Knowledge Center

The Knowledge Center provides you access to hundreds of documents including policies, procedures and a wealth of research on topics such as charitable gifts, expense reimbursements, board governance, fringe benefits, and much more.

God-honoring board governance doesn't just happen. It requires spiritual discernment to recruit the right people onto the "board bus" and then wisdom to ensure that board practices are always Christ-centered.
Every Christ-centered organization should seek to handle money in a God-pleasing way. "Whoever can be trusted with very little can also be trusted with much."
Luke 16:10
Churches and other nonprofits are the recipients of public trust and must fulfill fiduciary responsibilities. This means ensuring that all funds are used in conformity with applicable laws and regulations.
Establish a resource development program that yields transformed hearts and generous gifts. Then, hold and disburse the funds in a faithful manner, with proper reporting to givers and the government.

Keywords Category Type of Documents

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.


Governance Overkill Syndrome

Nonprofit organizations are on a quest to seek out and attain good governance. The failure of a relatively small number of boards to do their jobs should not cause every nonprofit board in America to engage in remedial action that is unduly burdensome and unproductive, and that distracts board members from their true obligation--that of overseeing the effective carrying out of the mission of the organization itself.

Contributions for Disasters

Accountability for funds received and expended for disaster relief should be based on certain best practices.

Contributions for Disasters

Accountability for funds received and expended for disaster relief should be based on certain best practices.

Board Review of IRS Form 990

Board Review of Form 990

Guidelines for Handling Funds Raised for Disasters

Contains guidelines that ministries should consider when raising disaster-related funds

Guidelines for Handling Funds Raised for Disasters

Contains guidelines that churches should consider when raising disaster-related funds

Sarbanes-Oxley Act

Outlines the applicability and relevance of this law to nonprofits

Important Considerations for Church Benevolence Programs
Discusses church benevolence programs
Credit Card Use by Church Staff

Discusses the use of church credit cards for ministry purposes

Credit Card Use by Ministry Staff

Discusses the use of ministry credit cards for ministry purposes

Integrity and Compliance with the Law
Demonstrating integrity is important for churches because, over time, doing so establishes and reinforces necessary trust with church members as well as those outside the church whom we are called to reach with the Gospel.
Guidelines for International Grant-Making

Outlines the proper procedures and due diligence when making grants to international organizations

Child Adoption Fundraising and Support

Discusses items related to child adoption funding

Child Adoption Fundraising and Support

Discusses items related to child adoption funding

Five Ways to Make an Audit Easier
There are several reasons why a not-for-profit organization might undergo a financial audit.
The IRS Takes These Board Financial Responsibilities Seriously — Do You?
If you serve on the board of an organization, you’ve probably heard the term “fiduciary responsibility” and know that it applies to your role as a board member.
Executive Compensation Policy for Nonprofit Organizations
A Board’s determination of the nonprofit’s senior staff members’ compensation is one of its key tasks. 
Running Gifts Through the Ministry

Discusses how to recognize and avoid gifts that have been earmarked by givers for the benefit of specific individuals

Churches and the Support of Missions

For many churches, supporting missions is an important part of the work they are called to do. And for such churches, an important issue is the proper handling of funds expended from the mission budget. This document assists churches as they consider how to support missions.

How Proponents of Religious Freedom and Faith-based Service Can Gear up for Action

Faith-based organization, donors, volunteers and other supporters of faith-based organizations can be prepared to take a proactive stance when action is needed on threats to religious freedom.

Compensation of Outside Fundraisers

Discusses ECFA’s requirements regarding compensation of outside fundraisers

Compensation of Outside Fundraisers

Discusses ECFA’s requirements regarding compensation of outside fundraisers

15 Questions Nonprofit Board Members Should Be Able to Answer

If you serve as a nonprofit board member, we recommend that you review the organization’s Form 990 and be informed enough to answer these 15 questions.

Modeling Integrity in Administering Gifts to the Church
Article by John Van Drunen
Deputized Fundraising – The Basics

Discusses the basics of deputized fundraising

Deputized Fundraising – The Basics

Discusses the basics of deputized fundraising

Tuition Payments for Missionary Children

Discusses the deductibility of payments for missionary children’s tuition

Giver Restrictions or Giver Preferences

The distinction between a giver's restriction and giver's preference can make the difference between the giver's eligibility for a charitable tax deduction and no tax deduction.

