Have a sub-account for pastor discretionary fund. Funds are received from members/non-members of church as a gift/donation to the pastor of church. With given scenario, how or what are funds/monies to be used for by the pastor? Are monies taxable to pastor? Please advise. Thank You
The pastor's discretionary fund can be used for the pastor to help out needy individuals somewhat privately, but you really need to have some kind of written church polices regarding this fund.
1. Require the pastor to document and record distributions from the fund showing the types of assistance provided. For example: $100 was given to a needy family to purchase groceries or $150 was given to a needy elderly man to provide him with transportation to and from a cancer treatment center for a year.
2. Encourage the pastor to use the monies for goods and services rather than cash assistance, examples: a bag of groceries, taxi fare, bus ticket, a pair of shoes, a doctor bill, which helps to protect the pastor, the church and the persons receiving assistance from accusations of irregularity or private inurement;
3. Require the pastor to request the funds from the treasurer on some type of request voucher form, (note: this can be done and still maintain confidentiality for the specific needy persons);
4. State that the fund may not be used by the pastor for himself or his family.
5. This one is up to the board or governing body..... limit the dollar amount that may be expended at any one time without advance written permission from the church board or governing body.
Handled this way the monies used in the discretionary fund would not be taxable the pastor.
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