Gift or Gaffe?
How to get the full benefit from year-end donations.
PAGE 1 of 5Single Page

The end of a calendar year is usually a time of generosity. Donors may share part of their corporate bonuses or choose to give more for tax advantages. For churches, the boost of giving at year's end can be a windfall and a blessing. But end-of-year contributions are not always gleaming treasures. The gift that looks like a brightly wrapped present can actually be a lump of sooty coal carelessly stuffed into a stocking. To keep your blessings from turning into curses, you'll need to know which mistakes to avoid, and how to follow a set of best practices.

In the majority of cases, year-end giving comes in the form of cash and checks. But if many congregation members receive stock options, stock awards, or stock vesting at the end of the year, you can also expect stocks and securities in the offering, says Frank Sommerville, a Texas attorney specializing in non-profit law. Donations of real estate, vehicles, equipment, and jewelry are not so common at year's end, notes Dan Busby, acting president of the Evangelical Council for Financial Accountability (ECFA).

A church can choose to receive anything a donor wishes to give, including real estate, vehicles, equipment, art, jewelry, frequent flyer miles, and timeshares. Whatever form the gift takes, a very important key in "year-end gifts" is the qualifier—;"year-end."

The Difference A Day Makes

The biggest snare a church can step into is failing to keep an unmistakable dividing line between the old year and the new year. The IRS allows individuals t o deduct from their income charitable donations in the year the donations were delivered. Gifts delivered in person can be easily received and recorded on the same day. When a donation is mailed, the situation can get complicated, since donations delivered at the end of a year often are not received by the church until the new year.

When receipting mailed gifts, nearly all charities use the postmark date as conclusive evidence of when the donation was mailed. If the donor mailed the donation in the old year, but too late for the last mail pickup, keep in mind that the individual, not the charity, bears the burden of proving when the donation was delivered.

Jim Grubb, pastor of administration and finance at Bethany Bible Church in Phoenix, allows no wiggle room on this issue. "We will identify the postmark dates on all envelopes that come into the office during the first part of January and we'll keep those envelopes," he says. "This helps us deal with a donor who may say 'I gave this at such a date.' And we can say, 'We have to comply with the postmark.'"

Posted:
November 3, 2008

Like This Article?

If you enjoyed reading this article, get more like it. Become a Church Law & Tax member today.

Learn more

Already a member? .

View All
from our store
Talking to Your Congregation About Money

Talking to Your Congregation About Money

Helpful insights on talking about money and encouraging people to become generous givers.
How Churches Spend Their Money: 2019 Executive Report

How Churches Spend Their Money: 2019 Executive Report

This report will give you an inside look at how churches nationwide spend their money.
Church Finance

Church Finance

Learn about budgeting, financial reporting, tax compliance, insurance coverage, and more.
2019 Church & Clergy Tax Guide

2019 Church & Clergy Tax Guide

Find comprehensive help understanding United States tax laws as they relate to pastors and churches.

ChurchSalary

ChurchSalary

Experience a whole new way to set compensation. Eliminate the guesswork – get access to detailed compensation reports in just minutes.