In most cases the responsibility of counting and depositing the offerings rests with the Financial Secretary or Stewardship Commission rather than the treasurer. The following are suggestions and may or may not be somewhat different than the process in place at your congregation. We include this section mainly to underscore the importance of having written policies and procedures in place for both the protection of the church and of those individuals involved in counting and depositing offerings.

Generally taxpayers who itemize may deduct contributions of money or property made to charitable organizations. The IRS has special rules on the way recordkeeping and substantiation of donations is to be handled. 

Effective January 1, 2007 the IRS requires that all taxpayers who itemize deductions on their  income tax returns must now substantiate their contributions by a bank record (such as a cancelled check) or written communication from the charity, such as a receipt or letter, for all cash contributions.*   The charity’s acknowledgement must include the name of the charity, the date of the contribution and the amount of the contribution to substantiate deductions for all cash contributions.  A taxpayer who makes a charitable contribution online should be sure to print and retain a receipt of the transaction and not merely rely on the credit card statement.

The requirement that a contribution (cash or property) of $250 or more must be substantiated by a written receipt (as specified below) is unchanged.

Therefore, congregations should acknowledge all cash gifts from identified donors by providing a quarterly or annual statement of giving.  A charity’s statement should  include the name of the charity, the date and the amount of each contribution.   As an additional requirement  for contributions of $250 or more, the statement needs to include a listing of the non-cash property given, (if any)   and a listing of any goods and services provided in exchange for the donation, and a valuation of the same.  If no goods or services were provided, then there should be language to the effect that “No goods or services were provided to you by the church in connections with any contribution.”  The charity’s statement should be issued as soon as possible as the donor must receive the statement before filing their tax return.

Substantiation of single contributions of $250 or more

A single contribution of $250 or more can not be substantiated by a canceled check. Donors will not be allowed a tax deduction for an individual contribution (cash or property) of $250 or more unless they receive a written acknowledgment from the charitable organization that satisfies the following requirements:

• The receipt is in writing
• The receipt shows the name of the congregation or donee
• The receipt identifies the donor by name
• For donations of property, the receipt describes the property but does not state a value of the property
• The receipt shows separately each individual contribution of $250 or more
• The receipt states whether or not the charitable organization provided any goods or services to the donor in exchange for the donation, and if so, the receipt includes an estimate of the value of those goods and services
• If the charitable organization provides no goods or services to the donor in exchange for a contribution, or if the only goods or services the organization provides are "intangible religious benefits," then the receipt must contain a statement to that effect. An appropriate statement would be "No goods or services were provided to you by the church in connection with any contribution, or their value was insignificant or consisted entirely of intangible religious benefits."
• The receipt must be received by the donor on or before the date the donor files a tax return claiming the deduction

"Quid pro quo" contributions of more than $75

A quid pro quo contributions is one that is a payment that is partly a contribution and partly a payment for goods or services received in exchange for the contribution. For every quid pro quo payment the charitable organization receives it must provide a written statement to the donor that satisfies the following conditions:

• The statement informs the donor that the amount of the payment that is tax-deductible is limited to the excess of the contribution over the value of any goods or services provided by the charitable organization
• The statement provides the donor with an estimate of the value of goods or services furnished by the charitable organization.

For further information on substantiation requirements please contact your local Internal Revenue Service office.

In the handling of church income a climate of personal trust is usually assumed in the congregational setting. This is healthy and proper. However, some systems of handling money place individuals in a position in which their honesty can be questioned or in which they may be tempted to sin. Prudent and consistent practices in handling money are needed to maintain a trustful climate.

The following suggestions should not be interpreted as a lack of trust in the financial officers of a congregation. Rather, they offer protection for their reputations. No person with this kind of responsibility should be placed in a position where any suggestion of mishandling of funds must be defended by the word of one person against that of another. This system is intended to provide verification and support of sound practices at every step. This is important for the church as a trustee of "public" funds.

The above principles are applicable to the congregation's auxiliaries and organizations. The Congregation Council is constitutionally responsible for the financial and property matters of the congregation (C12.05). It is preferable for all funds under the direction of the Congregational Council to be in a single checking account and investment program. Congregational auxiliaries and organizations may wish to be included in this system, authorizing disbursement of funds through the congregation treasurer with vouchers for payment.

