This document provides a guidebook for church financial matters. It covers receiving donations properly, disbursing funds appropriately to support ministry and missions, and complying with tax regulations. Key aspects include establishing internal controls, designating housing allowances for ministers tax-efficiently, and reimbursing employee expenses accountably. The goal is to manage church resources faithfully as stewards of God's money.

1. Church
Financial
Guidebook
Resources for Ministers, Church
Treasurers, Financial Secretaries
and Church Financial Committees

2. Presenters Information
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3. CHURCH FINANCIAL GUIDEBOOK
This presentation is intended to provide church
leaders and staff with timely and accurate
information about the subjects covered. However,
such information is not intended to be sufficient for
dealing with a particular legal or financial problem,
and the authors and distributors do not warrant or
represent its suitability for such purpose. The
reader should not rely upon this presentation as a
substitute for the services of competent legal,
accounting, or other professional advice.

4. But everything must
be done decently and
in ORDER.
I Corinthians 14:40, HCSB

5. 2014 Tax Updates
• 2014 Standard Mileage Rate- .56
• 2014 Charitable Mileage Rate- .235
• Housing Allowance Exemption
Challenged in Court
• ACA Healthcare Exchanges

6. Church Financial Guidebook
• O – Overview
• R – Receipts
• D – Disbursements
• E – Ethics: Safeguarding Church
Assets
• R – Reports: Accounting & Record
Keeping

7. OVERVIEW

8. DEVELOPING A BIBLICAL
CONCEPT OF MONEY:
"(c) www.Kluth.org used by permission

9.  Whose money is it? (Ps. 50:10)
GOD’s
 What is our individual role?- (I Cor. 4:2)
We are GOD’s trusted managers
(stewards)
 We are to return a portion to GOD’s
organized family – Church (Mal. 3:10)
DEVELOPING A BIBLICAL
CONCEPT OF MONEY:

10. • Stewards of Kingdom Promise
• Stewards of Kingdom Power
• Stewards of Kingdom Progress
• Stewards of Kingdom Process
CONDUCTING AN ANNUAL
STEWARDSHIP EMPHASIS
IMPACT

11. • Qualifications
• Responsibilities
• Length of Service
Prayerfully
SELECTING A CHURCH
TREASURER

12. • Committed Christian
• Dedicated to the ministry of the church (Tither)
• Cordial & Fair Minded
• Knowledgeable regarding the work of the church
• Elected leader
• Person of Integrity & Character
• Fair and Trustworthy
• Accounting knowledge or Willingness to Learn
QUALIFICATIONS

13. RESPONSIBILITIES:
Principle Function
Receiving Disbursing
Accounting Safeguarding
The treasurer is responsible for the proper
of the resources that have been entrusted
to the church

14. 1. Long terms of service may provide stability
& continuity
2. Church should decide
3. Possible annual election or reaffirmation
4. Guided by Constitution & Bylaw’s
RESPONSIBILITIES:
Length of Service

15.  Exempts the church from paying federal
income tax
 Allows the church to receive tax-deductible
contributions
 Sales & Use Tax – State Issue
 Property Tax Exemption – State Issue
UNDERSTANDING 501(c)(3)
Tax Exempt Status:

16. OBTAINING 501(c)(3) STATUS:
Exemption Types
Automatic Individual Group

17. See IRS Publication 1828
 No Contributions to Political Parties
 No Public Endorsement for/or against
Specific Candidates
 No Biased Voter Guides
 No Campaign Activities by Employees
within the Context of their Employment
RECOGNIZING IRS PROHIBITIONS
On Political Activity:

19. RECEIPTS

20. • GIVING  RECEIVING  COUNTING
• CHARITABLE CONTRIBUTIONS
• IDENTIFYING UNRELATED
BUSINESS INCOME (UBI)
• WORKING WITH LIFEWAY
• GIVING ELECTRONICALLY
• ENCOURAGING PLANNED GIVING
RECEIPTS

21. “. . . it is more blessed to give than to
receive” – Acts 20:35b
1. Individuals
2. Groups
3. Churches
4. Businesses
5. Others (Fundraisers, banquets, etc)
GIVING THE MONEY:
Sources

22. GIVING THE MONEY:
Channels
"(c) www.Kluth.org used by permission

23. • Worship Services
• Sunday School
• Small Groups
• Mail - Postal Service
• Online - Electronic
• Special Gifts/Bequests
• In Kind Gifts -Non Cash
• Purchase Income
GIVING THE MONEY:
Channels

24. • Implement Safe & Secure
Procedures for immediate deposit
(Secure Counting Room)
• Ensure Separation of Duties
• Never require Treasurer to count
and deposit money
• Enlist Counting Team (Committee)
RECEIVING THE MONEY:

