Designated Giving

[Deacon]

It seems that some people in the church are giving their whole offering to specially designated items.

This has presented the financial team with a problem. The general fund giving is barely meeting needs and the designated giving is going overboard (more funds than needs).

History dictates that we can't use the designated funds for any other needs (without notification of the giver) because they were designated for a "special" need. This has become quite time consuming and a bit ticklish at times.

This idea was expressed in the business meeting: We should be giving primarily to the general fund with only "over and above" going to special needs or designated funds.

This would still allow people to have special "pet" projects and hopefully still meet our needs in the general fund.

One problem with this is that we do not indorse a "10% tithe" so "over and above" is vague.

Does your church allow designated giving?

Do they encourage or discourage it?

Is it biblical?

Rob

 

[Joseph_Botwinick]

There are several issues that COULD be in play here:

1. Designated giving should be over and above. I don't have scripture to back that up, but that is my personal opinion.

2. Why are folks designating the entire tithe? Is there an issue of trust here? Generally, IMO, those who have confidence in the financial leadership of the Church would not do something like this. I am not saying this is an issue, but COULD be an issue.

3. I would think if the leadership believes that this is morally wrong, that they could return the designated checks and refuse to accept them.

Joseph Botwinick

 

[TexasSky]

Well, don't faint people, but I agree totally with Joseph on this one.

 

[dianetavegia]

A tiny church we used to attend had a number of wealthy old ladies who designated all their gifts to be used to keep up the cemetary. What a waste! The building was falling down, plumbing didn't work, roof leaked, van was broken down... but the cemetary would be kept up ad infinitum.

 

[gb93433]

One church we joined had each person who wanted to be a member sign and agreement stating that they had read the membership requirements. In that agreement it stated that the chruch would not accept designated funds. So that never got started.

 

[PastorSBC1303]

I have had people tell me they designate money because they do not trust the church to use their money.

That is completely the wrong attitude. In one church, there was a lady that made it known that she saved up her tithe all year around and gave it to the Lottie Moon Offering because she knew that would go for something worthwhile.

Seems to me God would rather that person keep their money than give with that attitude.

 

[Joseph_Botwinick]

If I didn't trust the leadership of my Church, I would probably go somewhere else before I did that.

Joseph Botwinick

 

[DHK]

That's not a problem for a church that believes in tithing.

The tithe traditionally goes to the general fund to support the pastor, pay the bills of the church, etc.
Any offering "over and above" the tithe can be designated for whatever purpose the giver wishes.
DHK

 

[Jeffrey H]

Does your church allow designated giving?

Do they encourage or discourage it?

Is it biblical?

We allow designated giving and it's proven helpful when special needs arise that are not covered in the budget. Fortunately, our members understand the need to give "undesignated" to support the overall budget (operations) of the church.

If a person is giving cheerfully as the Lord leads them, then it's biblical. However, if their designated giving is based on a selfish purpose or to gain influence, then that would not be proper.

 

[IfbReformer]

I am not a big fan designated giving, although I don't have any scripture that would go against it. I don't believe tithing was instituted for the church either. It is all free will, and I think it should go into a general fund.

Then the church votes on how to distribute to the individual funds as the church sees fit. If you can't trust your church, then you are saying you can't trust the people sitting around you because most Baptist churches do things by congregational vote as opposed to the Pastor just shuffling money where he wants to.

There were some people at our church, who willed to our church their estates, but designated only the interest could be used(which is fine) and that the money from interest could only be used for missions.

I have a problem with that, because at times this church has struggled with its general fund, to a point we were almost going to have to let our assistant Pastor go, but they could not touch this money from these estates because they were designated only for missions.

Alot of churches allow designating funds because they think it will bring in more money, because people can control where it goes, but sometimes they are just tying their own hands behind their back.

IFBReformer
http://www.ifbreformation.org/tithing.aspx

 

[gb93433]

If there is not designated giving then it allows the church to use the money wherever it wishes or is needed. If a need arises it can be brought to the attention of the congregation.

I have known peope who just shift the money they normally give to a designated fund such as Lottie Moon or Annie Armstrong when that opportunity comes yearly.

 

[Artimaeus]

Are designated gifts tax deductible? I was under the impression that in order to be tax deductible that the funds could NOT be designated but must be donated with no strings attached.

Our church goes by the policy that once funds are donated to "ABC Church" then "ABC Church" is free to use those funds as it sees fit. If someone wants to designate where the funds go then we tell them that we will try and do that (and we do 99% of the time) but that we reserve the right to redirect those funds if we see fit.)

