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Sanford Levings

"Hi, I’m Sanford Levings, President of MinistryCFO and author of this blog. The purpose of our blog is to share with you information and insights that we gather from working with and listening to our clients and partners, located throughout the country." read more

Accounting Rules for Short Term Mission Trips

Can I Deduct My Gift to the Mission Trip?

We get this question frequently: can I deduct my gift to such-and-such mission trip?

The answer is: it depends.

Let’s start by telling you what you can’t deduct.

Scenario 1: If you contact your church and tell them that you are sending a check to the church for $1,500 for your travel expenses for the Haiti mission trip next month, then this check will not qualify as a tax deductible gift.

In other words, if / when you make a donation to your church, you can’t intentionally benefit from the gift. Having said that, you can still make a donation to your church and it will qualify as a tax-deductible gift provided that you indirectly benefit from the gift.

Scenario 2: You donate the same $1,500 to your church, but this time, you only stipulate that the donation be made to the Haiti Missions Fund. But that’s it: you don’t stipulate the use of your donation beyond the Haiti Missions Fund. Meanwhile, a disbursement committee at the church should be established to decide how to spend all the funds from the Haiti Missions Fund. The committee decides to pay you for your transportation to and from Haiti. In this situation, your $1,500 donation will qualify as a tax deductible gift.

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In more technical tax terms, a donor can receive a tax deduction provided he / she meets these two guidelines:

  1. Intended Benefit Test – the donor must understand that his/her gift is to the benefit of the church. As such, it is the church that has complete control and administration over the use of the donated funds that are earmarked for the mission project. The IRS has provided the following suggested language for use in the donor receipts: this contribution is made with the understanding that the donee organization has complete control and administration over the use of the donated funds.

    The best time to communicate the intended benefit test to the prospective donor is at the point of solicitation which would be before the gift is made as this underscores the principle of truthfulness in fund-raising.

  2. Control Test – The IRS uses the phrase discretion and control with respect to the church’s responsibility over gifts earmarked for missions. Discretion and control is be evidenced by the following:

    1. Control by a governing body of the donated funds, exemplified by the creation of a budget.

    2. Have the governing body establish, review and monitor the program.

    3. Regular communication to donors of the church’s full control and discretion of funds.

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At MinistryCFO, we can help you set up mission funding and spending procedures that will assure that your donors qualify for a charitable gift deduction.