Qualified Vehicles:

The IRS has developed guidelines regarding the donation of qualified vehicles to charities, which includes churches. The IRS has defined a qualified vehicle as :

• • • A car, or any motor vehicle manufactured mainly for use on public streets, roads, and highways,
    • A boat, or
    • An airplane

It should be noted that a car donated by a person who owns a car dealership would not be considered a qualified vehicle, but rather a donation of inventory.

Mechanics:

In most cases, the donor will transfer title of the vehicle to the church. Each state has different requirements regarding vehicle registration and title transfer. Please contact your local Department of Motor Vehicles to ensure that is being handled correctly. The donor will also provide the church with a claimed value of the vehicle. Once the church has the vehicle, they must determine if they are going to sell it, keep it, or give it to a needy person. The value of the vehicle also determines what type of reporting the church must provide.

Reporting Requirements of the Church:

Basically, the reporting requirement for the church depends if the donor valued the vehicle at $500 or less or at more than $500.

If the vehicle is valued by the donor at $500 or less, the church has two options on how to report the contribution. The two options available are:

• • • Provide a contribution receipt to the donor that lists the description of the vehicle, but not the value. Please refer to the non-cash article for details on the contribution receipt for non-cash donations.
    • Provide the donor with IRS Form 1098-C with Box 7 checked. In this instance where the value is determined to be $500 or less, the form should not be filed with the IRS.

If the vehicle is valued by the donor at more than $500, the church must file IRS Form 1098-C. Please see IRS Form 1098-C “Contributions of Motor Vehicles, Boats, and Airplanes” and Instructions for Form 1098-C for more details.

In order for the donor to claim an income tax deduction for the vehicle, the church must furnish copy B of Form 1098-C to the donor no later than 30 days after the:

• • • Date of sale if the car was sold at an auction by the church. or
    • Date of the contribution if the church is going to keep the vehicle for use by the church or if they are going to give it to a needy individual.

Penalties That Could be Imposed on the Church:

The church could face penalties imposed by the IRS if they fail to furnish IRS Form 1098-C to the donor, if they furnish a false or fraudulent acknowledgment or if they fail to furnish the acknowledgment in the manner and time required. These penalties all relate to the timely and accurate completion of Form 1098-C.

Income Tax Deduction For the Donor:

The donor can usually deduct the smaller of the gross proceeds from the sale of the vehicle by the church or the vehicle’s fair market value on the date of contribution. If the gross proceeds is the higher number, the donor must attach Form 1098-C that they receive from the church to their tax return. There are two exceptions to the above mentioned rule. The exceptions are:

1. If the church decides to keep the vehicle and use it in church operations or if they keep it and make improvements to it before transferring it, the donor can generally deduct the fair market value at the date of contribution. This will be handled on the Form 1098-C that the church will provide to the donor.
2. If the church gives the vehicle or sells it to a needy individual at a price below fair market value, the donor can generally deduct the fair market value at the date of contribution. Again, this will be detailed for the donor on the Form 1098-C that the church will provide to the donor.

Thank you for joining Icon Systems in this series on contribution reporting. We hope this has been informative to you. As always, please consult your CPA because you may have tax situations that are unique. Additionally, IRS rules are subject to change.

This current article will focus on how churches, donors, and the IRS handle contributions of stock and IRAs given to churches.

Contributions of Stock:

A contribution of stock is just another form of a non-cash contribution. As mentioned in earlier articles, the donor is responsible for obtaining the fair market value of the donation for his income tax return. Additionally, the donor is responsible to obtain from the church a written receipt for any single cash or non-cash donation in excess of $250. In no circumstances will the church put the value of the stock on the contribution receipt. They will, however, describe the stock on the statement.

Housekeeping Details:

If a donor wishes to donate stock to a church, how should they go about doing this? The donation will start by the donor sending the stock certificates and a signed stock power to the church. Alternately, the stock can be transferred directly from the donor’s brokerage account into the church’s brokerage account if they have one.

Is it better for the Donor to Contribute the Stock to the Church or to Sell the Stock first and then donate the Proceeds?

Like most everything in the tax world, the answer depends on the donor’s individual situation.
The donor may have stock that has appreciated in value since it was purchased. If he donates it to the church, he avoids having to pay the capital gains tax on the sale plus he can also take a charitable donation for the fair market value of the stock. It is almost like getting a double benefit for the donor! In turn, if the donor would realize a loss on the sale of stock, he would probably benefit by selling the stock first, claiming the loss on his tax return, and then donating the proceeds to the church.

