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Our goal for this course is to provide you with the backbone techniques and principles to start tracking your church’s financials while keeping them as actionable and succinct as possible. Sign up here and we will send you the entire course through email.
We’re going to discuss how to track your tithes, offerings, and donations to keep your members happy.
Your supporters are the foundation upon which your organization operates and exists. Managing them, stewarding them, and accounting for their gifts within the fund accounting framework requires time and organization. The fact is it is also one of the most unique things about managing the finances of a church that can also be one of the biggest headaches if you aren’t prepared with a good system.
How do you track contributions separate from other income?
Many churches think that all income received is considered tax-deductible, but there are often a number of forms of income that they may receive that shouldn’t show up on the annual contribution statement for donors. If the donor receives goods or services in exchange for the income, such as a stay at a retreat or a meal at an event, then it is important for your accounting system to also note that those transactions or portions of a transaction should not appear on contribution statements as tax-deductible. If your accounting software does not enable you to produce reports for tax-deductible and non-tax deductible income by person, it may be necessary to keep a separate log of your donations in Excel that notes the donor name, date, amount, and purpose of their donation. For those of you who use Aplos, you only have to track a donation once and it will be tracked for your donation and your accounting. Plus, if you use Aplos for receiving tithe online, those are tracked automatically!
What are you required to provide to donors?
Donors who gave contributions of $250 or more must receive a written statement from the church to make a tax deduction. Typically, the church sends this annually by January 31st so donors have time to file their tax returns. That being said, there is value in sending a statement to even your smallest donor to help them know their gift is appreciated.
The contribution statement must include the organization’s name, the contributor’s name, the date(s) of the donation(s), and the amount(s). It must include an explanation about whether the charity provided any goods or services to the donor for the donation. For example, include a statement such as the following: “You did not receive any goods or services in connection with these contributions other than intangible religious benefits”.
While annual is required, many organizations find that actually sending monthly or quarterly statements can boost giving, when they are partnered with dynamic content that really showcases the value of your mission.
Resource: Have more questions about tracking donations? Check out this article of other frequently asked donation receipt questions.
Also a good idea? Saying thank you
Sure, it seems obvious, but even in a church it is important to thank those who help support the mission of your church. Tell the story of the impact you are making together, share your vision for what opportunities are coming, and build trust that you are stewarding your resources well. Want to learn more? Check out our Church Stewardship email course!
Want to see more? Sign up and we will send you the entire course through email. We’ll delve deeper into the subject! We’ll talk on how to set up your chart of accounts, what to manage in your accounting on a day to day basis, and so much more!