Q&A: Changing Designated Funds

Can we redefine the use of funds that have been specifically designated to an individual for a set purpose? If so, to what extent does our congregation need to be notified of such a change?

Michael E. Batts, CPA
Bio
I have just taken a position at my church, which includes the duties of Financial Secretary. I discovered that our church has an account dedicated to Honduras. The gifts for this account have come from many sources and have been designated for Honduras and a specific person to take these funds to Honduras during her mission efforts there. This person, however, has not taken a mission trip to Honduras in quite some time due to her health and does not have any definite plans for a trip in the near future. We would like to see that these funds reach Honduras through another source in order for the funds to be useful for the needs of the people there. Because these funds were designated to a specific person, can we funnel these funds to Honduras through another source? How does this decision within the church dynamic need to be made?
I suggest you seek guidance from your legal counsel to ensure compliance with applicable state law. Specifically, I suggest you discuss with the attorney a plan whereby you would notify donors to the fund of the facts and of your intent to transfer the funds to another U.S.501(c)(3) ministry that engages in similar work in Honduras. It is likely that your attorney can help you develop a simple and legal resolution of the matter.
Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

Related Resources

Visit Store

ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay
caret-downclosefacebook-squarehamburgerinstagram-squarelinkedin-squarepauseplaytwitter-square