10 Steps to Forming a Charitable Organization

10 Steps to Forming a Charitable Organization

Fraud in Ministries: How to Respond

What to do if you detect fraud in your organization

Giver Privacy

Discusses giver privacy and important elements of a giver privacy policy

Giver Privacy

Discusses giver privacy and important elements of a giver privacy policy

Governing Board Culture
We are confident we need to address our current governing board culture but we are not sure when and how to proceed. What do you suggest?
How many months of cash should our church have in reserve?
How many months of cash should our church have in reserve?  Are there different categories of reserves we should consider? 
How many months of cash should our ministry have in reserve?
How many months of cash should our ministry have in reserve?  Are there different categories of reserves we should consider? 
Mission Creep – Blueprint for Mission Creep

Why organizations drift from their mission: finances, personnel, organizational structure, demographics, or philosophy

Audit Committee

Outlines the importance of an audit committee charter and includes a link to a sample charter

Giver Restrictions or Giver Preferences
The distinction between a giver's restriction and giver's preference can make the difference between the giver's eligibility for a charitable tax deduction and no tax deduction.
Handling Conflicts of Interest

Practical approaches to assist boards in understanding real or perceived conflicts of interest

Handling Conflicts of Interest
Practical approaches for boards
Fraud and Whistleblower Protection for Churches

Discusses the whistleblower protection provision contained in the Sarbanes-Oxley Act and its applicability to churches as well as general misconduct, dishonesty, and fraud prevention

Fraud and Whistleblower Protection for Nonprofits

Discusses the whistle-blower protection provision contained in the Sarbanes-Oxley Act and its applicability to nonprofits as well as general misconduct, dishonesty, and fraud prevention

Is Your Ministry Too Close to the Edge?

Discusses various forms of risk management for nonprofit organizations

Unmistakable Integrity Starts with the Tone at the Top
Integrity appears in both very small ways and very significant ways.
Unmistakable Integrity Starts with the Tone at the Top
<p> Integrity appears in both very small ways and very significant ways.</p>
Rules
Each of us lives by rules.
Rules
Each of us lives by rules.
Avoiding Common Fundraising Mistakes

A review of common fundraising mistakes demonstrates why raising funds is not as simple as it may appear. It requires careful planning, an understanding of the fundraising landscape, and the Lord's guidance.

Charging an Overhead Assessment against Restricted Donations

Highlights the key issues relating to the determination of overhead rates to be applied to gifts, accounting for overhead charges, communication of overhead charges to givers, and much more

Charging an Overhead Assessment against Restricted Donations
Highlights the key issues relating to the determination of overhead rates to be applied to gifts, accounting for overhead charges, communication of overhead charges to givers, and much more
Approval for Overtime Hours
Approval for overtime hours
Compensation Survey Resources

Lists several publications that contain surveys of nonprofit compensation

Disclosure of Overhead Charges

Discusses appropriate disclosure of overhead charges on giver-restricted gifts

Disclosure of Overhead Charges

Discusses appropriate disclosure of overhead charges on giver-restricted gifts

Policies and Procedures Governing Local Chapters, Branches, and Affiliates

If an organization had local chapters, branches or similar affiliates during the year, the Form 990 asks if there are written policies and procedures governing their activities to ensure consistency with the activities of the organization. If the answer to this question is No, an explanation is required in Schedule O as to how the organization ensures that the local unit’s activities are consistent with its own.

Religious Discrimination in Hiring

Discusses Title VII’s protection of churches’ and ministries’ right to discriminate on the basis of religion in hiring practices, includes a sample nondiscrimination policy

What are the Compensation Committee Best Practices for Setting CEO Compensation?
An ECFA member ministry has a compensation committee charged with the responsibility to recommend the CEO’s compensation and fringe benefits to the board each year. The committee is comprised of two non-staff board members and the ministry’s CFO. When the board receives the recommendation of the compensation committee, the CEO stays in the boardroom but does not participate in the vote. While the compensation committee records the details of the recommended compensation in their minutes, the board minutes do not reflect any details. How could the ministry improve their practices?
Directors and Officers Liability Insurance

Discusses importance of director’s and officer’s liability insurance and important policy characteristics

Mission Creep – Temptations and Solutions

Why organizations drift from their mission and how to avoid drift — "all great causes are not your cause."