Stock owned by the donor is classified as a capital asset and is taxed depending on how long the stock has been held. If the stock is held for more than 1 year and then sold, long term capital gains tax rates apply to any gain on sale. If the stock is held for 1 year or less, the gain is taxed at the ordinary income tax rates of the taxpayer. For 2011, the long-term capital gains tax rate is 15%. This is due to increase to 20% in 2012.

Lets take a look at some comprehensive examples of a donor who is thinking about either contributing his stock to his church or selling the stock first and then donating the proceeds to the church. The facts are as follows:

• • Donor purchased 10 shares of XYZ stock on 1/1/2000 for $300.
  • Donor contributes the 10 shares of stock to his church on 11/1/2011.
  • The fair market value of the 10 shares of stock on 11/1/2011 is $1,200.
  • The long term capital gains tax rate for 2011 is 15%
  • The long term capital gains tax rate for 2013 is 20%

• Example 1: Donor sells the stock for $1,200 on 11/1/2011 and donates the proceeds to the church:
  • The gain on the sale of the stock is $900 ($1,200 sales price less $300 cost basis)
  • The gain on the sale is taxed at the long-term capital gains rate. The donor pays $135 ($900 * 15%) tax on the gain on his income tax return.
  • The donor makes a cash donation of $1,065 ($1,200 proceeds less $135 tax paid)
  • The church enters the cash donation on the donor’s contribution record and supplies the donor with a written receipt for the donation of $1,065.
  • The donor takes a charitable income tax deduction of $1,065.
  • The church records a debit to “Cash” and a credit to “Contribution Revenue” in the amount of $1,065.

• Example 2:  Donor sells the stock for $1,200 on 1/1/2013 and donates the proceeds to the church:
  • The gain on the sale of the stock is still $900.
  • Since the sale is made in 2013, the donor is subject to the long term capital gains tax rate projected to be in effect for 2013. As of the writing of this article, that rate is 20%. The tax on the gain is $180. ($900 * 20%)
  • The donor makes a cash donation of $1,020. ($1,200 proceeds less $180 tax paid)
  • The rest of example 1 applies here except the amount is changed from $1,065 to $1,020. Notice that waiting to make the sale in the new year results in the payment of $45 more tax for the donor and receipt of $45 less donation for the church

• Example 3:  Donor contributes the stock to the church on 11/1/2011
  • Since the stock is being donated and not sold, the donor does not need to report or pay any tax on the capital gains.
  • The church will provide the donor with a receipt that provides a description of the stock “10 shares of XYZ stock” but will not include a monetary value on the receipt. This is because the donor is responsible for determining the fair market value of the donation, not the church. See the non-cash donation article for more details on determining fair market value of non cash donations.
  • The church should record the stock donation on their books at fair market value as of the date of donation. In our example, this is $1,200. The church would make an accounting entry to debit “Investments – Stocks” and credit “Contribution Revenue” for $1,200.
  • The church sells the stock on the same day for $1,200. The accounting entry the church should record would be a debit to “Cash” and a credit to “Investments- Stock” for $1,200.
  • In order for the donor to take an income tax deduction on their tax return, they must complete IRS Form 8283. In our example, the amount for the taxpayer would be $1,200. This amount would be recorded in Section A of Form 8283.
  • If the amount of the stock in our example were over $5,000, the donor would need to complete Section B of Form 8283. If this section is completed, the donor will ask the church to sign the Section called “Donee Acknowledgment”. See IRS Form 8283 “Noncash Charitable Contributions” for more details.
  • Additionally, if IRS Form 8283 Section B 1 is completed because the donation is over $5,000, the church must complete IRS Form 8282 if the donated property is sold within 3 years of receipt. See IRS Form 8282 “Donee Information Return”. This form must be mailed to the IRS within 125 days after the date of sale.
  • Notice in this example how the donor does not pay tax on the appreciation of the stock and receives a donation for the appreciated amount. In turn, the church receives the full benefit of the appreciated stock. In our example, if the church later sold the stock for a gain, it wouldn’t matter because the church does not pay tax.

Charitable Contributions Received from IRAs

In 2006, a tax situation was created that favored individuals age 70 ½  or older to make qualified charitable distributions from their otherwise taxable individual retirement accounts (IRAs). The provision expired at the end of 2009. In 2010, as part of the 2010 Tax Relief Act, the provision was extended through December 31, 2011. As of the writing of this article, it is not known if this benefit will extend to the end of 2012.

