Donations

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Pinga

Room for All
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Hi folks. This isn't just uccan, but, it is relating to church and canadian rules.

How does your church process the following.

1. Committee or team has a budget line say church school craft items.
2. Individual says, "i can pick it up" . They do.
3. They submit appropriate paperwork, including receipt, and theoretically the account to be charged.
4. They advise that they don't need reimbursement, but, would appreciate it being considered a donation.


how would this be processed in your church.
What kind of a donation would it be considered.
 

BetteTheRed

Resident Heretic
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3 and 4 should not be associated, according to our treasurer. And we, and our processes, are audited.

If you submit for reimbursement, you are issued a cheque, and it is your business whether you add it to your offerings.
 

Pinga

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@BetteTheRed -- thanks. years ago I remember being able to sign the cheque back to the church, ie not cash it.

Have you ever heard of anyone considering such an item a "gift in kind"? and recording it as same?
 

GordW

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What Bette describes is in fact the cleanest way to do it. In our congregation people wanting to donate the cost simply sign the back of the cheque and it gets put in the next deposit (which I suppose means in clearing the money leaves and then re=enters the church account?) Or some people simply give the item and not get a receipt for it.

It ha taken a fai bit of retraining to get people used to this process.
 

Pinga

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Interesting, I hadn't thought of the ability to sign the back of the church. Makes absolute sense, as that would ensure it cleared the account, but, reduce the delay. Smart move!
 

Pinga

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So, I contacted CRA's line for Gifting & Receipting after reading thoroughly the information on this link: Gifting and receipting - Canada.ca

I was brilliantly pleased with the response & information. I don't know if I hit a great agent, or if this is the norm there, but, wow.

Here is the summary.
1. If someone chooses to go out & buy something and donate it to the church, that is a gift in kind.
Examples of such an item are, I saw these great books and thought they were good for the nursery. I saw peanut butter on sale and bought a case for the pantry. i decided that we needed a new printer for the church school, so went and bought it. I have this printer that I bought a year ago, and it is better than the one the church is using.
For these items, a donation receipt can be given for the value; however, GST/HST are NOT part of that donation amount. The value of the item is not necessarily the value paid at purchase. Caution must be taken in valuaiton
2. If someone is directed to buy something, acting as an agent of the church, then, the item is an expense of the church. As such, it is not a gift in kind, and should be expensed. The reimbursement, as Bette pointed out, would go through channels. (interesting point re signing the cheque back)
3. The language of "service" is old language as is tangible assets, as one might be led down a rabbit hole with things like purchases of software-as-a-service such as constant contact. Some individuals see this as "service". They, for the purpose of process are like the purchase of a safe or any other property, and should be treated as such. Service is truly the lawyer offering to help on an item for a tax donation, or the plumber offering to do work for a tax donation. These must be invoiced by the individual, and follow appropriate protocols.

Woot, i really appreciated the person's input, and I feel much better.
 

Pinga

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One other item was that though one of the documents indicated a separate receipt is required for gift-in-kind receipts, that there is also a recognition that the receipt process should not be an administrative burden to the organization. Most software today will handle this appropriately.

It may make sense for any higher value gift in kinds be called out on an individual receipt so that if they do come up for audit, it doesn't result in the full statement being reviewed / reissued.
 

Pinga

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Oh, and the language of "Cash donation" includes such items as cash, cheque, gift card, etransfer.
So, in the case of #2 , where someone is reimbursed, then writes the cheque back to the church, it is considered a "cash donation"
 

Lastpointe

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If you donate something to the church and submit a receipt, you can submit that receipt as a donation. You would get a charitable donation

our auditors were firm at trying to get us to really account for all the little donations people made that they didn’t submit receipts for

an example. If someone picked up a box of printer paper while they were getting their own, it’s a donation. but if they say. Oh no big deal, just a gift. Fine. Except that then we are incorrectly accounting for how much paper we buy. They were quite adamant that we account for things. Otherwise you have an incorrect idea of expenses
 

Pinga

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Understood Lastpointe; however, the CRA person was clear about when you are acting as an agent of the church, versus just choosing to make a gift.
It is important that there be authorization / direction to purchase.

It could be, for example, that you say to the person responsible for the office, pick up paper if you see it, and expense.
Or, you say to the person responsible for the food cupboard, that they are authorized to pick up food and expense.

If they weren't previously authorized to be an agent, then, it is a gift-in-kind. Of course, the church can choose to not accept the donation. ie, if i decide to donate my beautiful embroidered last supper that my great-grandma made and say it is worth 10k, there are lots of challenges. Hence, gift in kind (if accepted) and fair market value ) (note: i don't have such a thing, but, i am fairly sure most churches have had this issue)

To your point, yes, for lots of reasons, it is important to truly record the expenses of the church...
 

Lastpointe

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Definitely it needs to be carefully handled. And I think a huge issue for churches is people donating old pianos. Everyone has one. And decides to donate them. Churches need to be firm to say no to things they really can’t handle
 

Mendalla

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The Unitarian Fellowship had a lot of artwork done by a local artist who was a member. Stained glass panels by the entrance and flanking the "stage" at the front. Lovely stuff and I am sure he donated it but that dated back before my time so I am not sure how it was accounted for. I can imagine stuff like that being a headache to appraise properly though since it was done custom for the church.
 

Luce NDs

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The are powerful individuals that say there is no such thing as complexity .... alas!

Thus simplicity avails us ...
 

Pinga

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Here is a summary of my findings so far.