Then and Now
Editorial by Dan Busby, ECFA president, originally published in Focus on Church Accountability.
Making Vision a Reality

Effective strategic plans and how to implement them

Board Voting by Proxy

Discusses the implications of board voting by proxy

Gift Acceptance Guidelines

Guidelines for a nonprofit to follow when determining what gifts should be accepted from donors

Embracing Accountability and Integrity

Embracing Accountability and Integrity (Excerpted from Integrity at Stake by Rollie Dimos; Pg. 41-44)

One of the most important steps leaders can take to prevent fraud from occurring in their church is to embrace accountability and integrity and decide these are nonnegotiable values in the church. This means practicing what you preach and modeling biblical stewardship.

Doing Well
Editorial by Dan Busby, originally published in Focus on Church Accountability.
Proper Care of Giver-Restricted Gifts

Giver-imposed restrictions create specific responsibilities for the ministry – both in terms of ethical practices and accounting issues

Sample Policy on Suspected Misconduct, Dishonesty, Fraud, and Whistleblower Protection
Sample policy covering the whistleblower protection provision contained in the Sarbanes-Oxley Act
Sample Policy on Suspected Misconduct, Dishonesty, Fraud, and Whistleblower Protection
Sample policy for whistleblower protection
Tough Decisions for Boards

Discusses elements of making effective board meeting decisions

Leadership Succession

Guidance for leadership transitions in nonprofit organizations

Planning for the Unexpected
We all have our share of the unexpected.
Doing Well
Editorial by Dan Busby, originally published in <em>Focus on Church Accountability.</em>
Overhead Assessments on Restricted Gifts
What limitations does a ministry have when applying an overhead assessment on restricted gifts?
What Is the Board's Role in Fundraising?

Looks at the specific roles of board members in fundraising

Current Assets and Current Liabilities

Defines and lists examples of current liabilities and current assets according to authoritative accounting literature

Finding Church Management Software to Fit Your Needs
With dozens of Church Management Software (ChMS) options available, finding the best solution for your ministry can be daunting. Ministry Business Services, Inc. has researched 39 of the top Church Management Software programs and offers a comprehensive and unbiased compilation of what each platform offers, as well as general information on what to look for in choosing a management solution for your church or organization.
Ministry Activities on the Internet

ECFA Advisory Opinion on ministry activities on the Internet

Four Accounting Challenges for Churches
Discusses four challenges churches face.
Educating Yourself About Church Vendor Fraud

Churches—particularly larger ones—are candidates for vendor fraud.  In this article, Jason Anderson, CFO of a large church accredited by ECFA, Living Word, Mesa, AZ, provides his excellent insights on how to evaluate how vendor fraud may happen in churches.  

Church Governance Resources

Resources on church governance issues

Conflicts of Interest Questionnaire
Sample questionnaire for determining conflicts of interest for board members
Ministers Opting Out of Social Security

Ministers may opt out of social security in rare situations. Unfortunately, this option is often promoted as a way for any minister to get out of paying into the social security system. This document clarifies these issues.

Contribution Policy

A charity may have an underlying sense that some contributions should be carefully reviewed before accepted.

Beyond Giving and Getting

Discussion of the board’s role of fundraising as a ministry

Clearly Communicating Ministry Financial Data

Boards and others need meaningful interpretation of ministry financial data

Fraud in Ministries: Real Examples and Red Flags

Ministries can implement a few simple internal controls to remove temptations from employees and protect resources from misappropriations.

Improving Your Board—One Step at a Time
Article by Dan Busby
Improving Your Church Board—One Step at a Time
Article by Dan Busby
Transparency Required under ECFA’s Standards in Addition to Disclosures Required by Federal Law

Federal law requires charities to disclose Forms 1023, 990, 990-T and 5227 when requests are made in person or in writing. However, ECFA’s Standard 5 goes beyond Federal regulation.

Effectively Handling Endowment Gifts

Outlines different types and proper accounting for endowments

Accelerating Board Members to Full Engagement

Proven ideas to accelerate your board members, both new and long-standing, into full service

Aim for Faithfulness Rather than Results!

