Christ commands us to love one another. Since the church follows his commands, the church wants to express that love, usually by blessing someone with a love gift. Frequently, the church will receive a love offering for someone in need or in appreciation of a member. The Internal Revenue Service does not mind love gifts as long as the church follows the tax rules. This article details those rules.

Donor Rules

In all instances, the church must approve the love gift and take control of the contributions. For example, if Ms. Myway wants to bless Pastor Loving by giving him a love gift through the church, then the church should not accept that gift. Ms. Myway is controlling how the money is spent. On the other hand, if the church decides to bless Pastor Loving with a love gift, it may accept the donation from Ms. Myway. If the church controls how the money is spent, then the donation qualifies for charitable contribution credit. On the other hand, if Ms. Myway is using the church as a conduit to give a personal gift to Pastor Loving, then she does not have a tax-deductible contribution and the church has risked its tax-exempt status.

Four Types of Love Gifts

The church may give love gifts in four circumstances: (1) to meet a benevolent need, (2) to compensate a visiting minister, (3) to compensate an employee, or (4) to bless a ministry. Each type of gift has rules that are specific to that type.

Benevolent Love Gifts

Benevolent love gifts have two characteristics: (1) the recipient has a need, and (2) the recipient cannot presently meet that need. The IRS has avoided defining "need," preferring to allow the courts to define the term. Since no court has defined it so far, churches should use the common, everyday meaning of "need." Generally, "need" is a synonym for "necessity." As a result, the church should only meet needs that represent a necessity for the recipient. Most commentators believe a need should relate to food, shelter, clothing, transportation or health care items. The church must document these two elements in writing. The documentation is intuitive: the church must confirm the need and the lack of resources.

For example, if a family cannot pay the rent, the church may call the landlord and confirm the rent has not been paid. The person making the call writes a memo to be filed, documenting the conversation. The church then secures a written statement from someone who is knowledgeable about the family's finances that the family does not have the money to pay the rent. Many churches find a written application helpful in documenting benevolent requests. (For a sample benevolence application, email the author at: fsommerville@nonprofitattorney.com.)