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?

Question:
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?

Answer:
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.

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Posted: March 9, 2010
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