It is a common practice for churches to raise funds to send volunteers on short-term mission trips. The funds are often raised by a participant preferenced for his or her own trip expenses, as opposed to raising the funds for the group of volunteers as a whole.
Tax-deductible contributions for short-term missionary trips must be made “to or for the use of” the church.
If the giver only intends to benefit the person—using the church as an intermediary in order to obtain a tax deduction for an otherwise nondeductible gift—the contribution will not be tax-deductible. Such a motivation may be encouraged by promises of a refund if the person does not go or if too much money is raised.
However, when the church exercises control over the project, the contributions, and who participates; and when contribution requests emphasize funding the project, as a whole, the giver’s contributions should be treated as tax-deductible gifts to the church.
IRS Publication 526 is pretty clear about there being “no significant element of personal pleasure, recreation, or vacation in the travel” in order for a donation to be deductible. This means that most of the days of a mission trip must be essentially filled with activities directly related to the purpose of the mission. This does not mean that an afternoon tour of a museum during a mission trip makes the trip non-deductible. What it means is that the expenses surrounding the museum visit are not deductible. Religious organizations need to be mindful of this and should also be careful to disclose what is and is not deductible.
In some trips, individual will be raising funds toward the cost of their participation in the trip. Since this can be viewed by the IRS as ‘gifts for a specific person’, there are guidelines that should be followed in order for these contributions to be considered tax-deductible. The key points are:
- the donation should not be designated to an individual
- the organization must have complete control over the use of the funds
To support these guidelines, the check, payable to the church, should not indicate an individual’s name. This gives the church complete control over the use of the donated funds and allows the donation to be considered a tax-deductible contribution. Contributions intended for team members who must cancel their participation, who raised more than the needed funds, or who become disqualified for any reason are then redirected to other charitable purposes related to the missions trip or other activities of the ministry.
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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.
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