Clergy Taxes – Contributions other than Cash or Checks

Many non profits and churches struggle  with how to properly handle contributions of a non- cash nature. It certainly can be a confusing subject.   Here’s the way it stands right now.

How do we (the church or non-profit) handle non-cash contributions?

When a church receives non-cash contributions, such as food supplies, vehicles, stock, etc. the church may provide the donor with a receipt or a letter of thanks.  Just be sure to include the following information in the receipt or letter:

1. Name, address, telephone number of the church, preferably on official church letterhead.

2. Date(s) of contribution(s)

3. Name of the donor, preferably, the way it appears on the individuals tax return.

4. A carefully detailed description of the donated goods.

5. The name and signature of an officer or official representtive of the church.

Special Note*  The church should not get involved in the appraisal business. Do NOT, under any circumstances, declare the value of the donated property in the letter. The donor is responsible for obtaining an appraisal or other evidence of the value of the donated items.

Do we (the church or non-profit) need to record or track volunteer expenses some how?

Volunteer Expenses  for driving for the church, Sunday School teachers’ purchase of materials, members hosting missionaries, etc. are deductible on the individual’s tax return without any statement from the church.  This is for the cost incurred for tangible materials or mileage, not the cost of time or skill valuation.  The individual should prepare and keep their own detailed record of the expenses with any applicable receipts with their tax papers.

The church may provide a thank you letter acknowledging the nature of the volunteer’s expenses, but the donor doesn’t need this letter for their tax filing.

If a doctor or plumber, or anyone donates a service to or for the church or non-profit, can he/she be compensated for the time involved in the service.  How are peoples’ donated time and ability to be recorded or compensated?

Unfortunately these very valuable contributions are not tax-deductible. Volunteers are not allowed a deduction for the value of the labor they provide to the church.  Teachers, Bible study leaders, volunteer secretaries, painters, even professional services from attorneys and accountants all result in no tax deduction.  We’ve had many discussions with professionals who’ve donated considerable time and expertise, such as plumbing that were unable to use that time as a tax deduction. Be sure to advise your donors to keep track of any expenses incurred during the service to the church.  Those expenses are deductible.