LifeSpirit
Chart of Church Funds
www.LifeSpirit.org
Information
for Ministers: Appropriate Church Funds &
Expenditures
A.
FUNDS
1. Exempt Donations or Exempt
Passive Income
Examples:
Gifts: Donations*, Gifts, Grants
Passive
Income:
Dividends, Interest, Royalties & Capital Gains
2. Active Income (sometimes exempt)
Examples:
-
Income from debt-financed property: exempt
to the extent not debt-financed
-
Income from unencumbered realty -
Exempt
-
Funds from church-related activities -
Exempt
-
Unrelated business income - Not
usually Exempt
-
Work performed by Minister or Religious
under Letter of Direction on behalf of Church - Usually exempt
As
a church-related Healing Ministry, service fees are usually exempt.
*
Written receipts for donations over
$75.00
B.
EXPENDITURES
1. Religious Activities (Not taxable
to
minister or church)
Examples: costs of religious
services and observances
(including group meals), flowers, candles, incense for altars,
religious
statuary and images, etc.
2. Charitable Activities (Not
taxable to
minister or church)
Examples: donating funds or things
to needy persons or
to charities
3. Educational & Research
Activities (Not
taxable to minister or church)
Examples: costs of educational
programs, minister’s
continuing education, church library, research equipment, educational
trips,
equipment, materials, expenses, operation of church auxiliaries and
affiliated
organizations (sponsoring education, wellness programs and the like)
4. Minister’s Professional
Expenses (Not
taxable to minister or church)
Examples: office expenses,
ministerial travel &
professional entertainment
5. Parsonage Allowance (Not taxable
to
minister or church)
Examples: mortgage, rent,
utilities, maintenance and
enhancements to parsonage
6. Minister’s Stipend
(May be taxable to minister if
exceeds minimum to file; not taxable to church)
7. Church Administrative Activities & Expenses (Not taxable to minister or church)
Examples: church office location, equipment, utilities;
insurance for church; handling church accounts; overseeing of church
and
retirement funds.
C. EXEMPT ACTIVITIES
Churches
may carry on ordinarily non-exempt "business" activities. If these
"business" activities are church related (such as publication of
religious books and periodicals, or carrying-on a Healing Ministry)
they are
also exempt from federal income taxes.
[Whether
an activity is “church related”
depends on the Church’s expressive association – that is,
what it communicates
about itself – LifeSpirit teaches that a Healing Ministry is part
of the
Mission of the religious NGO and thus, it is so.]
Certain
types of "passive" income of churches are also exempt (this category
includes dividends, interest, royalties and capital gains -- thus
permitting
Churches to accumulate a Patrimony through donation and passive
investment).
Even
income from Church owned real estate can be tax-exempt, to the extent
that the property
is not debt financed.
The
Law favors passive income for exempt organizations. Thus, the primary
strategy
for asset management for charitable purposes is to seek passive income
sources
for the religious organization, while also being aware that related or
business
activities, though not passive like dividends, interest royalties and
capital
gains, can also be exempt.
Such related business activities must contribute substantially to the exempt purposes of the exempt organization.
Activities primarily for members' benefit, or carried on by volunteers are also usually exempt.
08 Jan 2020