The following were used as source of information for this document

  • Emails from ......
  • Information from fellow United Church of Canada congregations (received from ministers & chairs of council by Jayne Little)
  • Information from CRA documentation including Gifting and receipting - Canada.ca
  • Information from CRA client service person in charitable giving area at 1-800-267-2384


Questions:

What is a gift-in-kind?

It is a non-cash gift to the not-for-profit. There is lots of information regarding valuation which will not be documented at this time.

Can you give a donation receipt for a gift-in-kind?

  • Yes, absolutely. The valuation can be interesting as noted above.
  • An essential part of the receipting for the donation is that GST/HST can NOT be included in the donation amount.
Can you donate a bill that you paid on behalf of the church?

  • Yes, absolutely, if you are acting as an agent of the church.
  • An essential part is that you need to have been directed to make the purchase.
  • The payment requires all the standard expense reporting, including approvals/GL accounts
  • You would need to be paid, and then issue that payment back to the church, either by writing a separate cheque & depositing the one you get, or by endorsing the cheque you get.
Do you have to deposit your cheque in order to donate it?

  • Well, someone has to deposit it, but, it doesn’t have to be you.
  • It is essential for appropriate accounting that the cheque clears the church’s bank.
  • Method. They endorse the cheque by signing it. They also write “ Pay to the order of .............United Church” . Church then places the cheque in the deposit, ensuring that the cheque both clears and is deposited.
Can gifts-in-kind and cash donations be listed on the same official receipt?

By definition, they are supposed to be on different receipts; however, if the generation of same would create an administrative burden, then, they can be combined on one.



Key words

  • Cash: Cash, in this document, refers to cash, cheques, gift cards and etransfers.
  • Agent: When a person is acting on behalf of the congregation , they are acting as an agent. Prerequisites is clear direction for the activity.
  • Tangible: tangible is typically considered items such as safes, desks, things you can physically see. Although software is often not something that you can see, especially with online software, it may be considered a tangible asset for capitalization purposes if it meets the other criteria.


Scenarios:

  • Individual gifts their much loved and beautifully done Lord’s Paryer in crossstitch to the congregation. This is clearly a gift-in-kind; however, if the congregation does not desire it, then there is no requirement to consider it a donation nor should a receipt be given.
  • Individual gifts their computer printer to the congregation. This is also clearly a gift in kind. If the congregation desires it, then, the fair market value of the printer needs to be determined and a receipt may be issued.
  • Individual is out shopping and sees a neat craft book and some great story books for the Sunday school. This is a gift in kind, if the congregation desires it. As receipts are available and recent, the valuation is pretty clear. The donation would be for the cost of the items, but not including taxes paid. They are not acting as an agent of the church.
  • Council directs finance to acquire a safe. Team decides which individual should acquire it. Person goes out, and pays for the safe. They submit the receipt as an expense. They receive a cheque for the full amount. They are acting as an agent of the church.
  • Council team directs individual to acquire software. Individual acquires software and submit the receipt as an expense, advising that they would like it considered a donation. They need to receive a cheque for the full amount, and it is not a gift-in-kind as they are acting as an agent of the church.
  • Individual is at social concern and outreach committee meeting. The group identifies that there is a lack of peanut butter and canned meats in the pantry. An individual is tasked to acquire those materials. They do , and submit the receipt to the church, stating it is a gift. The important part here is that the individual is acting as an agent of the church. The receipts should be entered into an expense form, including taxes paid. The individual is then issued a cheque. (see later scenario about someone getting a cheque.)
  • A lawyer in the congregation, offers to do some work for the church, and would like a donation for the amount of the work. The requirements of this item fit under the donation of a service. A service cannot be a gift in kind. The individual must invoice the church, and there are a number of other restrictions, in part as it is important to ensure appropriate valuation and accounting on both sides.
  • An individual has received a cheque from the church. They wish to give it back to the church. They write the cheque over to the church by endorsing, and putting in “pay to ______ church” This is recorded as a cash donation to the church.
  • A roast beef dinner Is being held. Individuals are asked to provide specifical material, such as butter, roast beefs, etc. The receipts are submitted. They should be placed on an expense form, as an offset to the beef dinner revenue. If the individual chooses to do so, the cheque can be endorsed back to the church, thereby providing the individual a cash donation.
 

Lastpointe

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Going to throw out another scenario for you

church is having a fundraising auction. Individuals donate items for the auction. They can submit the receipt to get a charitable donation for the amount if they choose. How much the item is sold for has no impact in the value of the receipt

ie. we had a joke type gift of a bottle of hand cream. Value was about $10. That is the amount donated. But because of this particular item it would often sell for several hundred dollars. One year the donor wanted a recipient for the sale price. That’s a big no. Value of item has no impact on value of sale

it helps people understand better if you reverse it

individual donates a week at their cottage. They routinely rent out the cottage for $2000 a week. And submit that receipt to th church for a taxable donation


the cottage only sells for $500. Owners still get the $2000 receipt as they have documents ito prove value
 

Pinga

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love the scenario of the cottage, lastpointe.
It would also be a "gift in kind"
 

Pinga

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hmm, actually, i may call on that one, as it may be classified as a service, and so, would not be eliible, unless the cottage owner invoiced the church, and then, gifted back the payment.

It's a good one, and I will ask.
 

Carolla

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If I recall correctly, when our church had fundraising auctions in the past - the purchaser of the item rec'd a receipt for the amount they paid; the donor of the item did not receive any receipt.

This was also the case at a charity/service club auction in which I participated some years ago - there was quite a dust up when a 'donor' who unknown to any of us & had no apparent connection to the organization wanted a receipt for a painting they 'donated' & were miffed when this was not permitted. Seemed maybe a bit of scam on their part when we looked into it further.
 
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