25. RECEIVING THE MONEY:
"(c) www.Kluth.org used by permission

26. • Comply with IRS Guidelines
• Encourage stewardship by providing
giving statements
• Give contribution credit
appropriately – “Church Control”
• Manage benevolence requests/gifts
properly
CHARITABLE CONTRIBUTIONS:
Guiding Principles

27. 1. Is it a trade or business?
2. Is it regularly carried on
(Frequent and Continuous)?
3. Is it substantially related to
furthering the organization’s
exempt purpose
IDENTIFYING
Unrelated Business Income (UBI)
QUESTIONS TO ASK

28. 1. Most of work performed by
VOLUNTEERS
2. Activity is carried on for
CONVENIENCE of members
3. Activity consists of selling
DONATED MERCHANDISE
IDENTIFYING
Unrelated Business Income (UBI)
ACTIVITIES NOT CONSIDERED
TO BE UBI

29. 1.Customizable offering
envelopes
2.E-Giving
3.Contribution Statements
4.Special Fundraising/Major Gift
Development
5.Planned Giving/Estate Tithing
WORKING WITH
LifeWay Envelope Services

30. • Electronic Giving continues to increase
• Church Considerations:
– Fully evaluate administrative and
processing costs
– Urge members to use Electronic Bill Pay
– Potential increase in e-giving
– Systematic/Consistent option for donors
ELECTRONIC GIVING:
Considerations

31. 1.Single Largest Act of Whole Life
Stewardship
2.Partnering Together for the
Sake of the Lost
3.Giving is a Reflection of our
True Love and Loyalty
4.Leaving an Eternal Legacy
ENCOURAGING
Planned Giving/Estate Tithing

32. ENCOURAGING
Planned Giving/Estate Tithing
Resources to Remember
FAMILY FAITH

34. DISBURSEMENTS

35. • SUPPORTING MISSIONS &
MINISTRY
• EBRACING THE COOPERATIVE
PROGRAM VISION IN THE CHURCH
• DISBURSING CHURCH FUNDS
• MANAGING DESIGNATED FUNDS
DISBURSEMENTS

36. “. . each of us will give an account of
himself to God” – Rom. 14:12b
• Obligations of church should be
paid promptly
• Plan ahead for financial challenges
(Financial Contingency Plans)
• Final responsibility and authority
for disbursements belongs to the
church
SUPPORTING MISSIONS &
MINISTRY: General Funds

37. “Share with the saints in their
needs. . .” – Rom 12:13a
• Send mission gifts on a timely
basis
• Prayerfully consider church %
giving to Cooperative Program and
to local Baptist association
• Carefully budget planned mission
support
SUPPORTING MISSIONS &
MINISTRY: CP & Assoc. Miss.

38. • www.stewardshipdirect.com
Stewardship Development
Association
“equipping churches to address
Biblical stewardship”
EMBRACING THE VISION :
Resources

39. • www.stewardshipdirect.com
• www.cpmissions.net
Southern Baptist: Cooperative
Program Missions Resources
EMBRACING THE VISION :
Resources

40. • www.stewardshipdirect.com
• www.cpmissions.net
• www.actsone8.com
Resources on becoming a
worldwide mission center
EMBRACING THE VISION :
Resources

41. • www.stewardshipdirect.com
• www.cpmissions.net
• www.actsone8.com
• www.sbc.net
EMBRACING THE VISION :
Resources
Official website:
Southern Baptist
Convention

42. • Petty Cash
– Minimal amounts
– Emergency payments
• Check Payments
– Majority of disbursements
– Require 2 signatures
– Ensure adequate documentation
DISBURSING CHURCH FUNDS

43. 1. Establish a written policy for creating
a new fund
2. Clearly defined Purpose, Governance,
Disbursement, & Accountability
Procedures
3. Inform members of the policy
4. Keep a list of contributors
MANAGING DESIGNATED
FUNDS: Establishing

44. MANAGING DESIGNATED
FUNDS: Samples in Guidebook
Benevolence
Love
Offering
Building &
Grounds
Ministry
Memorial
Missions

46. DISBURSEMENTS:
COMPENSATING CHURCH
WORKERS

47. • WORKING WITH PERSONNEL
COMMITTEE
• MAXIMIZING TAX BENEFITS FOR
MINISTERS
• HIRING CONSIDERATIONS
• REPORTING REQUIREMENTS
• WORKING WITH GUIDESTONE
COMPENSATING CHURCH
WORKERS

48. Provide following information:
1. Current staff compensation
2. Breakdown of compensation
3. Budgeted amount available for
staff compensation
WORKING WITH
Personnel Committee
“. . . the laborer is worth of his wages”
– I Timothy 5:18b

