A recent mailing from my college alma mater included a list of ways that I could donate to the school, including noncash gifts. Ministries often receive these kinds of donations. When you do, what are your legal, financial and biblical responsibilities?
The Internal Revenue Service (IRS) has a lot to say about noncash gifts. For example, when you give the donor a receipt, you are not to assign a value to the donated property. A helpful summary from the Stewardship Services Foundation says:
According to the IRS churches are not appraisers and should not assign a value to a gift of property. A donor should be provided with a receipt which includes the name of the church and the date of the contribution. The receipt should also include a detailed description, but not a value, of the donated property.
If you sell a noncash contribution within three years, the IRS article “Charitable Organizations—Substantiating Noncash Contributions” says you “must file Form 8282, Donee Information Return,” unless the property is valued at $500 or less or if the property is distributed for charitable purposes. The article also notes that special rules apply to certain contributions of motor vehicles.
You’ll want to inform people making noncash donations that their gifts may not be tax deductible. IRS Publication 526, mentioned above, provides all the details about deductions.
Thanks is due to The Church Accounting Software Guide for a blog series on how to handle year-end contributions, including noncash ones. Here’s an interesting nuance to the reporting requirements for financial contributions:
For cash, check, or other monetary donations made after January 1, 2007, the IRS requires that the donor have either a bank record (i.e. cancelled check) or a written communication (i.e a receipt or letter) from the church in order to claim an income tax deduction. This requirement places the responsibility of obtaining the necessary documents on the donor.
Of course there’s an IRS publication with this and numerous other details about the financial aspects of year-end gifts. It’s the Tax Guide for Churches and Religions Organizations.
No biblical text specifically advises how a church should handle noncash donations. But the early church’s practices do set a tone for how to steward them:
All the believers were together and had everything in common. They sold property and possessions to give to anyone who had need. Every day they continued to meet together in the temple courts. They broke bread in their homes and ate together with glad and sincere hearts, praising God and enjoying the favor of all the people. And the Lord added to their number daily those who were being saved. (Acts 2:44-47)
What a great reminder during this Christmas season of how we the church should view money and stuff.