) is not a charitable contribution and is not given to a charitable organization, the Church. Funds given to the bishop outside the charitable umbrella of the Church becomes liable to the laws governing gifts to individuals and could, based on applicable law, be taxable to the bishop.

The Church's guidance for donations can be found in Handbook 1, Stake Presidents and Bishops (I do not have the specific reference on hand.).

In this case (giving cash directly to the bishop), I'm not thinking members are considering these sub-for-santa funds to be a donation, certainly not a tax-deductible one. It's just a way of helping needy families have a Christmas (1) preserving anonymity of the donor and the recipient (2) taking advantage of the fact that the bishop knows who the needy families are and (3) circumventing the need for policies regarding fast offerings to be followed. In this case, I don't think the members are counting on or are worried about that money being tax-deductible. They are doing it to give, not to improve their tax situation.

I'm assuming that if funds are gathered through an other account, the disbursements to the recipients would be tracked (at least by the bishopric and clerks), so there wouldn't be the same level of confidentiality. And I wonder if a sub-for-santa other account is really following the spirit of what the other account is intended to be used for.

On the other hand, maybe the ability to track those funds is an advantage, because it provides a level of protection for the bishop and a level of assurance that the funds will be used for the intended purpose.

Is there any specific guidance on these issues and how members and bishops should address them? Is a sub-for-santa account an appropriate use of the other category? Is there any rule against members giving money to the bishop for disbursement to a needy family without going through an official church account? Note that I'm not asking about tax consequences -- I'm asking about cases where donors aren't trying to get a tax deduction; they just want to help.

https://tech.lds.org/wiki/Other_category says "Leaders should not solicit or deposit money into the "Other" category for purposes beyond the established guidelines." Is sub-for-santa a purpose that falls within established guidelines?

The Other account is a passthrough account. One criteria is the funds must be disbursed for the event. In this case the event is Christmas. So if the funds are disbursed by Christmas that requirement is met.

A comment has been made about the intentions of donors in regards to a taxes. It is impossible to know what the intentions of donors are in regards to taxes. Making an assumption that a donor will not attempt to include such a donation as a charitable contribution should not be made. This places the Church at risk as to tax exempt status. Any contributions made to the Church must be treated uniformly and follow established policies and procedures. Exceptions cannot be made. The bishop is a representative of the Church in fiduciary matters. As such, he is responsible for adhering to both taxing authority guidelines as well as Church guidelines in regard to all donations. Dismissing such donations as not having a tax consequence is not responsible. While an individual may not claim a tax status for a contribution it does affect the Church's tax status if not handled properly.

jdlessley wrote:The Other account is a passthrough account. One criteria is the funds must be disbursed for the event. In this case the event is Christmas. So if the funds are disbursed by Christmas that requirement is met.

But the other criteria of a passthrough account is that is for a paid-for benefit. The inherent problem with Christmas accounts is that the status of the money is ambiguous. Is it a charitable donation? Is it a payment for things that the bishop will then buy? Is the payment a charitable donation? This leads to problems. See below.

A comment has been made about the intentions of donors in regards to a taxes. It is impossible to know what the intentions of donors are in regards to taxes. Making an assumption that a donor will not attempt to include such a donation as a charitable contribution should not be made.

And if it is made, there is the potential for it to be made in error. My first Christmas as a finance clerk, the Christmas account was announced over the pulpit, and people made donations. Since Tithing Settlement had mostly been completed by the time Christmas rolled around, the first time some people noticed that their Christmas account donations weren't charitable was when I handed them their tax statements. I was then placed in the uncomfortable position of trying to explain that it really wasn't a charitable donation, but a payment for gifts/whatever (because I had no idea what the bishop planned for these funds). One sister said that if she'd known that, she would have just donated to fast offerings. Ever since then, I've tried (and so have the auditors, who mention it every February audit) to convince the bishop not to have this account, and not to announce the account, but to no avail.

