Hey Fletch … We don’t have a policy for selling church property. Some staff have given furniture away, sold equipment, or sold things to family members. Do you have a recommendation on the sale or donation of church property?

Fletch—You have a big problem! Inurement happens when staff give or undervalue items, and those end up with a family member or for personal gain. If the dollar value is high enough, you could land in court or in big trouble with the IRS.

You want a fair and easy to use policy. Have clear lines of authority and decision-making, along with a good paper trail. You need a policy like this one:

Disposing of Assets Policy

This policy determines our procedures for disposing of a church asset. Church assets generally consist of things like buildings, land, and equipment. Any staff member may recommend the disposal of an asset with a written request. 

The principle is that whether an item was purchased by the church or donated, the church is the owner of that item. No asset may be given away or sold without permission—this includes old furniture, cell phones or computers. The process of securing permission can be relatively easy, and people have to secure permission before they give away something that does not belong to them.

The request for disposing of an items goes to the Executive Pastor and should contain:

Description

A clear statement of the item, with serial number if possible: 

  • Two Gizmo 8 desktop computers, special sound processing hardware for editing recordings, 64 gigs ram, 1 terabyte hard drive, serial #1234 and #1235.
  • Nokia cell phone, model “6650 fold.”
  • 1932 Rolls Royce Phantom II Continental, mint condition, ID #456abcd.

Reason

A simple declaration on why the church does not need the item:

  • The computers are not needed since the same features are now free on our iMacs.
  • Nokia phone is obsolete by 14 years.
  • Maintenance and insurance costs are too high on the 1932 Rolls Royce. We used to have a car show and it was our centerpiece, but we haven’t done a car show for 4 years.

Values

The date of purchase year and price, along with current value.

  • Computers are from October 9, 2019—purchased for $2,000 and now worth $500.
  • Cell phone is from sometime in 2004—who knows the original price? It now serves as a paper weight with no $$ value.
  • Rolls Royce was a donation ten years ago (12/25/2012) for the car show. At donation, it was valued at $400,000 and now estimated at $1,760,000.

Recommendation

Ideas of how the asset can be disposed, such as sell, donate or trash. This may include a suggestion of who may receive the item and why. If the receiver is family to any church staff member, that must be stated.

  • My brother-in-law has a studio that uses these Gizmo 8 computers and will buy each at $50 over any valid estimate. See the attached to show they currently sell for $500 on ebay. Also, there is a Christian non-profit job training center in town that would like us to donate the computers to them.
  • 10 years old; we need to trash the cell phone and recycle the materials.
  • A professional should market the 1932 Rolls Royce, maximizing the sales price. 

Decision Making Policy

The policy for making a decision on disposition of assets should have dollar limits and who can approve the various levels. The decision-maker must be recused if that person is also a buyer or recipient. The next higher authority level would then make that decision.

Under $2,000

Based on the documentation, the Executive Pastor can make a decision that best serves the church.

  • Sell the computer to the brother-in-law for $550. Ebay info proved valid sales price.
  • Give the other computer to the non-profit job training center.
  • Recycle the cell phone.

$2,000 to $10,000

Two bids, or their equivalent from internet valuation sites, should be obtained. The XP can make a decision that best serves the church.

  • Staff has a portable sound board with 3 wireless microphones and full speaker set up. We purchased this for picnic meetings in 2018 for $9,500. The staff person who led these meetings has now left. No other staff wants the item. It had lots of use but is in medium condition. See the attached documentation of values for selling this for $2,500 to a local evangelist.

Over $10,000

The XP brings three bids or other written evidence to the Finance Team or Board, along with a recommendation for disposition. The Finance Team or Board will make a decision that best serves the church.

  • For the vacant lot at 550 Elm Street that was owned by the Kreugers, and based on a property analysis in Zillow, the Finance Team recommends that a real estate agent try to sell it for at least $94,500.
  • For the 1932 Rolls Royce Phantom II Continental, with an estimated value of $1.76 million, the XP and Finance Teams recommend that we hire for $5,000 an external professional who is an expert in vintage cars. The expert will get a credible estimate on possible sales prices, inform the Board, then sell at auction, or at or above the estimate. We will then alert original donor and the congregation of the sale and that the $1.7 million fully retired our building debt. Any excess funds from the sale will go into the Benevolence Fund.

Conclusion

Churches should have a list of all capital assets. With your CPA, decide on what dollar level of items to include. Some CPAs want items on the list that are over $100 and others start at $1,000. This list is essential in case of a disaster and you need to show your insurance company what assets the church owned.

When you sell or give away an asset, it should be removed from your list. New purchases should go on the list when they enter the church inventory.

A good policy prevents cases of inurement, as staff can easily show a paper trail for valid disposition of assets. Yes, you can sell items to family of staff, if you document that is was done fairly! Define who can make what decisions and how those decisions are documented.