Different churches, regardless of their religion, accept contributions from their members. Members give contributions to their churches as a way of sharing the blessings that they have been receiving from God. Churches right now are very technologically updated in accepting donations. Many churches have websites on the internet showing the goals of the church to the world to encourage donation from people surfing the net. But online donations are only made possible if the church has the correct system in place. Right now there are many church software packages with different purposes on the market today. It’s up to the church to decide whether it will grab the opportunity to utilize this kind of software or not.
Church contributions are most often observed in the weekly service that the church is conducting. People with differing socioeconomic status gather in these services to praise and worship God. Normally before the services end the church asks for any amount of contribution that the members can offer. These contributions are considered tax free if your church is recognized as a charity.
Because these contributions can be considered tax exempt a financial manager of the church should be aware of the different types of contributions that he/she may receive. There are three types of contributions that a church accountant should be aware of.
The first type of contribution, and the most common, is cash. Whether the actual contribution is credit card, cold cash, or check the church usually just considers all of these “cash” for accounting purposes. Handling cash contributions is relatively straightforward.
The second type of contribution is a non-cash or gift donation. A good example of this is a member of the church donating a car or a private airplane to the church. These types of donations are relatively difficult to handle. Finding the fair value of these types of goods can be complicated. You need to know the value of it so you can issue a contribution summary to the donor at the end of the year for tax purposes.
The last type of donation is a labor donation. Similar to gift donations the fair value of the contribution can be hard to determine. Usually looking at the normal labor price for someone performing a similar type of labor is a good measuring stick.
Being a financial manager for a church is not easy, even for experienced accountants. The different church contribution systems out there can be overwhelming. Church accounting is a completely different ballgame than regular accounting. Understanding the different types of church contributions you will be receiving can help.
