Designated Gifts

Q: A donor wishes to designate a gift to a pastoral staff member. Can we do that and give the donor a charitable contribution receipt?

A: In order for a charitable contribution to be granted by the church for a contribution received, the contribution must be to, and for the use of, the church. This means that individuals must not personally benefit from a contribution made to the church.

So, for example, if Donor X writes a check to the church designating that the amount should be given to Pastor Y, the church is simply acting as an intermediary for a personal gift (not a donation) from Donor X to Pastor Y.

The IRS would view this no differently than putting money inside a birthday card. As a result, no contribution receipt should be issued to the donor and no income should be recorded for the pastor.

There is an exception to this general rule for “special occasion” gifts. A church may take up an offering for the pastor or church staff on special occasions, such as Christmas, pastor appreciation week, or birthdays, for example. On such “special occasions,” it is best for the church to announce that an offering for this special occasion will be taken and that charitable contribution receipts will be given to donors for this offering.

Under these circumstances, the church may issue a charitable contribution receipt to the donor and the amount of the gift should be added to the taxable compensation (W-2 or 1099-NEC) of the pastor or staff members who receive the special offering.