Designated Funds

Usually as I have seen designated funds go for what it is designated for. And it is on the giving record. Where would building funds be with designated giving.

 

More and more churches are being forced to deal with this subject. Small amounts designated for the building fund or nursery are usually not a problem. Large gifts that come with stipulations on how to spend them can be. If your church does not already have a policy for this then you need to write one now, before the gift is made.

Often these designated funds come in the form of large lump sums paid from the estate of a former member. Sometimes no one knew that this individual was wealthy. Then all of a sudden you have a $400,000 gift, but, (like government money) it comes with strings attached. The generous philanthropist or his estate want the money spent on a fountain and water garden for the sanctuary entrance to be built in their memory.

Now you can't afford to gas up the vans to bring kids to Sunday School, the Youth Pastor is only part time because you can't afford the salary increase but your going to spend 400k on a fountain? I hope not.

Every church, especially small ones, need a written policy concerning designated funds. There needs to be a committee of deacons or elders, you could use an existing finance or building committee, but there needs to be a clause there that allows a designated group of church members to evaluate the gift and determine if it is in keeping with the goals and ministry of the church. There may well be times when a gift has to be refused or negotiations made with the estate about how it is spent. There may be cases like with lottery winnings that the church refuses the gift based on the source of the money. There may be cases where a compromise can be reached. Spend 30k on a fountain with a nice "in memory of" plaque and spend the rest on Sunday School literature, or whatever the needs are.

The thing is you need to write your policy NOW, before any large gift is made. Otherwise the risk of a split in the membership is high. You want to have a written policy, previously approved by a membership vote, that you can fall back on. You don't want to make this up as you go.

 

Yes, we allow designated offerings. Yes, we include it on the person's giving receipt. We haven't had any issues with "strings attached" gifts that NCT mentions in his posts, but I agree with what he says there.

As for designated gifts for items on our budget, we treat the money as fungible. For instance, let's say our choir budget for the year is $1,000, but someone designates a $100 special gift towards the choir budget. On our church financial statement, we show two columns for the expenses - one for expenses taken from the general budget, and the second for expenses taken from special gifts. So if the choir spends $1,100 for the year, then we would show $1,000 in the general expense column and $100 in the special expense column (per the $100 special gift that came in). If the choir only spends $1,000 for the year, we would show $900 and $100 in the two columns.

The thing to remember about a budget is that it is an estimate, not a fund per se. So if we budget $1,000 for choir that does not mean they have exactly $1,000 and only $1,000 to work with. Some years they spend a little more and some years less. Any special gifts that come in just help the choir director spend a little more than she normally would under normal circumstances, if she chooses to do so. Again, the money used is all fungible.