Tripped Up

It’s an all-too-familiar scenario: A person wants to participate in an upcoming short-term missions trip and asks the church for the financial support they need in order to go. Donors from the church respond with a heartfelt desire to support the cause and the individual.

The question is, Can someone make a gift to support an individual going on a short-term missions trip?

It depends, says Dan Busby, president of the Evangelical Council for Financial Accountability.

A gift restricted for a particular missions trip generally qualifies for a tax deduction; it’s no different than a gift restricted for the building fund, he says. The challenge comes when a gift for a missions trip is identified with a specific individual. If the donor only expresses a preference or desire that the gift be used to fund a certain individual, the sponsoring church generally has sufficient discretion and control over the gift to qualify it for a tax deduction. “However, a gift that is restricted for an individual generally doesn’t provide sufficient discretion and control to the church and does not qualify for a charitable gift deduction or a charitable gift receipt,” Busby says.

How problematic is a church’s lack of discretion and control over a missions trip-related gift? Consider this: Sally and Johnny both need to raise $1,000 for the same trip. Sally raises $1,100 through restricted gifts, while Johnny raises only $900. The church cannot take the extra $100 from Sally’s collections to cover Johnny’s shortfall, Busby says, because the nondeductible gifts are restricted for Sally and Johnny, respectively. However, if Sally raises $1,100 and Johnny raises $900 for the missions trip, but the gifts are only preferenced for Sally or Johnny, the church generally has sufficient discretion and control over the funds to use the money to cover the expenses of both trip participants. Moreover, the gifts qualify for charitable deductions.

Busby says the question of restricted gifts arises more frequently as church leaders look to individuals to come up with the money for domestic and international short-term missions trips as a way to avoid sapping budget resources.

So how can churches still encourage individuals to raise money? Busby, author of Donor-Restricted Gifts Simplified, suggests the following:

Support letters sent out to the congregation should explicitly say that any gifts will go toward the missions trip, and that the church maintains full discretion over how those funds are used for the trip. This establishes the trip’s connection to the church’s charitable purpose, and lets the donor know the church controls how the money will be used.
The response coupon included with the letter should repeat the same information..
If a donor insists on helping a specific individual, the donor needs to indicate the money is for the trip first and foremost, with a preference that it be used on behalf of that individual, if possible.