Tuesday, February 12, 2019

Hey Fletch…our church envelopes and website allow donors to make designations. There are words that say, “The board has complete discretion and control over the use of all donated funds.” Can our board take a missions fund donation and put it in the building fund?

DRF—There are several questions floating out there about restricted gifts to churches. I’ve consulted with my friend Dan Busby, President of the Evangelical Council for Financial Accountability. Here are his thoughts.

Dan—The short answer is No. And the long answer is No-o-o-o. In nearly every instance, church boards lack the authority to override a giver’s designation.

Many churches utilize disclaimers on giving envelopes or through their online giving platforms. A general statement like, “The church board has complete discretion and control over the use of donated funds” is generally ineffective to override a specific gift restriction. 

Exercising discretion and control over all donated funds is a fundamental responsibility of a church board. In the context of designated (restricted) gifts, the board carries out these responsibilities by determining which gifts the church will receive and ensuring that once designated (restricted) gifts are received, they are used in accordance with the giver’s designation (restriction). And yes, a church has the authority to decide whether to accept any gifts with designations. Once a designated gift has been accepted, then the church must deal with the consequences of properly handling the gift.  

An appropriate disclaimer would generally indicate more specific language like, “In the event that a program, project, or giving purpose becomes overfunded, your gift will be applied where needed most.” When this wording is used, it does not give the board the authority to generally re-purpose designated gifts. But it does give the board the authority to re-purpose designated gifts that exceed stated needs for programs, projects, and other giving purposes.

To learn more about designated (restricted) gifts, get free access to more resources at: ChurchExcel.org or by getting a copy of The Guide to Charitable Giving for Churches and Ministries or the smaller booklet Charitable Giving Guide for Giver-Restricted Gifts.