What are we aiming for? Or in ministry terms, how do we define success? From our research, ministry leaders typically define success along one of two lines.

How Much for Fundraising?

Discusses factors that may be considered when determining what is an appropriate amount of fundraising expense for a specific organization

It’s More Than Contribution Receipts

Outlines ways that nonprofits can be financially accountable to donors beyond providing a contribution receipt

Sample Finance Committee Charter

Sample Finance Committee Charter

Quid Pro Quo Disclosure and Acknowledgment Requirements

Discusses when to disclose, how to disclose and how to calculate quid pro quo contribution

Quid Pro Quo Disclosure and Acknowledgment Requirements

Discusses the obligation of a ministry to provide a receipt for certain transactions where the giver receives goods or services in exchange for a donation

Recording Church Board Minutes

Outlines the importance of and procedures for recording board meeting minutes, including a sample set of minutes

Recording Governing Board Minutes

Outlines the importance of and procedures for recording board meeting minutes, including a sample set of minutes

Special Events

Overview of fundraising events and proper accounting treatment for event elements

Special Events Church

Overview of fundraising events and proper accounting treatment for event elements

Why Accountability Matters

Why Accountability Matters (Excerpted from Integrity at Stake by Rollie Dimos; Pg. 19-21)

Oftentimes, I meet church leaders who are fearful of making their financial activity accountable and transparent, and many times, control of the church’s finances is limited to one or two individuals. In a best-case scenario, this is simply an honest but naïve mind-set, believing that finances are better controlled when fewer people are involved. In a worst-case scenario, this is a deliberate attempt to conceal poor stewardship or abuse. It’s the worst-case scenario that will ruin a leader’s ministry, destroy a church, and shatter people’s faith.

Governing Board Minutes

Board Minutes - Sample

Position Descriptions – Board Secretary

Board Secretary position description

Prohibiting the Acceptance of Restricted Gifts

A ministry's policy to prohibit the acceptance of restricted gifts only has a limited effect.

Prohibiting the Acceptance of Restricted Gifts

A church's policy to prohibit the acceptance of restricted gifts only has a limited effect.

Sample Staff and Volunteer Ethics Policy

A nonprofit's staff and volunteers' commitment to biblical, ethical, businesslike, and lawful conduct

Selecting an Auditor

Suggests factors a nonprofit organization may consider when selecting an auditor

Maximizing Generosity Through Alignment

When givers, askers and organizations submit to God's call, generosity is maximized. Then, great things are accomplished individually and corporately in the present world that result in eternal rewards.

Redefining How We Raise Resources

This article focuses on a new way of thinking about raising money for the work of God's Kingdom. Rather than merely harvesting or picking "low-hanging fruit," the focus should be on sowing seeds that encourage Christian generosity.

Short-Term Mission Trips

Discusses the deductibility of contributions for short-term mission trips

Short-Term Mission Trips

Discusses the deductibility of contributions for short-term mission trips

4 Keys for a Church to Properly Handle Designated Gifts

Almost every church receives some designated gifts each year. The gifts are “restricted” for accounting purposes, but churches often refer to them as “designated.”

Could Your Ministry Use an Accountability Tune-Up?
While solid financial accountability systems take extra effort, they are important tools.
Expense Reports Can Kill!

Explores the importance of proper expense record keeping and includes expense-reporting guidelines

Social Security Tax for Ministers - More Complex than It Appears
Social Security Tax for Ministers - More Complex than It Appears
The Who, What, When, and How of Church Internal Audits
There are several reasons why a church may perform an internal audit.
Charity Auction Implications

An overview of the tax rules relating to the donation of items to be auctioned and the items purchased at an auction

Sample Conflicts of Interest Policies

Discusses conflicts of interest and related-party transactions, and includes several sample conflicts of interest policies

Aim for Faithfulness Rather than Results!
 What are we aiming for? Or in plain terms, how do we define success? From our research, church leaders typically define success along one of two lines.
Determining Reasonable Compensation Related to Earlier Undercompensation

Discusses a Tax Court case in which compensation paid to a company’s founder was found to be appropriate due to previous undercompensation

