Transparency In Ministry

We receive several questions each year regarding designated or restricted contributions. Designated contributions are contributions made to a church or ministry for a specified purpose or program. The donor may designate a specific project or a specific individual relating to the contribution. Whether or not the contribution is deductible for income tax reporting depends on the type of designation and whether the Church has control and discretion over the contribution.

The following are several examples...

1. Donor Jones designates a contribution for the mission program of the Church. The Church has control and discretion over the contribution and the mission program supports the exempt purpose of the Church. This contribution is deductible.

2. Donor Brown designates a contribution for Student Smith for a mission trip. The Church has full administrative control and descretion over the contribution and the mission trip supports the exempt purpose of the Church. The contribution is deductible.

3. Donor Williams designates a contribution for John Doe. The contribution is not deductible.

4. Donor Smith designates a contribution for Student Smith a ski trip. Student Smith is Donor Smith's child. The contribution is not deductible, and resulted in a personal benefit to Student Smith. The ski trip does not support the exempt purpose of the Church.

The Church must have administrative control of the contribution and the related activity should support the exempt purpose of the Church.

Maintaining and motivating staff is a challenge for most organizations, including churches. Having proper employment policies, staff training/development and retention plans are critical areas for churches.

The following are examples of employment policies that should be considered and implemented by non-profit organizations:

·Comply with all federal, state and local employment laws when hiring and employing personnel, including withholding and payment of payroll taxes. See IRS Publications 505 and 517 relating to payroll issues for employees and ministers.
·Employ skilled individuals who are suitable for the positions they occupy and are committed to the goals, values and objectives of the organization.
·Have people on staff that compliment and support the mission of the organization.
·Continually work to provide a safe and healthy work environment.
·Adopt a set of specific policies and procedures for managing employees and volunteers.
·Establish a clear conflict of interest policy for employees that includes disclosure of relationships, nepotism and interested party transactions.
·Have specific grievance procedures for personnel with protections for reports of violations of organizational policy or applicable laws.
·Have a succession plans, to handle transitions in leadership and other key positions.
·Conduct background checks on employees and volunteers, particularly if their positions involve working with children or vulnerable adults, performing financial duties or serving in other sensitive areas.

See our next post on training, development and retention.

If a church or ministry receives a vehicle valued greater than $500 and it is not sold, you must certify that it is used substantially in the church’s regularly conducted activities. Or, you must certify that the vehicle is to be transferred to a needy individual, at below value, to further the church’s charitable purpose. On Form 1098-C, a detailed description of the vehicle’s use must be supplied. Do not check box 7 or your donor will be limited to a $500 donation. The church/ministry must supply Copies B & C to the donor within 30 days of the contribution if no sale will take place.

Donations of vehicles valued at over $5,000 that will not be sold should have a written appraisal from a qualified appraiser. This is not the responsibility of the church or ministry; it is the responsibility of the donor. The same requirement applies to a non-cash contribution exceeding $5,000.

If the vehicle is sold or disposed within three years additional reporting requirements will apply.

Our next blog will discuss the required forms.

Personnel continue to be one of the greatest resources of a organization. Hiring the right person for the right position is important, however retaining that individual continues to be a strong challenge for a number of organizations.

The following are examples of policies directed for training, development and retention:

·Provide personnel with clear, current job descriptions and the resources they need to produce quality work.
·Support the education, development of and opportunities for growth and advancement of personnel.
·Balance internal equity with market-based, livable compensation for all employees.
·Provide personnel with adequate benefits and the opportunity to financially contribute to retirement plans.
·Be open to input from personnel regarding the organization’s activities and results on a continual basis.
·Prepare performance evaluations at least on an annual basis.

For additional information or resources, see the following organizations:
The Alliance for Nonprofit Management
National Center for Nonprofit Boards (NCNB)
Minnesota Council of Nonprofits
Internal Revenue Service

Retain and develop one of the church’s most valuable resources…her employees.