Understanding The Gifts We Receive
In a congregation we are likely to receive two kinds of gifts: restricted (designated) and unrestricted (undesignated). We need to understand the difference and faithfully honor the intent of the giver. This is not simply our moral and ethical duty – it is a legal obligation that has serious consequences if we fail to do so.
Gifts without donor restrictions: Every dollar given to a church creates an obligation for the church to use that dollar for the uses intended, implied, or legally restricted by the donor. At the most basic level, for the regular offerings collected by the church, there is an obligation to faithfully steward gifts so that they can do ministry. These gifts, with no donor restrictions other than that they be used for ministry, typically comprise the majority of a congregation’s resources.
Gifts with donor restrictions regarding the purpose or holding period of the gift: Most congregations also raise funds for specific purposes, whether that be a Week of Compassion offering, a capital campaign , or donations for a youth mission trip. Congregations should take care to ensure that money raised for a named purpose is used entirely for that purpose. If the Week of Compassion offering is larger than in past years, a congregation may not take some of the ‘excess’ to meet another budgeted need. If the money is raised to install an elevator in the church, the congregation should not use those funds for other purposes if it fails to raise enough funds or later decides not to complete the intended project. In the case of specific capital projects, where there is reasonable doubt about raising all the funding needed to complete the intended projects, a congregation may be well advised to articulate contingency plans as a part of the capital campaign (If we fail to raise the required $x for the installation of an elevator, the Trustees will commit any funds raised to installing a simple lift to help congregants get from the entry lobby up to the sanctuary level.)
Gifts with donor restrictions may be formally stated in a legal gift document. A congregation and the donor may jointly decide to modify such a document, but congregations should take care to be sure that the donor is in full agreement with any revisions. When these gifts are testamentary, they should be used for other purposes only the approval of your state’s Attorney General.
Gifts with donor restrictions may arise simply from a donor’s response to a congregation’s solicitation materials. If circumstances prevent a congregation from using the gifts for the intended purpose, a congregation would be wise to consider their legal obligation to return those gifts to their donors.
Gifts with donor restrictions regarding the permanent nature of the gift: Many congregations have been blessed by endowment gifts, often received at a member’s death, that bless the church. Testamentary gifts can be given with no restrictions “I give 10% of my residual estate to First Christian Church of Sunny Town, Florida.” Testamentary gifts can also be given to be restricted as a permanent endowment, but used for unrestricted purposes “I give $100,000 to my congregation, First Christian Church, the annual income from which may be used for any purpose determined by the congregation.” Gifts may also be restricted by the donor for both “time and purpose” – such as a gift that state “To First Christian Church, the residual of my estate, to create an endowment that will provide income to be used for building maintenance needs of the congregation.” As you can see, the way that donors articulate their gifts varies widely. It is always a good practice to request a copy of the actual bequest language and to seek help in understanding whether the language used creates any restrictions on the gift.
Gifts restricted by congregation policy: Many congregations have well-thought-out policies that state how testamentary gifts received by the congregation will be used. These policies generally serve to encourage testamentary gifts by giving prospective donors assurance as to how potential gifts will be used to expand a congregation’s ministries. Congregational policies, whether drafted in the congregation’s bylaws or written in approved policy documents, never override or limit any restrictions put in place by the donor.
Resources: For Disciple congregations, the Christian Church Foundation is a valuable resource to help create or review permanent fund policies, as well as to understand restrictions that may be created by testamentary gifts. The Foundation offers, at no additional cost, to maintain important donor documents when those endowment gifts are invested through the Foundation’s investment funds.
Our thanks to Ruth Weaver, Senior Vice-President of the Christian Church Foundation, for her contributions to this article.