Reasonable Compensation

Outlines the Internal Revenue Code’s criteria for reasonable compensation

Sample Giver Privacy Policy

A sample policy  that may be modified for your ministry's use

Sample Giver Privacy Policy

Discusses giver privacy and important elements of a giver privacy policy

Sample Quid Pro Quo Charitable Gift Acknowledgment
Sample gift acknowledgement for a quid pro quo gift
Sample Quid Pro Quo Charitable Gift Acknowledgment
Sample gift acknowledgement for a quid pro quo gift
10 Steps to Forming a Church

10 Steps to Forming a Church

Renewing Your Vision

The importance of keeping God’s vision for ministry in focus

Leading God’s Way
The greatest leader who ever lived loved hanging around weak people
Board Self-Evaluation Overview

Discusses board self-evaluation and includes links to sample board self-evaluation forms

Executive Director Job Description

Nonprofit organizations exist in all sizes with an emphasis on an array of causes.  Regardless of size, or whether the organization’s staff is made up of volunteers or employees, every nonprofit should have one person who is the effective leader that guides the organization.

Joint Venture Policy (Abbreviated Version)

Organizations should consider adopting a joint venture policy if the organization has entered into or is considering entering into a joint venture agreement. See an abbreviated version of a joint venture policy.

Overcoming a Deficit of Trust and Truth

Trust is difficult to earn, easy to lose, and even more difficult to regain.

Overcoming a Deficit of Trust and Truth

Trust is difficult to earn, easy to lose, and even more difficult to regain.

Policies Relating to the Payment of a Housing Allowance, First Class or Charter Travel, Spousal Travel, Gross-up Payments, Discretionary Spending, Health or Social Club Dues

Sample policies for first class travel, spousal travel and housing allowances

Sample Benevolence Policy

Sample benevolence policy that may be used as a guideline by a nonprofit ministry designing its own benevolence policy

What Is a Nonprofit?

Discusses the characteristics of a nonprofit

Board Member Commitment Pledge

Sample annual pledge of service for board members

Audit Oversight Process

Details adequate financial oversight and how it is one of the central responsibilities of effective board governance

Could Your Church Use an Accountability Tune-Up?
While solid financial accountability systems take extra effort, they are important tools.
Courage
<p> Courage to stand in battle is essential to bring victory. The increasing pressures of our day suggest it is time for us to level up in terms of courage.</p>
Courage

Courage to stand in battle is essential to bring victory. The increasing pressures of our day suggest it is time for us to level up in terms of courage.

Different
Trust is like a phenomenon of nature, like Niagara Falls or the Grand Canyon
Excess Benefit Transactions

Discusses and defines excess benefit transactions for 501(c)(3) and 501(c)(4) tax-exempt organizations

Integrity Slipping?
Article by Dan Busby
Integrity Slipping?
Article by Dan Busby
Investment of Permanently Restricted Net Assets in Real Estate

Discusses the propriety of investing permanently restricted net assets in real estate

The Small Stuff
Article by Dan Busby
Travel Outside the United States

Outlines the deductibility guidelines of business related travel outside the United States

Viatical Investments

Defines and discusses issues relating to viatical investments, investments by an organization in an individual life insurance policy

Employee vs. Independent Contractor

Outlines differences between an employee of a ministry and an independent contractor

Sample Church Board Minutes
Sample minutes for a church board meeting
Digital Gifts to Churches—Developing Controls to Avoid Fraud
<p> In the past few decades, &ldquo;We&rsquo;ve gone from dial-up Internet access in our basements to high-speed connections in our pockets,&rdquo; says Steve Hewitt, editor of <em>Christian Computing Magazine</em>.</p>
Internal Control & Internal Audit Guidelines
Internal Control and Internal Audit Guidelines
7 Lessons My Father Taught Me About Fundraising

Dr. Barry Corey, President of Biola University, thoughtfully shares characteristics of Godly development that were modeled by his father. His thoughtful comments will encourage anyone involved in resource development.

Applying for Tax-Exempt Status

Outlines how a nonprofit may apply for tax exempt status

Asking Is Just the Beginning!

Discusses the importance and means of maintaining integrity throughout the fundraising process

Avoiding Digital Fraud
How can our church avoid digital fraud?
Employee Compensation and Tax Planning Considerations for Pastors
There are a number of employee compensation components churches can consider for pastors.
Gifts to Help Ministry Participants

When an individual ultimately benefits in some way from a gift, a variety of tax issues may arise. Churches and other nonprofits must be clear in their communication and control over contributions in order to protect their donors’ tax deductions.

