Important: Did I Support or Pay a Missionary?

Written by Chaston Asbury on Aug 20, 2019 in IRS Compliance

In Matthew 28:16-10, Jesus gave us the Great Commission: “All authority in heaven and on earth has been given to me. Go therefore and make disciples of all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, teaching them to observe all that I have commanded you.”

Supporting the Great Commission that Jesus gave to us can look like a variety of different things for different churches. Some churches fulfill the Great Commission by serving their community. Others take short-term mission trips. Other churches might financially sow into a mission organization. Still, others fulfill the Great Commission by financially assisting a missionary. 

Each of these examples helps to further the kingdom of God in different ways. When it comes to the last two examples, however, do you know the difference between supporting a mission and supporting a missionary? 

Who benefits?

The key to determining the difference between supporting the mission or supporting the missionary is to determine who is benefiting from your financial assistance. 

If the mission, or the mission organization as a whole, benefits from your gift, then you are supporting the mission. If an individual, the missionary, benefits from your gift, then you are supporting the missionary. 

Many churches today will financially support global missions as well as provide financial assistance to missionaries themselves. While this is a great thing for churches to do from a “Great Commission viewpoint,” it may make the church’s finances a bit trickier to discern for tax purposes. Misunderstanding the difference between supporting the mission and supporting the missionary may lead to dire tax consequences that could have easily been avoided.

What’s the difference?

In short, when you fund the mission, you are providing the resources necessary to conduct missions activities. This can look like:

  • Providing rent money for a facility
  • Sending food, clothing, and school supplies to a church, orphanage, or other nonprofit
  • Giving money to an organization to buy office supplies or training materials
  • Purchasing medical supplies and equipment for medical missions 

When you fund the missionary, you are providing the livelihood of the missionary so that they can have their personal needs met. Examples of this include:

  • Sending money to a missionary to use for personal care items
  • Providing rent money to a missionary for their housing
  • Paying for a missionary to travel home to see family

My wife and I regularly donate to a mission organization in Uganda. One of my friends is on staff there, and we also support him on occasion. The regular donation that we give to the organization is helping to support the mission of that organization, but when we send money to my friend to support his livelihood in Uganda, we are supporting him as a missionary.

Understanding the difference between the two is critical. For example, if your church pays money to a missionary and does not treat this support as compensation, then there can be tax consequences.

Sending money overseas

When you send money overseas to support missions work, you must take strict measures to ensure the proper use of those funds. Revenue Ruling 68-489 permits U.S. tax-exempt organizations like churches and ministries to support foreign charities so long as the donations given do not jeopardize the organization's exemption under section 501(c)(3) of the Code.

When your church gives missions funds to another U.S. nonprofit, this rule does not apply. But when you send funds directly to a mission organization overseas, make sure you are adhering to the following:

  • Your church must be sure that funds are being used to further your exempt purpose. By including language stating that your church will conduct missions activities in the purpose statement of your organizing documents (Articles of Incorporation & Bylaws), you ensure that any missionary activity your ministry conducts or financially supports is already allowable based on the purpose of your organization. 
  • Set up clear parameters for the use of the funds so that they cannot be abused.  Have a written agreement in place with the overseas mission organization or missionary receiving funding from your ministry. Be sure to clearly stipulate how funds may or may not be used. Require regular financial reports from the organization or missionary. 
  • Maintain control over how the funds are used. This is accomplished by requiring regular financial reports from the mission organization or missionary. If the recipient of the funds ever misuses them, StartCHURCH recommends withdrawing support immediately and redirecting those funds to support your own organization or other nonprofit activities.

Before your church supports any foreign organization, you should confirm that it’s okay to transact business by searching for the entity on the Office of Foreign Asset Control’s list of sanctioned countries, companies, and individuals The “Specially Designated Nationals and Blocked Persons List” and the “List of Sanctioned Countries” are specific sections to be checked. These lists can be found here. 

At StartCHURCH, we highly recommend creating an anti-terrorism policy. This is a policy we give to all churches and ministries that go through our StartRIGHT Service. To learn more about  how this policy will safeguard your ministry, give us a call at 877-494-4655. 

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(Recommended reading: "What Churches Should Know Before Supporting Missions")

Supporting missionaries

There are three main ways in which a church may disperse funds to a missionary. How the funds are treated from a tax standpoint is predicated upon the way in which the funds are given to the missionary. Your organization’s responsibility in how these funds are documented is also dependent upon how you fund the missionary. 

The three most common ways to fund a missionary are as follows:

  • Send money to another U.S. nonprofit and designate it to be given to the missionary. With this option, you are giving directly to another nonprofit that maintains control of the funds. The recipient nonprofit may then direct that money to its own support of the missionaries in its charge. In this scenario, your organization has no tax responsibility regarding the missionary because another nonprofit serves as the employer.
  • Pay the missionary as a contractor. This is the best option when you are providing living expenses for a missionary from time-to-time when he or she is conducting an activity in which your church believes. Remember, when money is given to the missionary to provide resources for work, it is non-taxable. However, when you pay money to the missionary for his or her own personal living expenses (rent, food, clothing, travel, vacation, etc.), you are paying him or her for a service, and thus those monies are taxable. 
  • Pay the missionary as an employee. When your church sends a missionary to a region or country to perform a specific function, and your church provides the funding for the mission, the job description for the missionary, and the pay for that missionary for the service, the missionary is an employee of the ministry. It is important to note that when your church hires a person to perform a task, controls how that task is done, and how much it will pay, that person is an employee.

Fulfill the Great Commission and do your due diligence

Whatever you are doing to help fulfill the Great Commission, whether that be short-term mission trips, block parties in your neighborhood, funding missionaries, or donating to mission organizations, you are partnering with God to see His work done.

Maintaining compliance and pursuing God’s plan for your ministry doesn’t have to be a difficult road to navigate. At StartCHURCH, our goal is to empower you with the knowledge and confidence to do both.

Our bookkeeping service gives you access to your own personal bookkeeper, trained in church compliance. Not only do we offer industry-standard reporting, but our bookkeepers will be on the lookout for you for anything that the IRS would consider a red flag.

Give us a call at 877-494-4655, or click the button below to schedule a call with us. Twenty minutes can change your ministry.

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