Donations to Consider at Tax Time

Navigating tax season can be complex for churches, requiring careful consideration of various donation types. We have crafted this comprehensive guide to support church admins, bookkeepers, and pastors in effectively managing donations and ensuring accurate tax reporting. Within this article, you will find a curated list of donation types to consider at tax time, offering valuable insights and practical tips.

Important Notice

Remember, it's always a good idea to consult with a tax professional or accountant to ensure compliance with specific tax laws and regulations applicable to your jurisdiction and organization.

Cash Donations

When it comes to cash donations, meticulous record-keeping is key. As a church admin, you play a vital role in maintaining detailed records of cash contributions, including the date, amount, and donor information. This level of transparency ensures that your financial records are accurate and enables you to provide contribution statements to your generous donors. By doing so, you not only comply with tax regulations but also express gratitude and acknowledge the support of your congregation.

Check and Bank Transfers

Checks and bank transfers are common methods of donating to churches. To effectively manage these contributions, keep a record of each transaction, including the check number or transaction ID, date, amount, and donor information. This allows for smooth tracking and accurate reporting. Be sure to issue contribution statements to donors, highlighting their contributions made through these methods. Your attention to detail and prompt acknowledgment will foster trust and strengthen your relationship with your valued supporters.

Online and Mobile Giving

The advent of digital technology has made online and mobile giving increasingly popular among churchgoers. By leveraging a reliable online giving platform like Tithely, you can streamline the donation process and provide a convenient and secure giving experience. Make sure to keep track of online and mobile donations, providing acknowledgment receipts to your donors. Including these contributions in your year-end contribution statements demonstrates your commitment to embracing modern giving methods and ensures accurate tax reporting for your congregation.

Non-Cash Donations

Non-cash donations encompass a wide range of contributions, including goods and services offered instead of monetary funds. Establishing a system to document and acknowledge these donations properly is crucial. Whether it's donated goods, furniture, vehicles, or professional services provided to the church, maintaining accurate records and providing appropriate documentation to both the donor and the church is essential for tax reporting. Collaborate with a tax professional to determine the fair market value of these non-cash contributions, ensuring compliance and conveying the significance of these generous acts.

Stock Donations

Stock donations provide donors with a tax-efficient way to support your church. Familiarize yourself with the process of receiving stock donations, including the necessary forms and procedures. Collaborating closely with your financial team and consulting a tax professional will ensure you properly handle stock donations, maximizing their tax benefits. Promptly acknowledging stock donations and providing donors with the required documentation fulfills tax reporting requirements and reinforces the value and impact of their contributions.

In-Kind Donations

In-kind donations, such as donated food for events, equipment, or professional services volunteered by church members, directly benefit your community. Establish clear guidelines for accepting and documenting these contributions, considering their fair market value. Express your gratitude and acknowledge the generosity of donors who provide in-kind donations. By doing so, you strengthen community ties and encourage ongoing support.

Recurring Donations and Pledges

Recurring donations and pledges reflect the commitment of your donors to support your church regularly. Implementing a reliable system to track and report these contributions is essential. Provide year-end statements and acknowledgments to your recurring donors, expressing appreciation for their continuous support. Regular communication and updates on the impact of their contributions further reinforce their involvement in your church's mission.

Donor-Advised Funds (DAFs)

Donor-Advised Funds are becoming an increasingly popular vehicle for charitable giving. Familiarize yourself with the process of receiving donations from DAFs, including necessary paperwork and communication with donors and the sponsoring organization. Ensure compliance with any requirements or guidelines set forth by the DAF provider. By facilitating a seamless transfer of funds and providing timely acknowledgments, you strengthen relationships with DAF donors and ensure the effective utilization of their philanthropic intentions.

Crypto Donations

Cryptocurrency donations have gained significant traction in recent years. If your church accepts crypto donations, establish clear protocols to handle these contributions securely and compliantly. Seek guidance from a tax professional to understand the tax reporting requirements associated with crypto donations. Ensure you record the fair market value of the donated crypto at the time of receipt and provide appropriate documentation to donors. 

Interested in accepting crypto donations? See Accepting Cryptocurrency Donations with Engiven

Digital Asset Donations

Apart from cryptocurrencies, digital assets such as digital collectibles (NFTs) and virtual currencies within online platforms can also be donated. Like crypto donations, consult with a tax professional to understand these digital assets' reporting and valuation requirements. Maintain detailed records and provide the necessary documentation to donors. By staying adaptable to emerging donation trends, you can leverage the full potential of digital asset contributions.