Receipting guidelines for congregations

Receiving charitable gifts for EMM missionary support

Congregations that receive charitable gifts preferenced for missionaries serving with EMM are often uncertain about receipting the charitable gifts. The following are general guidelines based on EMM's understanding of IRS regulations. Each congregation should contact their denominational or local tax consultant if this material does not answer its questions.


Guidelines
  1. The appropriate decision-making body in the congregation should take action to include the mission work being carried out by the EMM missionary as part of the church’s ministry. The congregation should include the mission work carried out by the missionary in its spending plan and establish a separate account for the missionary's support.

  2. The IRS recommends that the following or something similar be included with all solicitations: “Charitable gifts are solicited with the understanding that the church has complete control over the use of all donated funds.”

  3. The church should send a receipt for all charitable gifts. We recommend receipting as charitable gifts are received or on a regular schedule but not later than January 31 following the calendar year in which the contribution was made. The receipt should provide enough information to substantiate the amount of the charitable gift.

  4. The church, and not the missionary, must control how funds are used. This will normally be done in consultation with EMM and according to EMM policies. In compliance with IRS regulations, funds sent to EMM to support the work of a particular missionary are under EMM’s full control and discretion.

  5. The church will seek to honor the donor’s wishes. If the funds are not needed to fulfill the financial commitment to EMM, the church will determine how the excess funds are to be used. If requested, EMM will work with the congregation to find ways to use the funds in the country or region where the worker served.

  6. Sometimes a church will want to fund a special project such as the purchase of a vehicle for the worker. This raises special issues for receipting. The church should make a decision to fund the project before receiving charitable gifts. Givers may be given a tax-deductible receipt if the church treats the benefit as compensation and issues the appropriate tax report at year-end.

  7. If funds received by EMM from a congregation are not needed for the preferenced missionary’s support, EMM will determine how the excess funds will be used. Often the funds are placed in an MST reserve account for use when missionary expenses exceed the amount budgeted and given. EMM seeks to honor the donor congregation’s wishes.

Background
  1. To be considered tax-deductible, charitable gifts must be made to a qualifying organization. The IRS considers a church a qualifying entity even if it does not have a specific letter ruling from the U.S. Treasury.

  2. To issue a tax-deductible receipt, the IRS requires that the charitable gift must be given to the church. The IRS uses two tests to determine if the charitable gift was to the church:
    1.  Does the church have complete control of the donated funds and discretion as to their use?
    2.  Does the donor intend the charitable gift to be to the church and not to the individual?

  3. Donors may indicate their preference that their charitable gifts are to be used for a particular individual or project and the church will normally honor that preference. However, the final decision must rest with the church.

  4. If the congregation is asked to forward a contribution to a specific individual, (for example, a birthday or Christmas gift), no tax-deductible receipt should be given. This is true whether the funds go directly to the worker or are channeled through EMM. If the church does not control the use of the funds, the money is considered a personal gift to the worker. Personal gifts are never tax-deductible to the donor.

  5. The church should not use tax-deductible charitable gifts to fund special gifts to workers unless they are small gifts of merchandise. Money given to individuals from tax-deductible charitable gifts is usually considered taxable compensation to the worker.

  6. A donor may claim a tax deduction for a charitable gift of $250 or more only if they have a written receipt from the church. A cancelled check alone will not serve as sufficient substantiation. The church is responsible for issuing receipts before the donor files their tax return, or by the due date of the return, whichever is earlier.

  7. Normally receipts should include the following, “Donor has not received any goods or services in exchange for this gift.” If the donor does receive any goods or services in exchange for a contribution of more than $75, the church must inform the donor in writing that the tax deduction is limited to the excess of the donation amount over the value of the goods and services.