This benefit works a little differently in that it does not result in an income tax deduction but results in an exclusion from gross income. To understand this better, lets take a closer look at it.

Individuals under the age of 70 ½ by the end of the year and who have taxable income are eligible to open a Traditional IRA. A Traditional IRA may be tax deductible or non-tax deductible on the individual’s tax return depending on a number of different factors. See IRS Publication 590 “Individual Retirement Arrangements” for more information. When the person reaches age 70 ½, they must start taking money out of the account. The amount they have to take out each year is prescribed by the IRS and is called the required minimum distribution. This distribution is taxable income to the individual and is included on their tax return. (Notice how the traditional IRA differs from the ROTH IRA. The traditional IRA receives tax deductions when the money is contributed to the fund but is taxed when the money is taken out. The ROTH IRA has no tax breaks when the money is contributed to the fund, but is not taxed when the money is taken out).

The current tax law due to expire 12/31/2011, states that individuals age 70 ½ or older may distribute up to $100,000 per tax year directly from their Traditional IRA account to a church without having to include the distribution in their gross income. This results in the payment of less income tax. The distribution to the church can also satisfy the required minimum distribution limits. In order to claim this tax benefit, the individual must obtain the proper contribution receipt from the church, even though the individual is not taking an income tax deduction. Generally, the church will receive a check from the administrator of the IRA. The church should record this money received on the individual’s contribution statement with a description of IRA proceeds included. If the church received shares in the IRA, then the contribution statement should be handled the same as the receipt of stock.

As always, please consult your CPA because you may have tax situations that are unique. Additionally, IRS rules are subject to change.

Icon Systems appreciates bringing these resources to churches hosted by Church Accounting Software Guide. The last one will deal with the receipt of automobiles, boats, and other vehicles by churches.

Definition:

Non-cash contributions are also known as gifts in kind. They can be anything from office supplies, computer equipment, books, stocks, real estate to automobiles. It is important to keep in mind that the church should either be able to use the donated property as a part of their operations or they should be able to easily sell the donated property and use the proceeds for church operations. If the donated property can fulfill one of the two requirements, the donor may be able to take a charitable income tax deduction on their tax return.

What about volunteers who work in the church? They are definitely necessary in the operations of the church. Should their services be reported as non-cash donations and they in turn take income tax deductions on their tax returns?  Isn’t this just another form of a non-cash donation? Unfortunately, the IRS has stipulated that you can not receive a charitable income tax deduction for the value of your time or services.

Another area that needs to be further examined is the importance to distinguish between a tax deductible non-cash donation to a church and a non-tax deductible personal gift to a minister that may need to be included in his gross income. Donations of a personal nature, whether cash or non-cash, are not considered charitable contributions but rather personal gifts. They are not tax deductible and may need to be included in the gross income of the minister.

Lets take a look at some examples and see what their tax consequences may be:

• Example 1: Donor gives two cases of paper to the church
  • The paper can be used in the normal operations of the church. The donor may be able to take an income tax deduction for the paper.

• Example 2:  Donor gives land to the church.
  • The land can be sold with the proceeds going toward the normal operations of the church. The donor may be able to take an income tax deduction for the land.

• Example 3:  Donor gives a computer to the minister to work on at home. It is used by the entire family.
  • The computer is deemed a personal gift to the minister. The donor can not take an income tax deduction for the computer.

• Example 4:  Donor gives a computer to the church office. The minister will be the primary user of the computer. The computer will stay at the church and will be used for church work exclusively.
  • The computer will be used in the normal operations of the church. The donor may be able to take an income tax deduction for the computer.

• Example 5:  Donor is a volunteer who works 10 hours per month in the church office. There is one paid office staff position at the church that pays $8.00 per hour. The volunteer would like a statement from the church that shows they work 10 hours per month in order to claim an income tax deduction.
  • The IRS does not allow an income tax deduction for the value of your time or services. No income tax deduction will be allowed for the volunteer.

Now that we have seen some examples of what non-cash donations are, lets take a look at the reporting requirements the church may have.

Reporting Requirements of the Church:

What reporting requirements does the church have, if any, if they receive non-cash donations?

Basically, the donor is responsible for obtaining a written receipt from the church for any single cash or non-cash contribution of $250 or more in order to claim an income tax deduction. Although the church is not required to provide a receipt, they may want to help the donor in this process since most churches rely on the generous support of their members. The church receipt should contain the following information:

• • Name of the church
  • Amount of cash contribution
  • Description (but not the value) of non-cash contribution
  • Statement that no goods or services were provided by the church in return for the contribution, if that was the case
  • Description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution
  • Statement that goods or services, if any, that the church provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.

