13 Oct 2014

How to Count Tithes and Offerings

Founder Raul Rivera

For approximately 11 years she embezzled funds from her church in Lexington, VA. Though no one ever suspected that she would take a dime from the church, the Commonwealth of Virginia has discovered, to date, that at least $157,000.00 of the church's money has been embezzled. Members of the church discovered that the money was missing when the woman became sick and unable to handle the church finances for a period of time. Seeing that certain purchases were made for jewelry, clothing, and other online purchases that had nothing to do with church business, these members decided to further investigate the matter and also discovered that some of the offerings made to needy people never made it to those for whom the money was given. It was indeed a sad day in the life of this church.

It is what you do when you discover fraud that counts most

There are three primary reasons why embezzlement happens at a church. First off, churches are trusting environments. Secondly, they usually have poor financial controls. And lastly, churches oftentimes believe that a financial audit will catch all forms of fraud. However, according to the Association of Certified Fraud Examiners, less than 10% of embezzlement cases are discovered because of a financial audit. For that reason, embezzlement usually goes on for many years before it is caught. If members of the board of directors discover embezzlement, they have a fiduciary duty to correct it and then report it. It is the best way to avoid personal liability. When it comes to the IRS, as stated in regulation 26 CFR 1.501, the church could lose its tax-exempt status if the board knows that embezzlement has occurred and fails to report it. Moreover, a fine of up to $20,000.00 per board member could be imposed for failure to correct the problem, per section 4958. Yet despite these potential consequences, church boards often do not report embezzlement because they would rather keep the state out of the matter. While the reasons vary, one common motivation is that they do not want to drag the church through public embarrassment or community scrutiny. Another reason is fear. Board members often believe that they may get into personal trouble if the authorities are alerted. The Business Judgment Rule protects board members from personal liability when the board members act in good faith. This rule originated through case law in 1945 in Otis & Co. v. Pennsylvania R. Co., 61 F. Supp. 905 (D.C. Pa. 1945). The court held that "mistakes or errors in the exercise of honest business judgment do not subject the officers and directors to liability for negligence in the discharge of their appointed duties." In light of the above, church board members should not fear reporting embezzlement. 

Seven steps to counting tithes and offerings

Churches are usually good at trusting individuals because of their Christian character. Anyone who works in the tithes and offerings counting system of the church must be someone the pastor and leadership can trust. If a church uses a volunteer, it must ensure that the volunteer is trustworthy, able to pass a test of scrutiny, and displays a balance between accountability and trustworthiness. Below are recommended guidelines for how to properly handle church tithes and offerings.

1.     Select multiple money counters, regardless of the size of the church. Never allow this job to be done by just one person during any given worship service. Always have more than one person in the counting room at all times; enough individuals should be selected so that more than one team of counters can exist and rotate.

2.     Select a safe room for the counters to do their job, and guard the entrance to this room by a person standing on the outside to ensure that no one person enters either accidentally or on purpose. This also provides protection to the counters.

3.     The counters should use a count sheet to record the tithes and offerings. Appendix B of the Ultimate Church Structure Conference has a copy of this form. This form is where the amount of cash in the envelopes is verified and corrected if entered incorrectly on the envelopes. 

4.     All counting should be done on the same day the offerings are collected. The counters should meet at the same time, count together, sign the count sheet, and prepare a deposit slip. A copy of the tithes and offerings count sheet needs to be given to the treasurer and the secretary.

5.     After money has been counted and the deposit slip prepared, it needs to be placed in the church safe under the supervision of the treasurer.

6.     The money needs to be deposited by the treasurer and a deposit receipt showing the exact amount that was actually deposited needs to be given to the counters.

7.     We recommend that the church put its tithe and offering counting policy in writing to ensure that everyone, whether paid staff or volunteer, follows the exact same procedure every time.


The church in Lexington mentioned at the onset of this blog suffered great loss because of the actions of one person. While they did the correct thing by reporting the crime, they could have avoided the crime altogether by implementing a system that protects both the ones who handle the money and the interests of the church.

Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Raul Rivera

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