The topic of this thread unfortunately addresses two concerns that are closely related - proper use of the Other account and tax laws. The predominant issue is the purchase of goods for needy families for Christmas. From that issue there are two methods discussed so far for collecting funds for this purpose. The first is using the Other account and the second is the bishop accepting the donations but not recording those donations in MLS, purchasing the goods, and then distributing those goods.

While the purchase of goods for needy families can result in a tax benefit for the donors, that should not become the focus of the discussion in this thread. Whether or not there is a tax benefit for the donors is between them and the taxing authorities. The Church does not provide tax statements for contributions to the Other account simply because it is impossible for the Church to determine whether the purpose of the contribution would qualify for tax favored status or not. I would venture a guess that most of the time it would not qualify simply because the primary purpose of the Other:Authorized Member Financed Activities account is to collect funds for a defined purpose and then distribute the funds to pay for goods or services.

In the scenario being discussed for Christmas welfare to needy families it has potential to be a tax favored donation. But we do not need to get bogged down in that aspect for the purpose of addressing the method of collecting the funds in this thread. We should be concerned with what is in accordance with Church policies and procedures and in protecting the Church's tax exempt status and protecting the leaders of the Church.

The discussion should focus on what is the best method is of collecting the funds and then purchasing the goods. I addressed the tax issue only to ensure we understand that there can be negative tax consequences for the Church, and possibly the bishop, if handled improperly. Having no record of the collection and distribution of those funds as has been suggested has potential for negative consequences for both the bishop and the Church. I do not want to suggest or imply how donors should or may address the tax favored status of their donations. I am only concerned with protecting the Church leaders and the tax exempt status of the Church. Following Church policies and procedures ensures that protection.

allenjpl wrote:But the other criteria of a passthrough account is that is for a paid-for benefit. The inherent problem with Christmas accounts is that the status of the money is ambiguous.

The paid for benefit is for goods in behalf of donors to be given to needy families. I don't think the status of the money is ambiguous. It is clear that the bishop will purchase goods and then distribute them for and in behalf of the donors. Just because the recipients of those goods are not defined in the name of the sub-category does not make it ambiguous. If necessary the name of the family can be entered into the description of the purpose of each check. I do agree that the name of the Christmas account should reflect its purpose and not simply be titled "Christmas Fund". It could be "Christmas Gifts for Needy Families" or anything that makes it less ambiguous.

allenjpl wrote:Since Tithing Settlement had mostly been completed by the time Christmas rolled around, the first time some people noticed that their Christmas account donations weren't charitable was when I handed them their tax statements. I was then placed in the uncomfortable position of trying to explain that it really wasn't a charitable donation, but a payment for gifts/whatever (because I had no idea what the bishop planned for these funds).

Even after I stated we do not need to get bogged down in the tax status of a donation, I think some aspects of that issue should be addressed.

Simply because a donation to an Other account is not reported on a tax valid statement does not mean it cannot be treated as a charitable contribution. Whether or not it is a charitable contribution is for the donor to decide. In the U.S. the tax valid statement is not the only valid document for reporting contributions less than $250. This is the area we do not need to get bogged down in.

The proper response when someone is concerned about the tax favored status of a donation is for them to seek tax advice from a tax specialist. We should not make statements about the tax status of a donation unless we are tax specialists. In the case we are discussing it very well could be considered a tax favored charitable contribution. If a donor is expecting their contribution to be treated as a charitable contribution then I would recommend to them to not contribute to such a purpose without first seeking tax advice from a tax specialist.

An announcement made over the pulpit could include a disclaimer that the contributions will not appear on the tax valid statement and that the contribution may or may not be considered a charitable contribution. The disclaimer should also include the caution that tax advice should be sought from a tax specialist to determine whether contributions would qualify as a charitable contribution.