Value of Non-Cash Donations for the Contribution Statement

The value of a non-cash donation is not recorded on the contribution statement sent to the donor. This is because the church is not responsible for determining the value of the donation in regards to the donor’s income tax return. The donor is responsible for coming up with this value. The donor will usually do this by consulting with his CPA and using the fair market value as outlined in IRS Publication 561 Determining the Value of Donated Property. Although the value is not stated on the contribution statement, a detailed description of the donated property is. (i.e. 300 shares of Microsoft stock)

Value of Non-Cash Donations for the Financial Statement

Although the value of non-cash donations are not recorded on the contribution statements, they are recorded on the financial statements of the church. This would involve an accounting entry that is not linked to the individual contribution module. The entry would be a credit to contribution revenue and the debit would depend on the nature of the donated property. For example, if paper was donated, the debit could be to office supplies expense. The dollar amount to be used should be the fair market value of the property at the date of the donation.

Benefits to the Donor of Non-Cash Donations

There are some real benefits to donors who contribute non-cash items to churches. Most of the benefits occur when they donate property that has appreciated in value. For example, lets say a donor purchased stock 10 years ago for $100 and on December 1, 2011  the stock has a fair market value of $1,000. If the donor sells the stock for $1,000, they will receive $900 in cash and will need to report a $900 long term capital gain on their tax return. (For purposes of our example, lets use a long term capital gains rate of 15% for 2011). After paying federal tax of $135 on the gain, the donor then has $765 available to donate to the church. The church would then receive a cash donation of $765 and the donor would be able to receive an income tax deduction for $765.

Now lets take a look if the donor donated the above mentioned stock to the church on December 1, 2011. The church will receive the stock and will issue a contribution statement to the donor describing the property – but not the value- received. The statement may say something like “200 shares Microsoft stock” and may list the stock numbers. The church intends to hold on to the stock for a period of 5 years. The donor has determined that the fair market value at the date of contribution is $1,000. This is the amount he will receive as an income tax deduction. Notice that the donor does not need to record or pay tax on a long term capital gain. In turn, the church decides that the fair market value of the stock on the date of contribution is $1,000. They will record this on their books as a debit to “Investments- Stock” and a credit to “Contribution Revenue” in the amount of $1,000.

What Other Forms Should I be Aware of Regarding Non-Cash Donations?

As indicated before, the church is not responsible for a lot of the reporting regarding non-cash donations, however, as a service to their members, it would be advantageous for them to be aware of some of the additional forms involved with non-cash donations.

Some of the additional forms involved with non-cash donations include:

• IRS Form 8283- If the donor values the non-cash property at more than $500, they are required to complete IRS Form 8283. If the donated property is valued over $5,000 the IRS requires it to be listed in Section B Part 1 of this form. If Section B Part 1 is completed, in order to obtain an income tax deduction, the donor will require the church to complete Section IV “Donee Acknowledgment”. Additionally, the IRS will require the donor to obtain a qualified appraisal for property listed in Section B Part 1. Please refer to IRS Form 8283 “Noncash Charitable Contributions” for more information.

• IRS Form 8282 – If the donor lists the non-cash property on Section B part 1 of Form 8283 as described above, IRS Form 8282 must be completed by the church if the church sells or disposes of the donated property within 3 years of receipt. This form needs to be completed and mailed to the IRS within 125 days after the date of sale. Please refer to IRS Form 8282 “Donee Information Return” for more information.

The above article does not apply to the donation of vehicle or boats. That topic will be addressed in a separate article.

As always, please consult your CPA because you may have tax situations that are unique. Additionally, IRS rules are subject to change.

Icon System’s looks forward to bringing this contribution series to churches and other non-profits so they understand the complex reporting regulations better. The next article in this series will deal with the receipt of stock and IRAs by churches.

Part 1

With the Holiday season and year end rapidly approaching, it might be a good time to review the reporting requirements for churches who receive contributions.

General Requirements:

As tax exempt organizations, churches are qualified by the Internal Revenue Service (IRS) to receive contributions from donors. Since qualified churches are not subject to federal income tax, these donations are tax-free to the church. Donors, in turn, may be able to deduct their contributions to churches on their income tax return. In order to take advantage of these special tax situations, the IRS has developed rules that apply to donors and to churches regarding contributions. These general rules are as follows:

• In order to claim a federal income tax deduction, the donor must have either a bank record or a written communication from the church.
• The donor is responsible for obtaining a written acknowledgment from the church for any single cash contribution of $250 or more.
• The church is required to provide a written disclosure to a donor who makes a payment in excess of $75 and the payment is partly for a donation and partly for goods and services received.

