Individual FAQs
A young man donates a few hours each week to administer our church website. He is wondering if we can give him a receipt for the value of his donated time. What should I tell him?
You should provide profuse thanks to the individual who is administering the church’s website on a donated basis. However, the church has no basis to provide a charitable gift receipt for the value of his time, nor can he take a charitable donation for the value of his time. The gift of time never represents a basis for a charitable gift donation.
Yes. The church can and should provide a gift acknowledgement for the $1,000 temporarily restricted donation for sanctuary carpeting. The fact that the donor has restricted the use of the funds for a certain purpose does not impact the charitable contribution.
Our board is considering providing a regular weekly stipend to the person who (up to now) has been a “volunteer” worship leader. Can we consider her an “independent contractor” and avoid paying taxes and Social Security?
The word “stipend” is just another term for “taxable compensation.” Whether the worship leader is an employee or an independent contractor depends on a variety of factors. The most important issue is how much control the church exercises over the worship leader. The church has significant control over “when” the activities are provided. There may be less control over exactly “how” the activities are provided. If this person is a worship leader at other churches (in other words they hold themselves out to be a professional worship leader), then there may be a sound basis to treat the person as an independent contractor. However, if your church is the only one at which the individual leads worship, it is likely the IRS would consider the individual an employee, subject to the employment tax rules.
See Also: Memo #2 - Church Employees or Independent Contractors?
The answer to this question depends on whether the church sells the vehicle without any significant intervening use or material improvement between the date of the donation and the disposition of the SUV. If such a sale is made, the donor’s charitable deduction cannot exceed the church’s gross proceeds from the sale, as reported by the church to the donor on Form 1099-C. If the church does not sell the SUV, (the church keeps the vehicle or gives or sells it at a low price to needy individuals), the donor’s charitable deduction is limited to the vehicle’s fair market value. This value may be determined by using an established used-vehicle pricing guide. Dealer retail value cannot be used to determine the fair market value of a vehicle.
Workers’ Compensation laws exist in all states and Canada. They are designed so that benefits (both medical and disability income) for the work-related accident, injury, or illness can be paid promptly without the need for expensive legal fees to determine fault. Medical benefits have no dollar or time limits and cash benefits are paid for lost wages due to impairment or disability. In severe cases, medical and vocational rehabilitation benefits may be provided.
A few states exempt churches from Workers’ Compensation coverage and several exempt all nonprofit employers. A few others exempt any employer, including churches, having fewer than two or three employees. However, the majority of states have compulsory participation laws which do not exempt churches.
See Memo #9 - Workers' Compensation Laws and the Local Church for more details.
Church board members have a long list of responsibilities. Among these is the responsibility for the money that flows through the church. It’s such an important issue that the Manual contains at least three paragraphs about it.
Paragraphs 129.21 and 129.22 touch on keeping accurate records and never letting a single individual have control of the money. These make good common sense. Paragraph 129.23 requires an annual audit of the church’s financial records. This is a bit more difficult.
However, an annual audit of the church’s records is a must. External audits are performed by an independent auditor who has no impairing relationship to the church and, therefore, can review its data procedures with maximum objectivity. Internal audits generally are performed by church members or by persons closely associated with the church. While a church may choose to have an external audit (review, compilation, or agreed upon procedures), paragraph 129.24 of the Manual relates to an internal audit.
For details about performing a church audit see Memo #8 - The Annual Church Audit.