A Church Finance Handbook

A CHURCH FINANCE HANDBOOK

FOR CHURCH TREASURERS & FINANCE COMMITTEES

MASSACHUSETTS CONFERENCE

2010

? 2010 by the Massachusetts Conference of the United Church of Christ

This Handbook was prepared with funding from Our Church's Wider Mission and

Massachusetts Conference Fellowship Dues.

For additional copies, please contact the Massachusetts Conference, United Church of Christ

One Badger Road Framingham, MA 01702 508-875-5233

FOREWORD & ACKNOWLEDGEMENTS

Thank you for agreeing to serve your church as its Treasurer or Finance Team member. Your work is essential to the ministry of your own congregation as well as the larger United Church of Christ. As you carry out your leadership responsibilities, you may find that you need information beyond what you currently know about non-profit financial management, legal and tax matters, employer responsibilities, or communications with the wider church. We offer this handbook in the hope that it will be helpful to you and your work with your church.

The first edition of this handbook was prepared in 1998 by Dawn Hammond, now Associate Conference Minister for Policy and Finance, at the request of the Commission for Leadership Development for the Massachusetts Conference of the United Church of Christ, in order to provide guidance regarding some of the questions commonly asked by church treasurers and finance committees. This second edition has been updated by Rev. Karen McArthur, Affiliate Minister of Stewardship and Finance at First Church in Cambridge, Congregational, UCC and a consultant to numerous congregations. It incorporates updated resources and requirements, along with new information about financial reporting. Some sections are excerpted from Karen McArthur's unpublished work-in-progress entitled Prophetable Stewardship: What Every Pastor (and Leader) Needs to Know about Church Finance. The drawings were contributed by Maureen Devey Jones, a member of the Congregational Church of South Dartmouth.

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Special thanks to Dawn Hammond, Associate Conference Minister for Policy and Finance; Andy Gustafson, Associate Conference Minister for Stewardship and Financial Development; Brian James, Treasurer of First Church in Cambridge; Stow Walker, Treasurer, and Ken Taylor, Trustee, of Old North Church in Marblehead; and Bob Stolte, Treasurer of West Parish of Barnstable, who have read drafts and made suggestions along the way.

If you have questions that are not addressed in this handbook, feel free to call the Massachusetts Conference office (508875-5233) and speak with Dawn Hammond.

In addition to this printed resource, the Massachusetts Conference provides Treasurers' Workshops as a part of its program. These half-day workshops take place at several locations throughout the state. Information about the programs is included on the MACUCC website and is e-mailed to each church throughout the year. Additional information may be obtained from the Massachusetts Conference.

IMPORTANT DISCLAIMER:

This Handbook seeks to provide current and accurate information about the topics presented. However, it is offered with the understanding that if you need accounting advice, you should contact an accountant who can review your situation personally and offer her or his professional advice.

Again, thank you for all you do for our local churches, the Massachusetts Conference, and the United Church of Christ!

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? 2010 Massachusetts Conference UCC

TABLE OF CONTENTS

I. THE ROLE OF THE TREASURER .......................................3

II. THE LEGAL STATUS OF CHURCHES ...............................5

A. Incorporation ..............................................................................6 B. Reporting Compliance and Exemptions.................................7

1. Employer Identification Number (EIN) .............................8 2. Massachusetts Reporting Requirements ..............................9 3. Federal Reporting Requirements ........................................11 C. Tax Compliance and Exemptions..........................................12 1. Federal Income Tax Exemption .........................................12 2. State Income Tax Exemption..............................................13 3. State Sales Tax Exemption...................................................13 4. Massachusetts Hotel Room Use Tax..................................14 5. Local Property Taxes ............................................................15 6. Federal Excise Taxes.............................................................16 7. Unrelated Business Income Tax .........................................16 8. Payroll Tax Deposits.............................................................17 D. Banking ......................................................................................18 1. Bank Accounts.......................................................................18 2. Credit Cards ...........................................................................19 3. Loans and Lines of Credit....................................................20

III. RECEIVING CONTRIBUTIONS ........................................22

A. Contributions from individuals ..............................................22 B. FASB116: Accounting for Contributions .............................25 C. Gifts of Stock ............................................................................27 D. Gifts of Property ......................................................................27 E. Payment Methods.....................................................................28 F. Fundraising Events...................................................................28 G. Annual Stewardship Campaigns.............................................29 H. Capital Campaigns....................................................................30 I. Planned Giving .........................................................................31

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