Lets take a detailed look at these three general rules and then move on to specific situations that churches may face.

The donor must have either a bank record or a written communication from the church :

For cash, check, or other monetary donations made after January 1, 2007, the IRS requires that the donor have either a bank record (i.e. cancelled check) or a written communication (i.e a receipt or letter) from the church in order to claim an income tax deduction. This requirement places the responsibility of obtaining the necessary documents on the donor. Although the church will not incur a penalty if they do not provide this information, the donor may not be able to deduct the donation on their income tax return without it.  This may affect future contributions that the donor wished to make. Since most churches rely on the generous donations of their members, it may benefit them to assist the donors in this process. The written church communication to the donor should include the following:

• the name of the church
• the date of the donation
• the amount of any cash contributions

The donor must receive a written acknowledgment from the church for any single cash or non-cash contribution of $250 or more:

The donor cannot claim an income tax deduction for any single contribution of $250 or more unless the donor receives a written acknowledgment from the church. The church can either provide separate acknowledgments for each single contribution of $250 or more or one acknowledgment for several donations of $250 or more. The total yearly contributions are not added together to arrive at the $250 threshold. For example a written acknowledgment would not be required for a donor who donates $10 per week for 52 weeks (total of $520) even though the total is more than $250. If the donor made only two contributions of $260 each, then they would need a written acknowledgment. As mentioned in the first rule above, the church would not incur a penalty for neglecting to furnish the proper receipt, but churches who value their donors may wish to provide it. If the donor claimed an income tax deduction for the contribution and did not receive the proper receipt, the IRS could disallow his contribution on his income tax return. Again, this could affect any future contributions that the donor wished to make. This written acknowledgment should include the following:

• the name of the church,
• the date of the donation,
• the amount of any cash contributions,
• a description (but not the value) of non-cash contributions.
• In addition to the above, the written communication must contain one of the following statements:

• • “No goods or services were provided by the church in return for the contribution.”

• • “Goods or services that the church provided in return for the contribution consisted entirely of intangible religious benefits.”  Or

• • A description and good faith estimate of the value of goods or services other than intangible religious benefits that the church provided in return for the contribution.

The church is required to provide a written disclosure to a donor who makes a payment in excess of $75 and the payment is partly a donation and partly for goods and services received.

Sometimes churches host charitable events where the public needs to purchase a ticket to attend. Donors can only take an income tax deduction for the portion of the payment that is in excess of the fair market value of the goods or services received. For example if a church charges $100 for a “Fall Festival” which includes a meal valued at $30, the donor can only take a charitable deduction for the portion that exceeds the fair market value of the meal. In this example, the charitable donation would be $70. Even though the charitable portion is under the $75 threshold, a written acknowledgment is required because the total payment was in excess of $75.

In addition to the name of the church, the date of the donation, and the amount of the payment, the written disclosure should include:

• A statement that “ The amount of the contribution that is deductible for federal income tax purposes is limited to the excess of money (and the fair market value of any property other than money) contributed by the donor over the value of goods or services provided by the church.” AND
• Provide the donor with a good faith estimate of the value of the goods or services received by the donor.

The IRS calls the above mentioned donations quid pro quo. Further details about them can be found in the IRS code section 6115. The IRS can also impose a penalty to churches who do not follow the above rules. These penalty amounts can be found in IRS code section 6714. Section 6714 states as follows:

• • (a) Imposition of penalty – If an organization fails to meet the disclosure requirement of Section 6115 with respect to a quid pro quo contribution, such organization shall pay a penalty of $10 for each contribution in respect of which the organization fails to make the required disclosure, except that the total penalty imposed by this subsection with respect to a particular fundraising event or mailing shall not exceed $5,000.
  • (b) Reasonable cause exception – No penalty shall be imposed under this section with respect to any failure if it is shown that such failure is due to reasonable cause.

In plain English, this means that churches could be penalized $10 for each quid pro donation that was not properly disclosed with a penalty cap of $5,000 for each fundraising event. Proper disclosure means that it follows the rules mentioned above. Additionally, the IRS can impose a penalty to the church of $1,000 per person per year for aiding and abetting an understatement of tax under IRS code section 6701. This means that “the church knows or has reason to believe that members will rely upon the contribution statements the church provides in connection with reporting their tax liability and that the reliance on those statements will result in an understatement of tax.” Serious stuff indeed!