49. Identify Ministerial/Support Staff
non-salary compensation:
1. Housing Allowance (ministers)
2. Non-Taxable Fringe Benefits
3. Accountable Reimbursement
Plans
WORKING WITH
Personnel Committee

50. MAXIMIZING TAX BENEFITS:
Housing Allowance
"(c) www.Kluth.org used by permission

51. Ministerial Classification Guidelines:
1.Ordained, Licensed or Commissioned
(Required)
2.Administers the ordinances
3.Conducts religious worship
4.Management responsibilities in
local church
5.Considered a religious leader
MAXIMIZING TAX BENEFITS:
Housing Allowance
B
A
L
A
N
C
I
N
G
T
E
S
T

52. Steps to Designate Allowance:
1. Adopt Initial Procedure (One time only)
2. Receive Written Request of amount
from minister (annually)
3. Provide Written Response to minister
designating amount of housing
4. Approve in Advance of payment
MAXIMIZING TAX BENEFITS:
Housing Allowance

53. • Federal judge rules Nov
2013 that Ministerial
Housing Allowance exclusion
is unconstitutional
• Decision NOT Final . . . .
Story developing . . . .
MAXIMIZING TAX BENEFITS:
Housing Allowance

54. 2014 TAX REMINDER
• Over the Counter medications require
a written prescription
• Penalty tax up to 20% on improper
distributions
• For 2014, Flexible Spending Accounts
(FSA) limited continued at $2,500
per year
HEALTH CARE REFORM:
Medical Reimbursement Accounts

55. IRS Requirements:
1. Involves a ministry
connection
2. Requires employee to
substantiate expenses
MAXIMIZING TAX BENEFITS:
Accountable Reimbursement Plan

56. IRS Requirements:
1. Involves a ministry connection
2. Requires employee to substantiate
expenses
3. Requires employee to return any excess
• Expenses substantiated within 60 days
• Excess reimbursement returned within
120 days
MAXIMIZING TAX BENEFITS:
Accountable Reimbursement Plan

57. 2014 TAX UPDATE
• For 2014 the IRS has announced the
following: (effective Jan 1, 2014)
– 56 cents per mile for business/ministry
miles driven (Reduced from 2013)
– 23.5 cents per mile driven for medical or
moving purposes (Reduced from 2013)
– 14 cents per mile driven in service of
charitable organizations
MAXIMIZING TAX BENEFITS:
Standard Mileage Rate

58. WHEN
WHAT
WHERE
WHY
WHO
Itemized Amount
Time/Date
Place/Location
Ministry Purpose
Ministry
Relationships
MAXIMIZING TAX BENEFITS:
Accountable Reimbursement Plan

59. 2014 TAX REMINDER
• Provided for Substantial Business/
Ministry Reasons
• NOT Provided for merely
Compensatory Reasons
• Actual Amount of the Expense is
Substantiated
MAXIMIZING TAX BENEFITS:
Cell Phone – NOT Taxable IF. .

60. MAXIMIZING TAX BENEFITS:
SBC Annual Compensation Study
"(c) www.Kluth.org used by permission

61. • Assist churches in objectively
compensating their staff
• Unique to Southern Baptists
• Free comparison reports
• Reports are available on Internet
• Updated every two years
• compstudy.lifeway.com
MAXIMIZING TAX BENEFITS:
SBC Annual Compensation Study

62. • I-9 Form: Employment Eligibility Verification
• W-4 Form: Employee’s Withholding
Allowance Certificate
• W-5 Form: Earned Income Credit
• State Income Tax Withholding Form
• Mandatory New Hire Reporting Form
• Social Security Number
• Unemployment & Workers Compensation
• Employee Federal Tax Reporting:
Forms W-2, W-3, 941 or 944
HIRING CONSIDERATIONS:
For New Employees

63. TAX REMINDER
• Must use Electronic Funds Transfer
• Subject to a 10% Penalty for failure-
to-deposit
• Total Quarterly Tax Liability < $2,500
– File with Quarterly Form 941
• May use Annual Form 944 if notified
by the IRS
• See IRS Publication 15, Circular E
COMPLYING WITH FEDERAL
Tax Deposit Requirements

64. 2014 TAX UPDATE
• Tax rate applies to the first $117,000
of salary for 2014
• Consider updating taxwitholding
and/or quarterly estimated payments
COMPLYING WITH FEDERAL
Payroll Tax Extended

