4 Steps to Create a Benevolence Program
By Kristen Alexander
“Tell them to use their money to do good. They should be rich in good works and generous to those in need, always being ready to share with others.” - 1 Timothy 6:18
Benevolence has always been a vital part of the church. As the body of Christ, we are called to care for those in need. Through our generosity and benevolent acts, we demonstrate God’s love, leading those in need to their ultimate Provider—Jesus Christ.
Rules and guidelines regarding charitable giving have developed and changed throughout the years. It can be challenging to know if you are doing the right thing the right way. It’s a common practice for many churches to give benevolence without having a program in place to guide their actions.
However, establishing a benevolence program will help you protect what God has called you to lead while best serving your church and community.
Let’s talk about how to create a successful benevolence program that meets both nonprofit law and the needs of your community. First, we must take a look at how the IRS defines benevolence.
The IRS defines benevolence, under Section 102, as a gift given from “detached and disinterested generosity,” and also out of “charity or like impulses.” This current interpretation of benevolence allows the recipient to receive the charitable gift tax-free. In turn, the church does not have to issue the recipient a Form 1099-MISC.
However, to fully understand benevolence, we must also understand who qualifies to receive it.
Who Qualifies for Benevolence?
Income Tax Regulation 1.501(c)(3)-1(d)(2) defines those who qualify for benevolence as:
“Persons who are financially unable to care for themselves as a result of sudden and severe or overwhelming financial burdens arising from events beyond their control are proper objects of charity because they are considered to be ‘distressed’.”
Also, Income Tax Regulation 1.170A-4A(b)(2)(ii)(D) defines “needy” as a “person who lacks the necessities of life, involving physical, mental, or emotional well-being, as a result of poverty or temporary distress.”
Now that we understand how the IRS defines benevolence and who qualifies, you must know who is not eligible for benevolence from your church.
Who Doesn't Qualify for Benevolence?
This may come as a surprise to you, but not everyone is qualified to receive benevolence from your church. Let me explain.
Treasury Regulation 53.4958-39(b) describes all those who are considered disqualified persons. In essence, those who have substantial influence in your church, as well as their family members, are excluded from receiving tax-free benefits from the organization. Therefore, board members and their direct family members are ineligible to receive benevolence.
When a disqualified person receives benevolence from your church, an excess benefit transaction takes place. In short, an excess benefit transaction occurs when a disqualified person receives any financial assistance above the service that the individual provides to the organization.
According to section 4958, disqualified persons may receive compensation in consideration of services rendered. This means they can receive financial payment reasonably based on a service they provide to the church. However, other than reimbursement for services rendered, disqualified persons may not receive financial assistance, benevolence included, due to their position of leadership or influence within the church.
4 Steps to Create a Benevolence Program
Now that we’ve covered some of the basics, here are four steps that your church or ministry can take to create a successful benevolence program:
1. Create a benevolence committee.
This committee is responsible for crafting a mission statement and benevolence policy. The members will also review the requests presented to the church from those in need and determine the best course of action for allocating funds and resources. Ultimately, this committee is responsible to the board of directors. If you are unable to create a benevolence committee, the board of directors will assume all responsibilities.
2. Determine how your church will serve.
You need to determine the specific types of resources and assistance that your benevolence program will offer. When making these decisions, you will want to keep your mission statement and program goals in mind.
3. Establish and adopt a benevolence policy.
You must adopt a policy that provides guidance and structure of the procedures in establishing your benevolence program. Every church and ministry that goes through our StartRIGHT® Service receives this policy. If you have further questions or need assistance with this policy, please give us a call at 877-494-4655.
4. Create a benevolence request form.
You should require anyone requesting benevolence from your church or ministry to complete an application. This form will help your benevolence committee (or board of directors) identify and meet your church and your community’s needs.
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Blessed to be a Blessing
“If anyone has material possessions and sees a brother or sister in need but has no pity on them, how can the love of God be in that person? Dear children, let us not love with words or speech but with actions and in truth.” - 1 John 3:17-18
As the body of Christ, we are called to show God’s love by reaching out to those in need with practical action. As God provides for us both corporately and individually, we must remember that we are blessed to be a blessing to others. Benevolence is a great responsibility; it is our job to be wise stewards of what God has called us to lead. The church’s legal compliance in daily operations is an essential part of that careful stewardship.
To assist you with this process, I recommend using our bookkeeping service to help keep accurate financial records. Hiring a bookkeeper to handle your church or ministry’s finances can give you peace of mind, knowing your books are in good hands.
If your church doesn’t have a benevolence program, or if you need help with your current policy, please call our team at 877-494-4655.
Let us provide you with the assistance you need so you can focus on fulfilling your God-given calling.