The IRS does allow some exceptions to the above rule. If an exception is met, the church does not need to provide the fair market value of the goods or services received by the donor on the contribution receipt or statement. These exceptions are as follows:

• Token Exception
• Membership Benefits Exception
• Intangible Religious Benefits Exception

Lets take a look at the three different types of exceptions listed above.

Token Exception:

• Insubstantial goods or services a church provides in exchange for a contribution do not have to be described or valued in the acknowledgment.
• Goods and services are deemed insubstantial if the payment occurs in the context of a fund-raising campaign in which the church informs the donor of the amount of the contribution that is a deductible contribution and:
  • the fair market value of the benefits received does not exceed the lesser of 2% of the payment or $96, or
  • the payment is at least $48, the only items provided bear the organization’s name or logo (i.e., calendars, mugs, or posters), and the cost of these items is within the limit for “low-cost articles”, which is $9.60.
  • Free, unordered low-cost articles are also considered insubstantial.

The insubstantial goods or services dollar amounts listed above are for 2010. Guideline amounts are adjusted for inflation. Contact IRS Exempt Organizations Customer Account Services at (877) 829-5500 for annual adjustment information.
Membership Benefits Exception:

• An annual membership is considered insubstantial if it is provided in exchange for an annual payment of $75 or less and consists of annual recurring rights or privileges, such as:
  • free or discounted admissions to the church’s facilities or events
  • discounts on purchases from the church’s gift shop or library
  • free or discounted parking
  • free or discounted admission to member-only events sponsored by an organization, where a per person cost is within the “low-cost articles” limits.

Intangible Religious Benefits Exception:

• Benefits provided by the church that are not usually sold in commercial transactions
• Examples include wine served in a religious ceremony, admission to a religious ceremony, and receipt of a church newsletter.
• Benefits that are not intangible religious benefits include tuition for education leading to a recognized degree, travel services, and consumer goods.

Please refer to the “Charitable Contributions – Substantiation and Disclosure Rules” portion of the IRS publication “Tax Guide for Churches and Religious Organizations” or the IRS publication  “Charitable Contributions – Substantiation and Disclosure Requirements” for more information. As always, please consult your CPA because you may have tax situations that are unique. Additionally, IRS rules are subject to change.

Icon Systems’ IconCMO addresses all of the unique situations above for churches and we look forward to working with your organization.

You’ve all seen them at church. Members popping out these strange looking devices during a sermon or Sunday School class. At first we thought they were playing games on them, but now we know that they were actually following along by reading the assigned scriptures or lesson manual.

The good people over at Icon Systems have released an application that will allow church leaders to manage their church using mobile devices like the iPad. I had to find out more so I contacted them with a few questions.

How will this make accounting and management better for churches?

Bill (President): Most people enjoy iPads and other portable devices; they provide a source of entertainment and are a great way to communicate as well as find information. With the availability of a full accounting system mobile devices have become much more than entertainment and communication devices: they are now valuable business tools.

Jay (Sales): If someone asks a question during a board meeting but no one happened to bring a copy of that particular report. Someone would either have to take a guess, follow-up later, or run back to their desk to print the report. What if the council wants to change a budget or prefers that some entries be reclassified to a different fund or general ledger account? The best they could do is take note of the changes and make the adjustments after the meeting. Accessing the church database on the iPad grants users the freedom to instantly make changes and provide accurate information no matter where they are.

Do you see a fair amount of churches using portable tablets in the future or will they remain somewhat of a novelty?

Bill: A high-powered laptop is not needed for typical tasks such as surfing the Web, taking notes, emailing, and social networking. Tablets are not only fully capable of the above tasks, but also offer additional benefits: they are lightweight, have an extended battery life, and offer quick availability since they are always on. Technology is definitely trending towards mobile devices. Tech-savvy individuals are not the only ones using mobile devices; the general population has also discovered ways in which mobile devices make life easier.

Jay: Essentially, new technology brings more opportunities that churches can use to help grow their organization. Mobile technology and social media are a powerful combination; users anywhere can hear about a struggle someone is having and post it to Facebook, Twitter, or other applications. Icon Systems is working to offer our services on as many mobile devices as possible including various types of phones as well as tablets such as the iPad, Motorola Zoom, and Samsung Galaxy.

Please tell us about all the exciting features. I have to admit that as someone who helps manage a church I’m excited to read about your offering.