65. 2014 TAX REMINDER
• Less than 250 W-2’s - OPTIONAL
• Over 250 W-2’s – REQUIRED 2014
– Report Cost of Employer Provided Health
Care Costs
– Reported ON W-2, Box 12, using Code
DD
– Informational ONLY
– NOT Taxable
COMPLYING WITH FEDERAL
W-2 HealthCare Reporting Rules

66. TAX REMINDER
• Expanded 1099 Reporting Rules
REPEALED during 2011
• Continue to issue 1099 for payments
to vendors of $600 or more
COMPLYING WITH FEDERAL
1099 Reporting Rules

67. • Retirement Services
• Investment Services
• Life, Accident & Disability Insurance
Services
• Medical & Dental Insurance Services
• Property & Casualty Insurance Services
• Mission Dignity
• www.guidestone.org
WORKING WITH:
GuideStone Financial Resources

69. ETHICS:
SAFEGUARDING CHURCH
ASSETS

70. • ETHICS OVERVIEW
• DEVELOPING AN EXAMINATION
PROCESS
• INTERNAL CONTROLS
• SUGGESTED POLICIES &
PROCEDURES
• CHURCH FINANCIAL MODELS
• RECORD RETENTION
ETHICS:
Safeguarding Church Assets

71. • Obtain written statement of law
• Notify proper church committee
• Present law/guidance to staff or
church
• Consider resignation if not properly
handled
ETHICS OVERVIEW
“For we are making provision for what is
honorable . . .” – II Cor. 8:21a

72. Every church should have some type of
__financial exam completed annually .
 Ensures policies and procedures are
being followed
 Increases confidence in accounting
system
 Assures members their gifts are being
used efficiently and effectively
 Protects integrity of financial leadership
DEVELOPING A CHURCH:
Financial Examination Process

73. EXTERNAL Financial Examination:
 Full Financial AUDIT
 Financial REVIEW
 Financial COMPILATION
 Agreed-upon Procedures
DEVELOPING A CHURCH:
Financial Examination Process

74. INTERNAL Financial Examination:
Committee Selection :
 Active Church Members
 Duly elected by the church
 Independent from other financial duties
 Possess integrity and financial knowledge
 Give complete and open access
 Give clear task assignment
DEVELOPING A CHURCH:
Financial Examination Process

75. CHURCH FINANCIAL
Controls
• Internal Controls
• Separation of Duties
• Suggested Financial Policies
and Procedures
• Church Financial
Organizational Models

76. • Varies by Church
• Varies by Record
• General Guidelines
RECORD RETENTION

78. REPORTS:
ACCOUNTING &
RECORD KEEPING

79. • WORKING WITH BUDGET
COMMITTEE
• REPORTING TO STAKEHOLDERS
• KEEPING FINANCIAL RECORDS
• DOING IT RIGHT
REPORTS:
Accounting & Record keeping

80. WORKING WITH
Budget Committee
"(c) www.Kluth.org used by permission
"(c) www.Kluth.org used by permission

81. “You must have accurate and honest weights
and measures - Deut. 5:15a
1. Seek spiritual direction
2. Consult with church leaders
– Budget Preparation
WORKING WITH
Budget Committee

82. “You must have accurate and honest weights
and measures - Deut. 5:15a
1. Seek spiritual direction
2. Consult with church leaders
3. Build congregational acceptance
– Budget Presentation
WORKING WITH
Budget Committee

83. “You must have accurate and honest weights
and measures - Deut. 5:15a
1. Seek spiritual direction
2. Consult with church leaders
3. Build congregational acceptance
4. Encourage personal commitment
WORKING WITH
Budget Committee

84. “You must have accurate and honest weights
and measures - Deut. 5:15a
•Develop your church budget based on a
biblical strategy to get your church from
your
ENCOURAGE PERSONAL
Commitment
•Leave room for God to do something
miraculous in the hearts of your people
MISSION VISION

85. 1. Congregation
2. Community
3. Denomination
4. Government
5. Other Donors
REPORTING TO
Stakeholders

86. • Annie Armstrong Easter Offering
• Lottie Moon Christmas Offering
• Individual State Missions Offerings
• Associational Missions Offerings
• Church Building Fund, etc.
KEEPING FINANCIAL RECORDS:
Designated Mission Offerings

87. “. . . whatever you do, do everything for
God’s glory - I Cor. 10:31b
• Keep accurate and detailed records
• Follow established church guidelines
• Maintain Bonding insurance
• Accountability involves EVERYONE!
DOING IT RIGHT:
Accuracy & Accountability

88. The Church Financial Guidebook and
this presentation are provided for
you through the cooperative work of
your Baptist State Convention and
the Stewardship Development
Association
www.stewardshipdirect.com

89. Church
Financial
Guidebook
Resources for Ministers, Church
Treasurers, Financial Secretaries
and Church Financial Committees