Benevolence Funds FAQs

Q: What are benevolence gifts?

A: Benevolence gifts are given by ministries to needy individuals or families.

Q: Can a giver deduct gifts directly made to a person?

A: No. Benevolence gifts made directly by a giver to needy individuals are not deductible. To qualify for a charitable deduction, contributions must be made to a qualified organization, such as a 501(c)(3) Christian ministry, which properly administers benevolence gifts.

Q: Which accounts are benevolence funds distributed from?

A: Benevolence gifts could be paid from the general fund of a ministry or from a benevolence fund based on gifts restricted for benevolence purposes but not restricted for a particular benevolent recipient.

Q: Can a giver suggest a recipient of benevolence funds?

A: If a giver makes a suggestion about the beneficiary of a benevo­lent contribution, it may be deductible if the ministry exercises proper con­trol over the benevolence fund. The suggestion must only be advisory in nature and the ministry may accept or reject the gift. Otherwise, earmarked benevolence gifts are generally not deductible.

Q: How are gifts reported to the IRS?

A: Benevolence payments to nonemployees are not reportable on Form 1099-MISC (or any other information form). Benevolence payments to employees are generally reportable on Form W-2.

Q: How does the ministry make decisions on issuing benevolence funds?

A: Ministries should form a benevolence committee for the express purpose of determining the recipients of the benevolence funds and the amounts they should receive.

 

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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.

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