Bill: Icon Systems has adjusted the menus to provide a larger work-space and easier navigation.  The larger work-space increases productivity by allowing multiple windows to be open at the same time so users can view and edit more information. Touch navigation has been added so customers have a true mobile experience with the familiarity of other applications they currently use. Time is the most valuable commodity people have so allowing volunteers and staff to complete objectives while on the go saves the church time and money.

Jay: The main goal behind this advancement of church software is bringing the church’s database (accounting, contributions, payroll and membership) into the hands of the user wherever they may be located. Icon Systems is taking IconCMO and putting it all on the portable tablet devices to be completely mobile.

Here are some great examples of how churches can use the iPad:

• Send an email blast to the church’s prayer chain within minutes rather than waiting hours or days after being notified of critical information.
• Pastors can determine how to best serve members by viewing email history, notes, reminders, attendance reports, and group assignments.
• Group leaders can use the iPad to take attendance for children’s bible education, adult ministries, addiction counseling, or any other ministries the church offers.

A recent blog post by MicrosoftTag supports the idea that mobile devices will become commonplace because of their versatility. Mobile devices started to be useful in our personal lives, however with an increase in development for web application they are becoming a vital business tool. There are many reasons why: low hardware cost, portability, speed and functionality, and sleek user interfaces. The post also reported that mobile devices are expected to account for more Internet usage than desktop computers by the year 2014. People enjoy using their mobile devices and are looking for new ways to fully utilize the technology.

Since technology moves at record breaking speeds, your ChMS needs to move just as fast. The church should embrace mobile technology and utilize it to raise community awareness, increase donations, quickly change data on the fly, and bring ease of use to members and staff while keeping everyone as mobile as possible. Engaging members through instant communication is essential for churches; people are busier than ever before and staying productive while on the go is a must. Icon Systems, Inc. is dedicated to connecting churches with the latest technology.

For multisite organizations with offices on other continents delivering mobile technology to them is essential. IconCMO has been deployed within organizations that span several continents successfully. Adding this mobile technology helps those organizations do their job effectively no matter where they are located. Many countries use Internet cafes requiring traveling instead of having the Internet in their homes. Now they can use the cellular networks to access their church software solution and save time in traveling that can be devoted to ministry work.

manage their membership, events, and finances.

Managing church finances is important for a couple of reasons: (1) members work hard to earn money and they give it to the church in good-faith, and (2) money donated to the church can be deducted for tax purposes. If the money is not managed wisely and donors do not receive a donor statement saying how much they contributed at the end of the year, it becomes more difficult for donors to claim the deduction.

Good church donation software packages will help your church manage the different types of donations easily. For example, if a donor sends in a general contribution that can be used for anything, then the donation software categorizes this as unrestricted. However if a donor sends in a contribution-specific donation then the software will categorize the contribution as temporarily restricted. Once the contribution requirements have been met you can move the assets from temporarily restricted to unrestricted at the click of a button.

Another great use of church donation software is the automation of the donor statements at the end of the year. Churches generally send out an official statement at the end of the year to all of those who contributed during the year. The members then use this official statement to receive a deduction for tax purposes. Money donated to churches is tax-exempt. The creation of the letter for hundreds of different donors can be burdensome. However, donation software can quickly perform this process for you. Simply pull up the list of donors and select print donor statements.

Donation software for churches can be used to generate other handy reports. For example you can use it to show leadership how the church is progressing towards its goals and how the church administrators are doing with their budget. Any time during the year you can quickly pull up a report on how much money any given donor has contributed.

Church financial administrators need to guard donations closely. This money has been worked for and given without regret. In addition this money can be deducted for tax purposes spurring some contributors to give even more. Church donation software makes managing this process much easier.

It’s pretty simple. You email me information about your church (see below for more details on what information you should include) and I email you back with the software package(s) that will be the best fit for your church or non-profit.

For first time visitors to this site, I suppose I should explain who I am so you realize you are getting informed advice. My name is Nate Waddoups and I have a Bachelors and a Masters degree in Accountancy from a religious school (which also happens to be ranked in the top 5 best accounting schools). In addition to my training in school I’ve spent three years working directly in the church finance trenches—of course my church would ask me to manage the finances because of the accounting degree.  I’ve done hours and hours of research and experimenting with the different church accounting or management packages available. The truth is most of the software packages available are pretty good, but they all have different features and depending on what your needs are you may or may not need all of these features.

For those of you who want some help, send me an email at churchaccountant@gmail.com and give me some basic information about your church. I’ll get back to you with my recommendations within 24 hours (unless it’s a weekend).

Below are some items you might want to share in your email.

