Our church sponsored a short-term mission trip with the expectation that each trip participant would raise enough funds to pay for their expenses. Sally was ill on the day the trip was to begin and could not participate. The individuals who made gifts preferenced to support Sally’s participation requested their gifts back. What should we have done?
In my view, you should not have refunded the gifts. You used the word “preferenced.” This is a key word—a key concept. When the donors made their gifts, they were not restricted for Sally; they were only preferenced for her. Thus, when they made the gifts, they released control over them and lost their right to get them back. Refunding the gifts demonstrates a lack of discretion and control over the funds by the church.
In these situations, you could carry forward the funds for a future trip in which Sally might have the opportunity to participate, but you have no obligation to do so.
Dan Busby is a certified public accountant, president of the Evangelical Council for Financial Accountability (ECFA), and the author of the Zondervan Clergy Tax & Financial Guide.