Tax Treatment of Scholarship and Fellowship Payments

Discusses the proper tax treatment of scholarship and fellowship contributions and payments

Tax Treatment of Scholarship and Fellowship Payments

Discusses the proper tax treatment of scholarship and fellowship contributions and payments

Independent Auditor Sample Request for Proposal (RFP)

Sample request for proposal can be used by ministries to request proposals from independent auditors to perform the ministry’s audit

Intermediate Sanctions

Under the Intermediate Sanction rules, the IRS can penalize nonprofit insiders. The sanctions are considered "intermediate" because they penalize the individuals involved without taking away an organization's tax-exempt status.

Sample Travel and Expense Reimbursement Policy for Churches

Travel and expense reimbursement policy for a church.

Travel and Expense Reimbursement Policy

Travel and expense reimbursement policy for a nonprofit organization

Building the Oil Supply

Dr. John Zietlow outlines a strong biblical basis for carefully devised financial policies and establishing adequate cash reserves. As he says:  “Financial health is a prerequisite for mission achievement. As you begin to build or rebuild your oil supply and stock or restock your storehouse, take confidence that God is your Source and He will supply all of your needs according to His riches in Christ.”

Golf Outings

Overview of golf fundraisers and the proper accounting treatment for possible elements of such an event

The Importance of the Annual Church Audit

Good accounting records and good stewardship go hand-in-hand. Your church is the trustee of the money it receives—handle it carefully. An annual audit of a church—either external or internal—is vital.

Board Member Application

Sample form to be completed by a prospective board member

Charitable Gift Acknowledgments for Donations

Outlines IRS requirements for acknowledgments for contributions received by a ministry

Charitable Gift Acknowledgments for Donations

Outlines IRS requirements for acknowledgments for contributions received by a ministry

After Thank You and Good-bye

For a season, board members throw their minds, hearts, and financial resources into the organization, and then they leave. Unless you are intentional about trying to stem the natural progression of things, all those years of service to your charity very quickly fade to a pleasant memory.

Building a Better Audit Committee

Some nonprofit organizations have learned the hard way that good intentions aren’t enough to ensure an effective audit committee — both the organization and committee members must fully understand the committee’s role and responsibilities.

Check-writing Procedures

Specific internal control procedures to follow when writing checks to best protect the assets of an organization and includes a list of publications that contain more information about disbursement controls

Five Board Governance Trends

Peter Drucker said, "The best way to predict the future is to create it." In this article, John Pearson shares five trends and best practices to help create your preferred board governance future.

Is Now the Time to Refinance Your Ministry's Loan?
In this every-changing economy, ministry leaders frequently face the question: "Is now a good time to refinance?"
Microsoft Charity Licensing

Many Christian churches and ministries have been uncomfortable with the Microsoft charity licensing program for Office 365 because it requires them to certify they don’t discriminate in their employment practices regarding lesbian, gay, bisexual, and transgender (LGBT) people. On October 8, 2015, Microsoft addressed these concerns and posted changes to its policy on their website.

Ministry Board Service

Boards seem to give little thought to qualities that separate good boards from the very best

Renting Versus Buying Your Church's Facility
Many growing churches rent their facilities and expect to do so in the future. Others have made the decision to purchase. Neither way is necessarily the better way. Whether to rent or buy is based on each church’s specific situation and, more importantly, on prayerful petition.
Strategic Plans that Learn: An innovative alternative to traditional strategic planning

Traditional strategic plans often fail to produce the intended results. In business schools, strategic planning has been replaced with the broader concept of strategic management. Rather than doing long-range strategic planning every three years or so, it is far better to conduct periodic strategic reviews. The article describes six questions to use to guide strategic review meetings.

The Good Story Project

Should we communicate with potential givers by sharing spiritual transformation impact or by telling stories about our nonprofit’s work?  Clearly, the answer is both!  In their excellent article, The Good Story Project, Bill Frisby and Dave Rippey, with Strengthening Leaders L3C, share how good stories link the legacy of the past with present realities and hopes for the future in ways that allow people to see the value of the ministry