• 31 MAR 14
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    Financial Facts: Benevolence Programs

    By Doug Lohrey

    Benevolence programs in churches stem from the church’s desire to help others, extend kindness, and to show charity to those in need.  This program is there to identify and meet the needs of under-resourced individuals or families.  This program sometimes fails to meet the standards set by the IRS and even sometimes will cause a church to lose their tax-exempt status. 

    The key in running a successful benevolence program is in the structure surrounding this program.  After the structure has been set forth, does the church operate under these guidelines and if not then it could cause the church to find itself in trouble with the authorities. 

    Below you will find a number of suggestions regarding a structured benevolence program.  Some of these ideas come from an article I read in a pamphlet called, “Church Finance.” 

    Here are some thoughts to guide you in having a positive benevolence program.

    1.      Does the benevolence program have a way of verifying that a person or family is in need and does not have the available resources to meet his/her own need?  A church should have some way of proving that these people are in need.  According to the IRS, a church should not help persons or families who are not actually in need.

    2.      Within the program you may need to have some of these guidelines:

    -          Who has the authority to approve a request?

    -          What type of needs will be considered and how?

    -          What proof of need will the church require?

    -          Who is your target group?

    -          What may disqualify a person or family?

    -          Is there a form that the person will need to fill out?

    -          How will multiple requests from the same person or family be handled?

    -          Will this program be available to employees?

    3.    Finally, I would ask this question.  What steps do you take in trying to guarantee that your gifts are used appropriately?  In my last church we would get requests for gas and other concrete items.  We finally went to a local gas station, just down the block, and put a plan together.  If we were going to help them with gas then we would give them a gas voucher for a certain amount and the gas station would know how much to give them and then bill us.  We also had some covenants with other stores.  These covenants really helped us in the area of benevolence.

    I found a sample Benevolence fund policy during some of my reading and I have included it in this article.  This policy is being used by permission and is there to guide you in creating your own benevolence policy.

    Sample Benevolence Fund Policy

    By Richard R Hammar

    Here is sample wording for a church benevolence fund policy:

    First Church, in the exercise of its religious and charitable purposes, has established a benevolence fund to assist persons in financial need.  The church welcomes contributions to the fund.  Donors are free to suggest beneficiaries of the fund or of their contributions to the fund.  However, such suggestions shall be deemed advisory rather than mandatory in nature. The administration of the fund including all disbursements is subject to the exclusive control and discretion of the church board.  The church board may consider suggested designations, but in no event is it bound in any way to honor them, since they are accepted only on the condition that they are merely nonbinding suggestions or recommendations.  As a result, donors will not be entitled to a return of their designated contributions on the ground that the church failed to honor their designations.

                Donors wishing to make contributions to the benevolence fund subject to these conditions may be able to deduct their contributions if they itemize their deductions on their federal income tax return.  The church cannot guarantee this result and recommends that donors who want assurance that their contributions are deductible seek the advice of a tax attorney or CPA.  Checks should be made payable to the church, with a notation that the funds are to be placed in the church benevolence fund.

    The Official Board

    First Church

    This sample was taken from Richard Hammar’s annual Church & Clergy Tax Guide, available on YourChurchResources.com.

    Doug Lohrey serves as Chief Financial Officer for Colorado Baptists.

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