You are here:

Nonprofit Law/Designate a contribution for a specific project or purpose

Advertisement


Question
Our church has a specific project such as major church building improvement, we encouraged church members to donate toward this specific project. Can the donors designate their contributions to this specific project for the church to only use the fund toward this specific project?
Is this considered earmark the contribution and therefore not allowed as tax-deductible contribution for the donor?

Answer
A donor may designate funds to go to the churches building improvement.  That is not considered what the IRS refers to as "earmarking", which is when the donor wants funds to go to an individual or to a non-exempt entity. See on page 3 of an IRS Private Letter ruling from 2006 to show what is considered "earmarking":
--- Start of Excerpt ---

 Another question that arises in the context of charitable
contributions is whether the contribution is really to the charity,
or to another person.  If a contribution made to a charity is
earmarked for the benefit of a particular person or non-charitable
organization under an express or implied agreement, then the
contribution is not deductible as a charitable contribution to the
charity.  The charity must have discretion and control over the use
of the funds.
---End of Excerpt---
www.irs.gov/pub/irs-wd/06-0003.pdf

By the way, if the donor wants to insure that the church uses the funds for the building improvement, have that donor contact me, because we would need to draft an agreement that the church would sign.

Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information.

Nonprofit Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Harvey Mechanic

Expertise

I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


©2016 About.com. All rights reserved.