Number of Members in Your Church:

Number of People Managing your Church’s Finances:

Experience of People Managing your Church’s Finances: Do they understand basic accounting principles? Do they know anything about accounting for non-profits?

Does your church already have an accounting system in place? If so, which one?

Are you looking for software to manage membership? Or do you just want a church financial software package to manage contributions?

Feel free to send me any other information you think will be helpful.

Always remember that church donations are sacred and should be managed carefully. In addition you’ll need to be in conformance with IRS section 501(c)(3) to be tax-exempt. The right church accounting programs will help you be in compliance. Note that software does not take the place of a licensed tax CPA or lawyer.

Not all church accounting software is built equally. Some software comes with a lot of features and technology while others are more basic. We want to make sure that you don’t buy software that your church’s computers can’t handle so we bring you the following information.

Before you make your purchase, make sure to double, nay triple check to verify that your computer(s) meet at least the minimum requirements for the software. There is nothing worse than spending money on software, returning back to your computer, placing the CD in the computer, and then finding out that your computer can’t handle the software. Please make sure you meet the minimum requirements for any software you buy for your church.

Unfortunately many companies that offer church software fail to place the minimum requirements on their websites. If you find yourself in this situation, then you have three options: (1) Gamble and purchase the software anyway hoping that your computers will have what it takes–not recommended (2) Contact the company via phone or email (3) Go to a different website. Gambling is never recommended

After searching the Internet, we’ve found that most church accounting software requires at least 64-256mb of ram. This may not seem like a lot to some people, but many churches don’t have a big budget to buy top end computers.

We hope we have saved you some time in your quest to purchase church software. Feel free to leave any comments about information you may have acquired.

So, you’ve decided to make the leap to buy your church some management/accounting software. You want to buy some decent software, but you don’t want to spend all of last year’s offerings to get it. We hope this article will at least give you a feel for what to expect when buying your church accounting software.

As with most products, if you spend a little more it is because the product is a little better. The trick is finding out what your church’s needs are. You might ask yourself, “What is it that I need to track?” You may be wanting to track your membership from week to week, or how much offerings are given on a monthly or yearly basis. More complex questions might be, how much taxes have I withheld for the paid clergy or how much will I need to withhold? The bottom line is to find out what exactly you need the software for before buying it.

Many church accounting services provided by companies will want to charge you on a monthly basis. This is becoming more common in almost all businesses. Prices start around $30 a month and go as high as $200 a month. We wouldn’t recommend paying more than that for your church accounting software. If you dislike monthly fees, then you can buy quickbooks online for about $200 over at Microsoft.

The best of luck in your hunt for your church management software. If you have any additional pricing information, feel free to post it in the comments box below.

Wouldn’t it be great if there was some free church accounting software out there to help you manage your church’s funds and taxes? Well, as always, there are several websites out there claiming to give away church accounting software. To hopefully save you some time, we’ve put together this list of supposedly free church software. And to save you some money, we have identified what the true cost of the software is.

As is always our policy, we do not endorse one church software system over another. We simply want to provide you information.

• Sunday Software

First of all, if you started the journey for your church’s accounting system by typing into google “free church accounting software” then you likely ended up on a sub-domain of sundaysoftware.com. SundaySoftware does not make accounting software; however, they do provide links to other sites that do.

• Churchtrac.com

The good new about churchtrac is that they actually do offer free church accounting software. The bad news is that the software is only for small churches. After some investigation we learned that small churches means less than 100 people.

**** Update July 15, 2010***

• Gnucash.org

Gnucash offers some software that could be used as free church management software. This software was originally built for businesses which may mean that you need to tweak it a bit for it to work for your church. It is open source and is considered by many as the best free accounting package available.

****Update April 26 2010 ****

Vickey over at freechurchaccounting.com has some free spreadsheets that can be an excellent solution for those of you looking for a completely free way to perform your churches’ accounting.

Synopsis
If the church that your managing has less than 100 people or if you don’t mind having some advertisements floating around the screen then you just may be able to find some free church accounting software. Otherwise, it appears you will have to fork out the cash to get the software.

**** Update June 19, 2009 ****

After thinking more about this topic, I have a few other recommendations if you are looking to save some money. If your church’s accounting systems is relatively simple then you could probably get away with using Microsoft Excel. Although most thoroughbred accountants will scoff at you for not using some sort of specialized software. And if you want to go completely free, then why not try Open Office. I know a lot of Non-Profits actually use this software and it does a decent job. Although it might take you a while to get over some of the annoying little quirks.