 

[Thankful]

It seems that the funds could be accepted as designated and recorded as such. Then if money is needed for every day operations, it could be "borrowed" from the special fund and then paid back as money is received for the general fund.

I'm not a certified accountant, but if a church has a treasurer who keeps the budget and accurate accounts of the money, then this is the way to solve the problem.

I don't believe that the church should refuse to accept funds just because they are designated for a special purpose. And It seems that any funds donated to the church would be tax deductible (unless it exceeds some limit).

 

[Jeffrey H]

Are designated gifts tax deductible?

Yes, with some exceptions. As long as the gift is made payable to your church and you do not receive anything in exchange for your gift. Examples: A gift to the "building fund" or "missions fund".

Exceptions: Fees paid to the church to pay for the cost of camps and retreats are not deductible. These are not considered "gifts", but merely paying your way to get something in return.

 

[Joseph_Botwinick]

Artimeus and Thankful,

I am not a CPA or anything, but I think what you are suggesting might be inadvertantly illegal. I would certainly look up the law when it comes to things like that. I happen to remember the uproar that was caused when the American Red Cross promised donated certain money to be given specifically for 9-11 relief and it didn't. Personally, I think it is immoral and unethical to take money that is designated for something and then to use it for something else. If you don't want to use it for what it is intended, then you should not accept it.

Joseph Botwinick

 

[Gold Dragon]

Any accountants in the house that can clarify this? Our church "borrows" from designated funds to meet shortfalls pending approval in a membership meeting. We have many highly trained and ethical accountants in our church (my father being one) and nobody has ever suggested this is a problem.

 

[TexasSky]

You need an attorney more than a CPA. (Just in case that statement is misleading, I'm not an attorney.)

Jeffrey is right about how the IRS views charitable donations. If you buy a box of cookies valued at $2.00 and pay $15.00 so the charity can make a $13.00 profit, it is not tax deductible. If you write a check out for $15.00 to the charity, the donation is tax deductible. The same is true for churches. If you, personally, receive something for your money, it is not tax deductible. If you don't, it is.

As to "using designated funds for other things." It depends on how the official paperwork is done. United Way does this all the time. You are allowed to say, "I want my money to go to Big Brothers/Big Sisters," but United Way is set up so that particular participating organization can only receive a certan number of dollars. Once that goal is reached, even if designated funds to that organization exceed the budgeted amount, the money is used elsewhere. The justification is that in other years, when the donations to that group are low, they will be supported by the United Way, so it all works out in the end. (Don't assume I agree with that justification.) United Way doesn't say, "Give to Big Brothers and Big Sisters," they say, "Give to United Way and if you want to specify your favorite charities to be supported by your money, tell us your first, second and third choices." In other words, you should know, going in, that the money may not go to your first choice.

The American Red Cross situation was different. They did not say, "This money is for all American Red Cross agencies." They said, "This money is for 9-11." So, using it for Africa was betraying a trust.

Gold Dragon - I would assume that as long as the committe keeps careful records regarding the borrowing, and as long as the designated use never falls short of its needs, it is legal and ethical, but again, I think its a lawyer's call. I think you could avoid problems in this are by writing something like, "If you prefer your money be used to meet designated needs, please indicate this on your check or offering envelope, but be aware that if the funds for that designation exceed the budgeted amount they will be used for another area we have a need in." (Like that will happen in a modern church.)

[ June 08, 2005, 10:45 AM: Message edited by: TexasSky ]

 

[Joseph_Botwinick]

I might be wrong about it being illegal. I don't know. But, even if it is legal, I still think it is dishonest and immoral and no Church should ever participate in this kind of practice.

Joseph Botwinick

 

[Jeffrey H]

Any accountants in the house that can clarify this? Our church "borrows" from designated funds to meet shortfalls pending approval in a membership meeting. We have many highly trained and ethical accountants in our church (my father being one) and nobody has ever suggested this is a problem.

I'm an accountant and former church treasurer and this does not appear to be a problem as long as everyone clearly understands that their designated gifts could suddenly become "undesignated" by a church vote. Otherwise, you will have some upset donors wondering what happened to the money.

 

[Gold Dragon]

Originally posted by Jeffrey H:
</font><blockquote>quote:</font><hr />Any accountants in the house that can clarify this? Our church "borrows" from designated funds to meet shortfalls pending approval in a membership meeting. We have many highly trained and ethical accountants in our church (my father being one) and nobody has ever suggested this is a problem.

I'm an accountant and former church treasurer and this does not appear to be a problem. </font>[/QUOTE]Thanks. Do you mind clarifying how accounting laws work in terms of the use of designated funds by churches?