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Good Ministry Practices
The Church Treasurer |
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By Rev. Dee Padgett Church Administrator First Church of God, Madisonville, KY |
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The position of church treasurer is one that requires a great deal of diligence and some bookkeeping expertise. Some church by-laws may detail duties of the treasurer to include all bill paying, payroll, deposits, withdrawals, recording of donations and quarterly and yearly taxes. Others may state that the treasurer makes the deposits and signs the checks. However, the individual duties of church treasurer are outlined in your particular church, here are some points to consider.
Bonding: Church treasurers need to be bonded for their protection and the protection of the church. Your church liability insurance may have a clause automatically bonding your local treasurer. If not, there are separate bonding insurance companies. A rule to use is to set the bonding amount to equal one month of income. This amount may be higher if the church has large balances.
Confidentiality: The church treasurer must keep confidences. The amount that individuals give to the church is a private matter. Many pastors prefer not to know who gives and who does not.
Money Counters: The church or treasurer may wish to appoint two individuals to count the offerings. These individuals should be people who are not related or married to the treasurer or pastor. These amounts should be kept in a notebook or other recording device. As stated above, these individuals should also keep any donations confidential. In some churches the offerings are placed in a locked bank bag and put in a night depository. In other churches, the treasurer does not even handle the money. The counters make the bank deposit and give the treasurer a copy of the deposit ticket.
Fire Proof Safe: If monies are kept at the church or taken home with the treasurer, a fire proof safe may be a wise investment to ensure the safety of the money until a deposit is made.
Donations: The accurate recording of donations is vitally important to the church and the givers. If a donor makes separate gifts during a calendar year of less than $250, there is no receipting requirement since each gift is a separate contribution. The donor’s canceled check will provide sufficient substantiation. However, most congregations receipt all gifts with no distinction between the gifts under or over $250. If your congregation is issuing receipts on an annual basis, you should try to get them to your donors by at least January 31 each year and earlier in January if possible. This will assist your donors in gathering the necessary data for tax return preparation (2016 Reporting Procedures for Congregations).
Volunteers may incur out-of-pocket expenses on behalf of your congregation. Substantiation from your congregation is required if a volunteer claims a deduction for unreimbursed expenses of $250 or more. However, the IRS acknowledges that the congregation may be unaware of the details of the expenses or the dates on which they were incurred. Therefore, the congregation must substantiate only the types of services performed by the volunteer which relate to the out-of-pocket expenses (2016 Reporting Procedures for Congregations).
Contributions made directly by a donor to needy individuals are not deductible. To qualify for a charitable deduction, contributions must be made to a congregation or other qualified organization. Contributions to benevolence funds may be claimed as charitable deductions if they are not earmarked for particular recipients (2016 Reporting Procedures for Congregations).
Church registration: A church must be registered with their church governing body. If an individual donating to the church is audited by the IRS and the church is not registered, that contribution may not be allowed as a deduction [unless, of course, a congregation holds its own 501(c)3 registration].
Monthly financial reports: The treasurer should post monthly financial reports. This can be done on a bulletin board, at board meetings, or in a bulletin insert.
Dual signatures may be required for all checks or checks over a certain amount. An internal audit is also a good policy. This can be done at the end of the year with two or three individuals.
Bank statements and financial reports: Another safeguard is to have an individual go over the checks and deposits monthly and match them with the bank statement. Financial documents have been created by treasurers of organizations; however those statements were never matched against the bank statement and fraud and mismanagement occurred.
Filing Quarterly Payroll Tax Forms: Employers must report covered wages paid to their employees by filing Form 941, Employer’s Quarterly Federal Tax Return, with the IRS. Form 941 congregations that withhold income tax and both social security and Medicare taxes must file Form 941 quarterly. There is no requirement to file Form 941 if your congregation has not been required to withhold payroll taxes, even if you have one or more clergy-employees. However, if the only employee is a cleric and voluntary federal income tax has been withheld, your congregation must file Form 941. It is the responsibility of the church to give any employee a W-2 or 1099 tax form at the end of the year depending upon the services rendered (2016 Reporting Procedures for Congregations).
Source: 2016 Reporting Procedures for Congregations: Federal, State, and Other Reporting Made Easy by Dan Busby, Michael Martin, and John Van Drunen (Servant Solutions)
NOTE: This article originally was published in the Kentucky Church of God Ministries newsletter, One Accord, September 2016. Used by permission.
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