November is here, and that means it is time for churches to begin educating those who faithfully give about charitable contribution deductions. Many churches miss this prime chance to remind people about giving opportunities and risk the tax deductibility of contributions their donors make.
How significant is this issue? A U.S. Tax Court case earlier this year resulted in the loss of a charitable contribution deduction for a donor who gave $25,000 to a church. The reason: The church didn't properly substantiate the contribution.
During these next eight weeks, we know churches will receive a flurry of donations. Many donors wish to make contributions before December 31 so that they can claim them on their 2013 tax returns. Others wait to see whether a Christmas bonus or stock dividend will pan out, providing them an opportunity to give a little extra. Still others are moved by the message of the season, feeling led to generously give.
Regardless of their reasons, set all of your donors up well by providing notice about the need for a written contributions statement from the church before filing their tax returns. Include these easy-to-use, one-page inserts in bulletins, newsletters, and other communications to guide them on how to give and receive tax deductions for their contributions.