Thursday, September 20, 2018
Hey Fletch … Our church wants to take up a special offering for a woman who has cancer. Can we ask people to give money through the church for her?
DRF—With the spirit of Christ’s love, we all care deeply for folks in a crisis. That crisis could be medical, a crisis event, housing related, or a natural disaster.
Let’s clarify the issue. Since the money is going through the church, the supposition is that the donations would be tax-deductible. If people want to give funds that are not tax-deductible, then anyone can give in any way that they like. However, most folks in church reasonably assume that any money given to the church will be tax-deductible. This is why Richard Hammar recommends that, “Since such contributions are not tax-deductible by the donor, the church should not receive them.” Notice that he said “should” and did not say “cannot.” If you receive gifts earmarked for an individual, they are not tax-deductible to the donor.
Now to the issue of tax-deductible contributions. The IRS is quite clear on tax-deductible contributions. IRS Publication 625 states:
You can’t deduct contributions to specific individuals, including the following:
Contributions to individuals who are needy or worthy. You can’t deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you don’t indicate that your contribution is for a specific person.
Example. You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. However, you cannot deduct contributions earmarked for relief of a particular individual or family.
There are two principles that the IRS articulated in a private letter ruling:
- The organization must have full control of all donations.
- No donation can be earmarked for an individual.
If your church is taking up an offering for “Mrs. Smith and her illness,” then this offering will not qualify for tax-deductible donations.
Your church can take a special offering for benevolence ministries and these donations can be tax-deductible. Donation envelopes, e-giving, notes accompanying the donation and checks cannot contain the name of the individual. The church has full control of the donations and can give assistance to individuals as the benevolence policy allows.