Church Tax and Employment Issues – Part 4 of 4: What is a Charitable Gift ?

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Not every check written to the church is a tax-deductible amount for the giver.

Per tax law, a donation is an “unconditional transfer” of cash or property with no personal benefit to the giver.  Even gifts restricted for a specific ministry purpose are considered a charitable donation as long as the church leadership ultimately has control of the funds.

When a gift is given to the church in exchange for something it is treated like a purchase. And, therefore, would not be a deductible contribution.  A good example of this would be a check written by a family to the church to cover summer camp for their child.

Sometimes a gift check is partially deductible. For example, when the church holds a banquet to support a particular mission of the church. If the ticket price is $50 and the value of the meal is $10, then the giver would receive a $40 taxable gift receipt.

Charitable contributions are deductible if given “to and for the use” of a church or nonprofit to be used for their exempt purposes. The three most common types of gifts are:

Bank, Check

Unrestricted Gift: A gift provided to the organization with no direction, other than for the organization’s general purposes. This type of gift is normally tax-deductible to the giver.

Gifts with Giver Restrictions: When the restricted purpose of the gift is in line with the organization’s general mission, it is just a more defined gift, e.g. for the youth program, or for the benevolence ministry. These types of gifts are generally tax-deductible.

Personal Gift: When a gift is specifically identified for a member of the staff or another member of the congregation and therefore is not under the control of the organization as to its use, then it is generally not tax-deductible.

So, how does your church keep up with deductible versus non-deductible gifts for individuals in your church?

If you need more information or would like to discuss, contact us today and we’ll talk!

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