by Blake Hill
One of the members at my church was just diagnosed with t-cell prolymphocytic leukemia.
He is a school teacher and his wife has been staying home with their younger children. We as a church body want to provide monetary assistance to this family to help with the medical bills. People and business in the community (as well as other church members) want to donate to this benevolence as well.
Is there any position the IRS will take if check are made out the Church with in the memo a designation for this individual.
Will this jeopardize my church’s 501(C)3 status? Will or could this be looked at as siphoning money from individuals to this specific person.
I believe the church should be in this ministry however this is not a direct part of our charter (to give to a specific person). From what I have researched it will take time to set up a trust or other vehicle that could qualify for exempt status for this individual and right now timing is of the essence.
How did you go about this?
You could probably take up a donation for this individual; however, the donations are not tax deductible. Gifts to an individual do not qualify as charitable donations, and the IRS does not allow a tax deduction for them.
Important: Check your state and local laws if you are soliciting funds for a particular individual as some state and local authorities regulate charitable solicitation.
According to Keith Hamilton, D.Ed.Min, CFP, “You cannot deduct contributions to specific individuals, including contributions to individuals who are needy or worthy. This includes contributions to a qualified organization like a church if you indicate that your contribution is for a specific person.
But you can deduct a contribution that you give to a qualified organization that in turn helps needy or worthy individuals if you do not indicate that your contribution is for a specific person.”
Read more of this informative article and download a free Sample Benevolence Request Form.
He also lists the IRS’s required documentation for a benevolence payment from a church in the above article.
Remember...if some of the church members decide to hold a fundraiser for the family, they need to check with your state law as far as any major issues involved with fundraising for an individual. Again, gifts to an individual do not qualify as charitable donations.
I think what you are wanting to do for this man and his family is wonderful. I also commend you for checking into the legal and tax side of it before you do anything.
A good resource for benevolence guidelines is the Church Accounting: How To Guide There is a whole section in that book devoted to benevolence. It also includes a written benevolence policy example that every church should have on file.
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