Designated Missionary Support

Posted on Wednesday, September 23, 2015

It is common for churches and other nonprofits to raise funds to support missionaries and their work. 

Normally, contributions restricted for the benefit of a specific individual given to a nonprofit organization are not deductible to the donor as a charitable contribution. 

The IRS has released guidelines that allow contributions designated for missionary work of specific individuals to be deductible as a charitable contribution if the nonprofit organization can show it retains control over the funds.  The IRS has provided certain criteria to be considered in determining control, such as the following:

-        The organization sets salaries by a schedule approved by the governing body and without consideration of the amount of money the individual collects.  For example, an individual’s salary is $30,000 but since the nonprofit only collected $20,000 in support, the nonprofit must still pay the individual $30,000.

-        The organization does not commit specific contributions to be paid as salary to a particular person.

-        The organization, trains, develops and supervises staff to ensure they fulfill its exempt purpose.

-        The organization’s governing body uses a budgetary process to control the donated funds.

The IRS has also ruled in the past that missionaries must provide detailed records of their expenses to the nonprofit, in order for the funds to be considered under the control of the organization.

Payments made directly to missionaries (as opposed to a nonprofit organization or church) are not deductible as charitable contributions. 

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

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