You’re probably not thinking about your church’s contribution statements enough.
I know that sounds like a bold declaration for something that feels so minuscule in the grand scheme of church administration and financial reporting, but let me explain.
First, what are church contribution statements?
Sometimes referred to as “giving statements,” a church contribution statement is a written acknowledgement from a church to a donor of donations made during a specific time period. Often itemized by contributions and sent out by a church each year, these statements are used by donors to claim a deduction on their tax returns (or to simply have a record of their contributions).
Required in some cases by the Internal Revenue Service (IRS), church contribution statements are treated by many churches as a financial afterthought, a receipt to be handed out to a donor at the end of the fiscal year.
But, if you let them, church contribution statements can play a more integral role in your church’s donor development strategy.
In this blog, we’ll explore:
- The importance of church contribution statements
- The role of contribution statements in maintaining transparency and expressing gratitude
- Legal obligations and the necessity of contribution statements for donors’ tax purposes
IRS Requirements for Church Contribution Statements
Providing contribution statements isn’t just a service a church provides for their donors. It’s also a matter of law.
According to the IRS, a charitable organization must provide written acknowledgment of a contribution to a donor if:
- The contribution is more than $250; and/or
- Your organization provided $75 or more in goods and services to a donor in exchange for a donation
Though the second point probably won’t apply to your church, it’s highly likely you have several donors who frequently tithe more than $250 at a time. As such, in order for those donors to claim a charitable contribution on their tax return, they have to provide a contribution statement from the organization.
Note: While the IRS requires contribution statements for donors who give more than $250 at a time, it should be noted that many donors expect a written acknowledgment of their gift regardless of how much they gave—especially if they’re giving online.
Additionally, in accordance with federal tax law, church contribution statements must contain specific information to comply with the IRS.
That information includes:
- Name of the organization
- Amount of cash contribution
- Description (but not value) of non-cash contribution
- Statement that no goods or services were provided by the organization (if that is the case)
- Description and good-faith estimate of the value of goods or services (if any) that organization provided in return for the contribution; and
- Statement that goods or services that the organization provided in return for the contribution consisted entirely of intangible religious benefits (if that was the case)
For a more detailed exploration of the IRS’s requirements for church contribution statements, check out their official document on Substantiation and Disclosure Requirements for Charitable Contributions. Also, be sure to consult an accountant or tax advisor to stay up to date on any new or updated federal and state tax laws, as noncompliance can result in fines.
Traditional vs. Automated Church Contribution Statement Generation
At first glance, the IRS’s requirements for contribution statements can appear absolutely daunting. How’s a church supposed to generate that kind of statement (and with all of that detail) for every donor in their church?
It’s a tall order, and one that seems to be primed to overwhelm your church’s finance department (especially in the lead-up to tax season). Thankfully, your church has options when it comes to generating contribution statements, but some of these options are better than others.
Traditional Statement Generation Methods
Prior to the advent of computers, churches had to record donor information and giving history by hand.
This process was arduous, time-consuming, and prone to errors. And even when computers arrived on the scene, inputting all of that information into an Excel spreadsheet wasn’t much of an improvement.
Unfortunately, many churches still take a manual approach to recording donor information and giving history, thus making the process of generating contribution statements far more difficult and time consuming than it needs to be.
Automated Statement Generation Methods
As more and more people shift their finances online (it’s likely the younger members of your congregation have never even used a checkbook and rarely have physical cash on hand), the ability to track an individual donor’s giving history and generate contribution statements is easier than ever.
The benefits of automated contribution statements are manifold, including:
- Accurate and error-free statements
- Can be sent via email
- Less anxiety knowing they’re IRS compliant
- Hours upon hours of time saved
However, perhaps the biggest benefit of automating your church contribution statement process is the time, money, and resources you can reallocate to more pressing areas of your ministry.
How to Create Error-Free, IRS-Compliant Church Contribution Statements
The effective way to automate your church contribution statement process is through a church giving software or platform like Pushpay.
Church giving software already collates giving data by individual in a database, therefore error-free and IRS-compliant contribution statements are a handy byproduct of the work your giving software is already doing.
Pushpay makes this easy by generating giving statements that list all tax-deductible transactions that have been recorded through the platform. The statements will be formatted to meet IRS requirements for charitable contribution receipts.
Your church will be shown as the recipient of contributions on the giving statements, which can be sent digitally to donors via email through Pushpay, or downloaded for printing and mailing.
Church Contribution Statement Example
In the image below, you’ll see an example of an IRS-compliant church contribution statement generated via Pushpay.
Church Giving Statements: More Than a Receipt
Generating and distributing church giving statements doesn’t have to be a bland formality. In fact, it can be a vital aspect of developing donors.
So, instead of viewing church contribution statements as a necessary evil, it’s important to shift your perspective and start viewing giving statements as an opportunity to re-engage with and express gratitude to your donors.
How’s that possible?, you might be thinking. Wouldn’t reminding someone how much they donated to our church cause them to reconsider the amount they give?
These aversions to openly discussing money are common in many churches, and they’re incredibly self-defeating.
For starters, people rarely give to a church begrudgingly. From NGOs to political causes, a donor literally has countless options to which to give their hard-earned money. Amid all of those options, the fact they choose to donate to your church indicates a conscious decision to invest in the ministry of the church.
This acknowledgement should put a smile on your face: they choose your church.
Second, you don’t have to approach church giving statements like handing out a receipt. They can be so much more than that.
For example, while giving statement PDFs generated by Pushpay are standardized (in order to keep them IRS compliant), if you choose to send them with an email, you may include a customizable message. You can use this space to thank your givers, discuss projects or funds from the previous year, or cast vision for the year ahead. You can also link to a video hosted on Youtube or Vimeo.
Or, if you choose to print the giving statement PDFs and mail them, you can opt to include a letter that expresses the same sentiments. In this way, the handoff of contribution statements to your donors can become a seamless opportunity to remind them of the importance of their continued support.
Want to learn more about crafting compelling messages for your end-of-year church giving statements? Check out this infographic that’ll break down every aspect of a successful contribution statement message.
Choosing the Right Church Giving Solution
When choosing a giving solution and management software (ChMS) for your church, it’s vital to ensure it has the ability to automatically generate contribution statements. Not only is it a requirement by the IRS, but contribution statements can be a vital aspect of your church’s strategy to develop donors and express gratitude.
Want to learn more about how Pushpay can help your church track donors, detect giving trends, and generate contribution statements? Connect with our team to get started, and see how we can work for you.
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