Churches must follow IRS rules when handling year-end giving. This includes issuing donor receipts by January 31, ensuring contributions are properly documented, acknowledging gifts over $250 in writing, and maintaining accurate records for compliance and transparency

  1. Contribution Statements
  • Deadline: Churches must issue annual giving statements to donors by January 31 of the following year.
  • These statements should include donor names, contribution amounts, and a clear statement that no goods or services were provided in exchange (unless otherwise noted).
  • This aligns with IRS requirements and helps donors substantiate their charitable deductions.
  1. Acknowledgment of Large Gifts
  • For donations of $250 or more, the IRS requires a written acknowledgment from the church.
  • The acknowledgment must include:
    • The amount given
    • A statement confirming whether goods or services were provided in return
    • If goods/services were provided, a description and good-faith estimate of their value
  1. Proper Documentation
  • Donors must have either bank records (like canceled checks or bank statements) or a written receipt from the church to claim deductions.
  • The Pension Protection Act of 2006 tightened substantiation rules, making proper documentation essential.
  1. Counting & Recordkeeping Policies
  • Churches should implement a counting policy to ensure accuracy and accountability in handling funds.
  • Records should be maintained securely and consistently to protect both the church and donors.
  1. IRS Recognition of Church Status
  • Churches are automatically considered tax-exempt under Section 501(c)(3) and do not need to apply formally.
  • However, they must comply with IRS rules on donations, unrelated business income, and restrictions on political activity.
  1. Cash vs. Non-Cash Donations
  • Cash donations: Require receipts or bank records.
  • Non-cash donations: Churches should provide written acknowledgment describing the item but not assigning a value (donors determine fair market value).
  • For non-cash donations over $500, donors must file IRS Form 8283.
  1. Timeliness of Giving
  • Contributions must be postmarked or received by December 31 to count for that tax year.
  • Churches should clearly communicate this deadline to members to avoid confusion.

Key Risks & Compliance Notes

  • Failure to issue receipts by January 31 may prevent donors from claiming deductions.
  • Incomplete acknowledgments (missing “no goods or services” language) can invalidate deductions.

If you need guidance that is tailored specifically to your unique situation, we encourage you to connect directly with Pro Advisor Support. Their experienced team specializes in assisting clergy and church organizations with complex tax, payroll, bookkeeping, and HR matters. Whether you have detailed questions about compliance, deductions, or planning strategies, they can provide expert advice and walk you through the next steps with clarity and confidence.

Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR | Consulting
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421.0101

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

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