The financial reports to the Congregation Council and congregation should include all funds, accounts, and investments of the congregation and its auxiliaries and organizations. No information should be withheld.

SPECIAL NOTE: "Dormant" bank accounts should be carefully monitored and preferably closed.

In some areas of its work and mission, the congregation does not follow the same practices as a business might. However, in accounting and handling of income, it is helpful to follow the same standards and safeguards that apply to a good business operation.

Income Handling Principles

Normal handling of funds in the congregation involves several steps. Some general principles:

1. No individual should be required or allowed to handle the congregation's income alone at any time.
   
2. It is preferred that no cash be stored in the church.
   
3. It is preferable for several people to be involved on a rotating basis in handling income.
   
4. All income transactions (receipts and disbursements) should be properly recorded and verifiable.  It is understood that the recording of income/gifts from individuals of the congregation is a confidential matter and such records are only available to the Pastor, Financial Secretary, and the Stewardship Committee when required.
   
5. It is suggested that the pastor should not serve in the position of Treasurer and pastor should not have check signing authority over any church account.

Suggested Steps in Handling Income

1. Immediately following the service, two persons carry the contents of the offering plates to a room for counting or placed in an adequate safe for counting the following day. Church funds/offerings should never be taken to a private home for counting.
   
2. The envelopes are immediately opened by at least two persons. Envelopes are marked as to intent and purpose if for other than undesignated offerings.
   
3. Balances between envelope totals and cash/check totals are reconciled.
   
4. A summary report outlining the various accounts income is to be credited to, is prepared and initialed by at least two persons.
   
5. A deposit slip is prepared and at least two persons bring the deposit directly to the bank.
   
6. A copy of the deposit slip and the summary report are given to the treasurer and to the financial secretary .
   
7. Persons in the above steps should be rotated periodically. It is best if the treasurer and the financial secretary are not personally involved in the above procedure.
   
8. The term of office, served by the treasurer, should be limited to a specific period of time. The successor to the treasurer should not be from persons of the same family nor should this office be rotated between the same individuals serving as financial secretary and treasurer.
   
9. Persons involved in handling income should not be involved in any way in the handling of expenditures.
   
10. Funds collected from other activities (fundraisers, special events, etc.) should be directed to those responsible for recording and making bank deposits of these funds. A copy of the deposit slip and summary report is given to the treasurer and financial secretary.
    
11. Members should be encouraged to make their offering by check, not cash.

   12.  Congregations should send out quarterly giving reports.

Suggested Steps in Handling Expenditures

1. Bills and obligations should be approved for payment. This approval should be indicated in writing by the person responsible. In larger congregations, a purchase/approval form may be used to approve payment and identify the account to be charged. In all cases, expenditures should be supported by original invoices and/or receipts, not photocopies.
   
2. Check is prepared.
   
3. Check is signed by persons authorized under the bank account agreement. Dual signatures are recommended. The pastor should not be an authorized signer.
   
4. Blank checks should never be signed in advance, under any circumstance.
   
5. Check number is written on invoice/support document to prevent duplicate payment, and check is mailed.
   
6. At least three persons should be involved in the above four steps, even in a simple system.
   
7. Savings and/or Investment Accounts - if the Financial Secretary and/or Treasurer is authorized to initiate fund transfers to/from these accounts via telephone, it is suggested that a verification notice (written form) be developed indicating that on a specific date such transfer took place (and for what purpose) and signed by the President of the congregation.  This form to be retained in the files of these accounts.

Bank Reconciliation
Bank statement reconciliation should be prepared by persons other than the treasurer or anyone else having check signing authority. This procedure should be reviewed and initialed by a person other than the treasurer.

Computers
If a computer is being used in your accounting and record keeping system, the software program for financial accounting and check writing should be a double entry program and provide a bank reconciliation program for deposits and withdrawals (cancelled checks).   One of many software programs for you to examine is "Revelations Church Management Software" which provides record keeping programs related to membership, baptism, weddings, contributions, etc.  This software offers a fully integrated, direct link to "QuickBooks", "Quickbooks Pro" and "Quicken" accounting software.  For more information about Revelations, click on  www.inconcmo.com.

Employee Dishonesty Bond
It is recommended that all persons elected or appointed to handle money in the congregation and all its auxiliaries are covered under an employee dishonesty blanket bond.