Note that I have not stated that it is appropriate to use the Other account for the purpose described by the OP. That decision rests with the local leaders. If the bishop is uncertain he should seek council from the stake president. The stake president can then seek council from the area auditor or other appropriate area authorities.

I am emphatically stating it is risky for the bishop to collect funds without proper records for the purpose described in the OP. The only way I know to maintain proper records for donations is in MLS using procedures outlined in the Handbook.

jdlessley wrote:In the scenario being discussed for Christmas welfare to needy families it has potential to be a tax favored donation.

If we were to create a Christmas basket for the neighbors next door, we're not going to be getting a tax statement.

I'll have to pay attention to how that's handled in my area the next time it comes up. I know there have been service projects where members are asked to bring items to put in a basket. As such, there's no money involved.

I also know of cases where a group made a basket and delivered it to the family in question. Presumably it was done so the contributors could experience the event for themselves instead of only having a verbal report from the bishop.

There's lots of ways it could be done.

Families in need can be most eaisly addressed through properly documented fast offering administration. Should members wish to donate to the needy, they should be instructed to pay a generous fast offering. The bishop under the guidence of the spirit and with the assistance of active home teachers can indentify familes in need and provide proper assistance so that holiday celebrations would not be a burden on the family.

Though it is not normally the policy to purchase toys, clothing, etc., an approved fast offering dispersment (housing, utilities, food) may free up funds that the family would otherwise not have available.

How about creating a Miscellaneous budget category for the Ward Christmas gift fund and posting donations from members for this fund to the Ward budget, instead of the other account? That way, the donation would appear as a tax-deductible donation on the official tax statement. Does anyone see a catch to this idea?

warnick wrote:Does anyone see a catch to this idea?

Yes. Donations should not be made to the budget. While MLS technically provides for funds to be deposited in a budget category, that capability is an administrative feature to permit things such as returning excess budget distributions, for example. See Handbook 1, 14.7.2. Pay particular attention to the sub-section titled "General Principles and Guidelines".

warnick wrote:How about creating a Miscellaneous budget category for the Ward Christmas gift fund and posting donations from members for this fund to the Ward budget, instead of the other account? That way, the donation would appear as a tax-deductible donation on the official tax statement. Does anyone see a catch to this idea?

Yeah, lots of problems.

As pointed out, the members are not allowed to donate to budget. It's for returning funds. Since it's not for donations, it won't show up in the official tax statement.

Last, I'm not entirely sure that it would be tax deductible. I'm not sure as anyone at the local level is allowed to make that determination. I'd leave it between the members and their tax advisor.

Thanks - this is helpful. Our stake financial clerk said basically the same thing. He also told me that the church prefers that "Christmas Fund" type donations be made to the Fast Offerings category. Is this documented anywhere?

warnick wrote:He also told me that the church prefers that "Christmas Fund" type donations be made to the Fast Offerings category.

As long as the assistance given is consistent with church policies for assistance, that seems like the best way to do it.

warnick wrote:Our stake financial clerk ... told me that the church prefers that "Christmas Fund" type donations be made to the Fast Offerings category. Is this documented anywhere?

I can't imagine that this preference is explicitly documented, but it's easy enough to read two documents and reach that inescapable conclusion.

• Handbook 1, Section 5.2 explains how we are to help the poor and needy, and although several specifics are mentioned, including the bishops' storehouse and fast offerings, there is no mention of targeted donations from members or the use of the Other account. The guidelines for fast offering assistance probably don't include all the expenditures that some wards have funneled through a "Christmas Fund", but the fact remains that this is the approved way for Church funds to help the poor and needy.
• The Help Center article The “Other” Category makes it clear that 'contributions to the "Other" category are not donations to the Church; rather they are payments for a tangible benefit.'

