Faith-Based Accounting

Picking up speed...

Because of our involvement in fraud prevention we make it a point to keep up with the latest news by periodically searching the web for news stories.  It seems like the pace of fraud occurrence is quickening.  Take a look here, (LINK) and here, (LINK) and here. (LINK)  PSK is not involved in any of these situations so I have no idea about anyone’s guilt, innocence or the ultimate outcome of the cases.  But, I am sure of one thing; no church or ministry wants to make these types of headlines.

To avoid this kind of publicity we have been urging, almost pleading with churches to take this situation seriously.  A "clear and present danger" exists and every church should immediately perform an analysis of their current management structures to determine their vulnerabilities to fraud.

This does not have to be complicated.  For example, a great start would be to simply hold a brainstorming session with key employees and volunteers. The meeting agenda could be organized around a few key questions.  For example you could start with the revenue streams of your church:

What are our church's different sources of revenues? (Offerings, counseling fees, tuition, fund-raising events, etc.)

Do we have processes in place to effectively and safely account for ALL sources of revenues?

Who is involved in the money collecting, counting, recording, and depositing processes?

Reason for Benevolence Policy - Don't Fall for Scam

So a chaplain at the University of Dallas wanted to be kind and reach out to someone who seemed needy.  And now the Chapel at the University is $100,000 poorer!  See the article in the Dallas Morning News -http://www.dallasnews.com/sharedcontent/dws/dn/education/stories/021709dnmetchaplain.36f29b2.html

Your church needs to have a clearly written benevolence policy - AND it needs to be followed!  The policy should address questions like -

• To whom will your church offer assistance?
• For what reasons?
• How much?
• How many times?

By the way, you cannot offer assistance to anyone on staff or their relatives.  By law, that is taxable income that MUST be reported to the IRS!

So take care!  If you don't have a formal benevolence policy, give us a call - we'll provide help and a policy template.

Your Mission Trips and Homeland Security

Last week, we had a presentation here at PSK on this topic!  Homeland Security and the Patriot Act are musts when thinking about your church's Mission Trips.

Steve Tiemann was our speaker.  He is an attorney who has lots of experience both as a lawyer and as a church member in this area. www.swtlaw.net.

Main points -

• Know the guidelines.  The US Treasury has issued Anti-Terrorist Financing Guidelines.  Boring but an essential 16 page document to be aware of.  Check out http://www.ustreas.gov/press/releases/0929%20finalrevised.pdf. 
• Know who you're dealing with.  In the foreign country, have intimate knowledge about the organizations and/or individuals you're sending money to.  You can check out the Terrorist Exclusion List (TEL) at the US Dept of State's website - http://www.state.gov/s/ct/rls/fs/2004/32678.htm.
• Know that the US Gov't is serious.  Federal law doesn't allow you to use the excuse: I didn't know!  If your church or organization inadvertently supports terrorists or terrorist organizations, you're guilty! 

Out-of-Pocket Expenses as Contributions!

Are you looking for additional charitable contributions for your tax return?  You - and so many other church members - very well might find a small bonanza here!

According to federal law, any un-reimbursed out-of-pocket expenses incurred while performing donated services may constitute a charitable contribution. The value of your donated labor or services is not deductible, BUT any un-reimbursed out-of-pocket expenses incurred while performing such donated services may constitute a charitable contribution for federal income tax purposes!

Examples of un-reimbursed out-of-pocket expenses that would relate to members who provide ministry services at your church are: 

• Purchase of literature for religious education classes 
• Building materials for repairing church facilities 
• Transportation and travel expenses for mission trips, youth activities, chaperoning retreats, etc.

If un-reimbursed out-of-pocket expenses amount to more than $250, the church must issue an acknowledgement letter to the volunteer.

Also, Tax regulations stipulate that you “can claim a charitable deduction for travel expenses, necessarily incurred while away from home, performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in such travel. This applies whether the service provider pays the expenses directly or indirectly (i.e. through the church).”  The purpose of this more restrictive rule is to deny a tax deduction to persons who perform only nominal services for the benefit of the church while traveling or who are not required to render services for significant portions of a trip.

Email PSK if you want more info, or if you have other questions along this line.