FUND ACCOUNTS – Many churches have established discretionary fund accounts, in order to be able to meet certain needs as they may arise. An example would be a Church Petty Cash Box; The Benevolent Fund; perhaps a “Missions Fund” where a portion of the Church monies are set aside, enabling the pastor and or leadership to send funds, as needed, to various missions and ministries.
The information we offer is not in anyway meant to hinder or impede the pastor or church leadership, but rather to inform and keep them out of harms way [IRS wise].
The following concepts apply to any fund or funds established, where the Pastor or Minister has discretionary authority to disburse funds. If the following four (4) points are not observed, the monies will likely be deemed taxable income to the Minister, and contributions found to be not tax deductable by the contributor.
- Every Fund should be established by a Corporate Resolution, and must be used solely to implement the “religious purposes” clause of the Articles of Incorporation for which the church was organized. Such as the relief of the needy, training members, sending missionaries or missionary activities or other types of ministries.
- The Minister may in fact be the sole person spending moneys from the Fund, but [within the language of the church policy] he must be prohibited from distributing any moneys to himself or to any member of his family.
- The Governing Board [or congregation] must retain control (by review or audit of the records on a regular basis) over the Fund, to insure that the use of this Fund is in accordance with the purposes for which the church is allowed to be Tax Exempt.
- The Governing Board or congregation must demonstrate control (by review or audit of the records on a regular basis) over each Fund, to insure that the use of this Fund is in accordance with the purposes for which the church is allowed to be Tax Exempt.
In other words, only the Board of Directors [or if the By-Laws say it's the congregation] have authority to spend church monies. Authority can certainly be delegated to a person or committee, but then that person pr committee is required to give an account of their actions to the governing authority.
If this discourse is of interest to you, please review our SAMPLES Manual. The sub title for this Manual is, “The Church is Incorporated – Now What?” This Manual has 80 examples of Policies, Minutes, Resolutions and Ratifications
See “The Church Administration ‘How To’ Manual” for more detailed information on all aspects of church administration. There are many Worksheets and Forms at the end of the chapters, to enable you to accomplish your goals. A CD-Rom is included with the purchase of the manual, with all the Worksheets, Forms and Policies.
This Manual, endorsed by three CPA’s, an EA and two attorneys, was updated again in January, 2011, for the 12th time, since its original publication in 1991.
The above information is provided as a service to the Body of Christ by ADMINISTRATIVE ASSISTANCE
Copyright © 2004 by Administrative Assistance