First United Methodist Church of Ann Arbor (the “Church”) is a part of the Michigan Conference of the United Methodist Church and is exempt from federal and state income tax as a not-for-profit religious organization under Section 501(c)(3) of the Internal Revenue Code pursuant to a group tax exemption ruling issued by the Internal Revenue Service.
Contribution of Cash or Checks
Contributions of cash or checks are deductible by donors as charitable contributions under the current provisions of the Internal Revenue Code. The Church will provide statements of actual contributions for the year for use by individuals in documenting their charitable contributions on their individual income tax returns. Cash gifts are included in statements to the extent the Church is able to identify the donor.
“Designated contributions” are those that are made to the Church for a specified purpose. If the purpose is an approved project or program of the Church, the designation will not affect the deductibility of the contribution. An example is a contribution to a church building fund or mission trip. However, if a donor’s contribution specifies that it be spent on a designated individual, then no deduction ordinarily is allowed unless the Church exercises full administrative control over the donated funds. Designated contributions that ordinarily are not deductible include contributions to a church scholarship fund that are earmarked for a specific individual. However, contributions to a church, mission trip, or missions agency that specify use by or for a particular missionary may be tax-deductible if the church or missions agency exercises full administrative and accounting control over the contributions and ensures that the contributions are spent in furtherance of the church’s mission.
The Church may, from time to time, accept special gifts and/or offerings for a predetermined purpose. Documentation of such gifts will be included on a donor’s statement of annual giving based on the Church’s ability to identify the donor.
Mission Trip Contributions
Contributions for mission trips are made with the understanding that the Church must have full administrative and accounting control over the funds, including all decisions about who will receive a benefit from the gift. In order to be deductible, a mission trip contribution must not designate a specific individual on the check. In addition, the Church will make a reasonable determination as to the portion of any mission trip expenditure that is for purposes other than mission work, e.g., sight-seeing or other recreational or pleasure activities. If a trip is not substantially devoted to mission activities (as determined by the Church), contributions for it and expenses incurred in connection with it are generally not deductible.
Contribution of Services
The value of services rendered to charitable institutions such as the Church is not deductible under current tax laws. Unreimbursed expenses in rendering services to the Church may be deductible. Transportation or other travel expenses (including meals and lodging) in performing services away from home on behalf of the Church are deductible if there is no significant element of personal pleasure, recreation, or vacation. Expenses incurred in connection with attendance at a church conference, convention or similar event are generally deductible only if the individual attends as the Church’s designated representative. Such expenses are not deductible if the individual attends simply as a member of the Church. When an individual pays for expenses directly, the individual is responsible for maintaining records pertaining to such expenses.
Receipt of Goods or Services by the Donor
Purchase of goods and services, including tickets to Church events or programs, usually presumes payment of an amount representing the actual value of such goods or services. In such cases, the burden is on the tax payer to show that the amount paid is not the actual value or that the payment exceeds the fair market value of the admission, in which case only the difference (i.e., the difference between the value of the item purchased and the amount paid) can be deducted. Sponsoring church groups may determine a fair value for their event, goods or services, and provide that information on the ticket or receipt. In that situation, the donor is responsible for maintaining records related to any deduction he or she may claim.
Contribution of Property
The Church may accept gifts of property after approval by the Church. In the case of such gifts, it is the donor’s responsibility to determine and document the appraised value of the contribution to support any tax deduction. The Church will provide documentation acknowledging acceptance of the gift, date of ownership transfer and description of the contributed property. The Church is not permitted to determine estimated value of property gifts.
Contribution of the Use of Property
Permitting the Church to use property generally is not a charitable contribution eligible for a tax deduction. However, the Church may determine to accept the use of property in such cases where the donor understands that no tax deduction is permitted.
The Church reserves the right to refuse to accept contributions that are not qualified for tax purposes or that are not related to the primary purpose of the Church or not in the Church’s best interest.
The purpose of this Policy is to provide donors with guidance as to general rules governing the tax treatment of their contributions to the Church. The Policy is not intended to constitute tax or legal advice. Contributors should rely on their own tax and legal advisors to answer specific questions they may have concerning the tax treatment of their contributions.
Approved by: Finance Committee
May 15, 2017