So putting those two together, it seems clear to me that bishops help the poor and needy at all times (not just Christmas) using the principles outlined in the Handbook, and that funneling funds through the "Other" category as a quasi-donation is not appropriate. Of course, members are permitted and even encouraged to help their needy neighbors in many ways, but not by funneling funds through the Church.

aebrown (sorry, I don't know how to embed), Can you expound on why it would be appropriate to have Christmas Fund type donations flow through fast offerings? In reading 5.2.3 & 4, it states what fast offering monies can be used for, which seems to be basic life-sustaining aid; not pop guns, bicycles, roller skates, and drums. Those receiving assistance should work for what they receive, thus negating the 'Christmas Gift'. As I read these sections, it appears completely inappropriate to use fast offering monies as a Christmas Fund.

It seems the best option for the Christmas Fund is the Other:AMFA account. The funds are specified, and per the below link are thus able to be rolled forward to the next year, and thus don't need to be returned to the donors. The money is being "raised or collected to pay for goods or services not covered by budget funds" as specified in the link below on lds.org.

https://www.lds.org/help/support/other- ... y?lang=eng
https://tech.lds.org/wiki/index.php/Other_category

trjohnson007 wrote:aebrown (sorry, I don't know how to embed), Can you expound on why it would be appropriate to have Christmas Fund type donations flow through fast offerings? In reading 5.2.3 & 4, it states what fast offering monies can be used for, which seems to be basic life-sustaining aid; not pop guns, bicycles, roller skates, and drums.

I never said anything about "pop guns, bicycles, roller skates, and drums." I would always strongly preach that the fast offering funds should only be used for those purposes that are appropriate according to the handbooks. My main point was that if members want to help the needy, they should donate a generous fast offering, and the bishop will provide assistance to the needy -- at Christmas and at all times -- according to the guidelines and the direction of the Spirit.

trjohnson007 wrote:Those receiving assistance should work for what they receive, thus negating the 'Christmas Gift'.

I don't believe you can find a blanket statement like that in the handbooks. There will always be many receiving assistance who have no ability to "work for what they receive." Those receiving welfare assistance should certainly work when they are capable of doing so; that is indeed a principle taught in the handbooks. But that is not always possible. And even when they can work, there is no requirement that the work exactly matches the value of the assistance received. In any case, welfare assistance is not a "Christmas Gift" -- it is life-sustaining assistance given to the needy.

trjohnson007 wrote:As I read these sections, it appears completely inappropriate to use fast offering monies as a Christmas Fund.

Some portion of the items that might be purchased through a "Christmas Fund" certainly would be an appropriate use of fast offering, such as food. But I certainly agree that many things that some people would like to funnel through a "Christmas Fund" are not appropriate for fast offering funds. My statements about using fast offering funds apply only to uses that are within the handbook guidelines.

trjohnson007 wrote: It seems the best option for the Christmas Fund is the Other:AMFA account. The funds are specified, and per the below link are thus able to be rolled forward to the next year, and thus don't need to be returned to the donors. The money is being "raised or collected to pay for goods or services not covered by budget funds" as specified in the link below on lds.org.

That's where I have to disagree. Funds collected in the Other:AMFA fund are for a "tangible benefit" -- the Other category is not a way to funnel targeted donations to some set of members. Although I know that some wards have had a tradition of setting up Christmas Funds, I think it is a risky practice for the Church to be in the middle of such things. I know that in our stake, our previous stake president completely shut down any such funds. Members who want to help their neighbors should find ways to help them directly, or in some other way that does not involve funneling funds through Church accounts.

And I don't know as there's much benefit to funneling money though the Other:AMFA account - as in most cases it won't show up in the year-end tax statement.

Maybe I'm wrong, but I always thought the "tangible benefit" referred to what the giver received in return for the payment. Such as popcorn, a magazine subscription or a scout camping trip. It's a test used to show that the donation was really a charitable donation and not payment for goods or services. Gifts to specific individuals falls into a gray area - or at least something that receives greater scrutiny than typical church donations. As such, the old "avoiding the appearance" thing could come into play.