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03 Jul 2018

What Every Church Must Know About Helping the Needy

Raul Rivera

As the Body of Christ, we are called to meet the needs of not only those in our churches, but also those within our communities.

Through acts of love, kindness, and generosity, we become the hands and feet of Jesus.

The act of helping those in need is commonly referred to as benevolence.

Throughout the Gospels, we often find Jesus teaching about the kingdom of God. In Matthew 25, Jesus tells us a story about a shepherd sorting sheep to his right and goats to his left, comparing them to those that God will one day set aside on His right and left.

In this passage, we read that those on God’s right were the ones who fed, clothed, and gave shelter to the “least of these.” The ones on God’s left were those who failed to feed, clothe, and give shelter to the “least of these.”

Jesus then takes it one step further by stating that what they did and did not do to the “least of these” was as if they did or did not do it to Jesus Himself!

While generosity and benevolent acts seem to be a part of the Church’s DNA, it is common for many churches to give benevolence without a comprehensive plan.

The truth of the matter is that how your church gives to the “least of these” matters.

Because of this, I want to show you how your church can create a successful benevolence program that not only meets the needs of those in your community, but one that also meets the requirements of nonprofit law.

Before we do that, however, you need to understand how the IRS defines benevolence and who actually qualifies for benevolence.

What is benevolence?

Using a Supreme Court decision, 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 benevolent (charitable) gift tax-free, and in-turn, the church does not have to issue the recipient a Form 1099-MISC.

However, in order to fully understand benevolence, we must also understand who qualifies to receive 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’.”

In addition, 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 better understand how the IRS defines benevolence and who qualifies for benevolence, it is important that you know who does not qualify for benevolence from your church.

Who does not qualify for benevolence from your church?

This may come as a surprise to you, but not everyone is able to receive benevolence from your church. Let me explain.

The tax code details all those who are considered disqualified persons.

In essence, those who have substantial influence in your church, along with family members, are disqualified from receiving benefits from the organization.

Therefore, board members and their direct family members are ineligible to receive financial assistance in the form of benevolence.

When a disqualified person receives benevolence from your church, it is what is known as an excess benefit transaction.

In short, an excess benefit transaction can occur when a disqualified person receives any type of financial benefit or assistance that is in excess of the service that person provides to the organization.

According to the tax code, however, disqualified persons may receive compensation in consideration of services rendered. Meaning, they can receive financial compensation that is reasonably based for a service they provide to the church.

How to create a benevolence program at your church

Now that you have a better understanding of benevolence as well as who does and does not qualify for benevolence, I hope you are beginning to see the importance of having a benevolence program and plan in place.

Below are 4 steps that your church or ministry should take when creating a benevolence program:

  1. Create a benevolence committee. This committee is responsible for crafting a mission statement and benevolence policy. They also review the needs presented to the church from those in need, and determine the best course of action for meeting those needs through the benevolence fund. This committee is ultimately responsible to the board of directors.If you are unable to create a benevolence committee, then the board of directors will assume all responsibilities.
  2. Determine how your church will serve. You need to determine the specific kinds of resources that your benevolence program will offer. When determining the types of resources/assistance that you will offer, you want to keep your mission statement and program goals in mind.
  3. Establish and adopt a benevolence policy. It is imperative that you adopt a benevolence policy that provides guidance and structure of the procedures in implementing your benevolence program. Every church and ministry that goes through out StartRIGHT® Program receives this policy. If you have further questions or would like a copy of this policy, feel free to give us a call at 877-494-4655.   
  4. Create a benevolence application/request form. You should require that anyone requesting benevolence from your church or ministry complete a benevolence application/request form. This application/request form will help your benevolence committee (or board of directors) identify and meet the needs of those in your church and in your community.

To further assist you in creating a benevolence program, we have created a more detailed and comprehensive resource for churches and ministries. You can click here for more information.

Blessed to be a blessing

Being benevolent is who we are as followers of Christ and as ambassadors of God’s kingdom. However, the world in which churches exist and operate is not as it once was.

Unfortunately, it’s not as easy to simply meet a need and not think twice about it these days.

Because of this, it is important for you to become and remain a good steward of all that God has entrusted to you. Your church’s legal compliance in its daily operations is a key part of that process.

When you attend one of our Ultimate Church Structure Conferences, you are actively working toward that very goal.

Click on the link below and register for an upcoming conference in a city near you.

Find a Conference Near You

Click Here

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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.

Blessings,
Raul Rivera

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About the Author

Church Planter. Speaker. Author. CEO. Raul Rivera has had ample experience in the church planting world. His current venture, StartCHURCH, has helped 1000's of churches to start right. Raul has compiled an array of manuals and software tools that help churches stay compliant with the IRS. He also hosts over 35 national conferences per year, training pastors on how to launch their churches. Raul is married to his wife Genel, and they and their five children live in Atlanta, GA.