FREE four-page PDF to download and distribute to your church leaders:
The following is the introductory paragraph of this four-page document on Designated Contributions:
"Designated contributions" which include love offerings, too, are contributions made to a church with the stipulation the donations are used for a specified purpose. As a general principle, a donor can receive a charitable contribution credit from the church if the church handles the designated contribution properly.
Designated funds cannot be spent on unintended purposes unless a prior written agreement has been established by the church. Without a prior written agreement in the church documents, legally, the only way a church can change the purpose of a designated donation is by court order. If the cash donation is for an approved project or ministry of the church and the designated fund has been established, the cash donation can be recorded on the donor's contribution statement.
Designated funds created before the church adopts a new written church policy will not be impacted by the new policy. The church must operate under the original terms (verbal or written) that were assumed when the existing designated funds were established. The new written church policy will impact only new designated funds created after the policy is approved by the church.
Contributions designated to a group or organization within the church (i.e. Sunday school class) for the organization's exclusive use and under its total control is not a deductible contribution to the church. (The class is not a 501(c)(3) organization.) The church cannot add the designated contribution to the donor's contribution statement because the church does not have any control over the contribution.
The document includes:
- Suggested Steps in Establishing a Designated Fund
- A Working Model of a Designated Fund Policy
- Sample policies for seven common designated funds (Benevolence, Memorial, etc.)
This document is intended to provide churches and church leaders with current and accurate educational information about the subjects covered. However, such information is not intended to be sufficient for dealing with a particular legal problem, and the authors and distributors do not warrant or represent its suitability for such purpose. The reader should not rely upon this document as a substitute for independent legal consultation or tax advice.