When a church solicited funds in 2005 for its building campaign, one member donated $5,000. Then, after the church abandoned its plans to construct a new building, the member asked the church treasurer to return her $5,000 contribution.
At another church, a member donated $1,000 to a mission project. A year later, the church decided to forego the project. Is the member entitled to a refund of the $1,000 contribution?
These are scenarios that churches may be confronted with when they solicit funds for particular ministry initiatives and later change course and drop the designated plan. But are churches obligated to return such contributions when the designated project or activity is abandoned? And, if so, what are the tax consequences to the donor?
These were the questions that Congresswoman Kay Granger asked the Internal Revenue Service in a recent letter on behalf of a constituent. In Granger's ...