Articles

Written by Dan Busby
From his column God, Government and Me—Money in the Churchgod-government-me-03-15-1

While churches sponsor short-term mission trips year-round, most of them occur in summer, that’s because students are on vacation and adults can take time off more easily. These trips are wonderful experiences for participants—opening their eyes to new vistas of service to Christ.

 

It seems like a simple decision to sponsor a mission trip. Yet, far too many churches overlook key principles necessary to properly raise and expend funds. It is essential that this be done in both a legal and God-honoring way. Here are seven basic steps to help ensure all your mission trips are conducted with integrity.

 

1. Only gifts made in the name of the church are tax-deductible. To qualify for a charitable contribution, donors who wish tax deductions must make their gifts to the church. Gifts made directly to trip participants are personal; therefore, they are not charitable gifts.

 

2. The church must have discretion and control over the gifts received for a short-term mission trip. This sounds easy enough until one stops to think about what is involved. It means:

 

A. Gifts restricted for individual trip participants are not tax deductible. If a donor restricts a gift for the use of a particular trip participant, the gift does not qualify as a charitable contribution, and the church should not provide a charitable gift receipt to the donor. Reason: Restricting a gift to an individual means the gift has the character of a personal nondeductible gift instead of a charitable deductible gift.

 

B. Gifts preferenced for certain trip participants may be tax deductible. If a donor makes a gift to the church for the purpose of supporting a short-term mission trip and only indicates a preference or a desire that the funds be used for the trip of a particular participant, the gift should qualify for a charitable deduction—even if the gift is from a family member of the trip participant. This assumes the trip participant is able to and plans to significantly perform services to carry out the purposes of the trip (for example, a child of age 3, is unlikely to qualify).

 

3. Refunding of gifts related to trips is rarely appropriate. There is no sound basis to refund gifts preferenced for particular gift recipients except in unusual circumstances, such as the cancellation of a trip. Funds preferenced for the trip of a particular participant could be carried forward for a future trip at the discretion of the church.

 

4. Assure consistent communication to donors. If trip expenses are fully or partially funded from resources raised by trip participants, all communication to donors—sample text for letters, websites, and blog posting and talking points for verbal communication about the trip—should be approved by the church. These communications should clearly indicate that all gifts must be made payable to the church and gifts restricted for particular trip participants will not be accepted.

 

5. Issuing charitable gift acknowledgments. At the discretion of the church, charitable gift acknowledgements should be provided by the church to contributors. No charitable gift acknowledgments should be issued for short-term mission trips that have not been approved by the church.

 

Charitable gift acknowledgments issued by the church should include the following wording:

  • An indication the church has discretion and control over the gifts.
  • A statement indicating “no goods or services were provided in exchange for the gifts,” if this is true.

6. Have a plan for over- and under-funding. If resources are raised beyond the goal for a particular trip participant, the excess may be used to provide resources for a trip participant that is under-funded.

 

If resources raised by a trip participant are less than the financial goal established by the church, the church may determine whether to assign funds sufficient to allow the individual to participate in the trip. The additional funds could come from the church’s mission or general funds, or, the additional funds could come from resources raised beyond the goal to fund other trip participants.

 

7. Determining accountable expenses related to trips. Trip expenses should be reimbursed under the church’s accountable expense reimbursement plan. Allowable volunteer expenses include transportation expenses and reasonable expenses for meals and lodging incurred while away from home.

 

Expenses should not be reimbursed for individuals who have only nominal duties relating to the performance of services for the church or who, for significant portions of the trip, are not required to render services (in other words, where there is a significant element of personal pleasure). See IRS Publication 526 for a definition of “significant element of personal pleasure.”

 

So, plan ahead for short-term mission trips that are God-honoring—both on the mission field and in the raising and spending of trip funds. For more information, see the Charitable Giving Guide for Short-Term Mission Trips by Dan Busby, Michael Martin, and John Van Drunen.


Dan Busby is a certified public accountant (CPA) and president of the Evangelical Council for Financial Accountability (ECFA)—an accreditation organization that sets standards for governance, financial management, and fundraising/stewardship for churches and other nonprofits across the country.

Please note: Dan Busby and Pensions and Benefits USA are not permitted to offer legal or tax “advice.” Important tax questions should be discussed with a qualified tax advisor to be sure all tax liability is met.

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