Understanding Church Benevolence: A Comprehensive Guide to Benevolence Funds and Programs for Nonprofits

Photo of two volunteers involved in a church benevolent fund

What is a Church Benevolence Fund? 

A church benevolence fund is a reserve collected to provide relief support to members of the local community. Donations are typically sourced from church members and supporters. Benevolence fund management should be overseen by a designated committee to ensure donations are fairly distributed when emergency assistance is required.  

 

How Does a Benevolence Fund Help Individuals and Families? 

Benevolence funds may be used for various purposes. Examples include:  

  • Unexpected medical expenses 
  • Financial hardships due to unemployment and other unexpected factors 
  • Natural disasters 
  • Provides support after a death in the family 

Funding also instills the concept of Catholic charity in communities.  

 

Sources of Funding for Church Benevolence 

A benevolence fund for church is primarily made up of donations from other church members. However, any individual or organization may donate to the cause.  

 

How to Start a Benevolence Program 

Photo of a to-do list for church's benevolence fund

Unfortunately, you can’t just start a benevolence program and begin raising funds. It requires a process to ensure it meets legal requirements. Here are the steps involved. 

 

Steps to Establish a Church Benevolence Program 

  1. Create and implement a written policy 
  2. Define what type of contributions will be allowed. Contributions must be made to the charity and not directly to the individual to qualify for tax deductions. 
  3. Determine what needs your funding will support.  
  4. Develop criteria to assess human needs.  
  5. Develop a process for determining individual needs and the documentation and verification required for disbursing larger amounts.  
  6. Create funding limits. Consider developing a process for people who have extensive funding needs.  
  7. Ensure funding is disbursed from the benevolence fund or a charity fund rather than the collection plate and other sources.  
  8. Pay funds like rent, mortgage, and utilities directly to the provider rather than the individual.  
  9. Keep a written record of the funds disbursed. 

 

Creating a Written Policy for the Benevolence Program 

Creating a written policy should be the first step in setting up your benevolence program. It should outline how funds are collected and disbursed. There are several templates online that you can use to guide your written policy creation.  

This video will guide you in the right direction: 

 

Engaging Donors and the Community in Fundraising 

Once your benevolence fund is in place, you can begin engaging donors and raising money. Funds can be raised in various ways including the following: 

  • Online Donation Pages: Churches should set up online donation pages for fundraising purposes. Donation pages should not be overly complicated and should be set up to accept various payment options. Guide donors to your donation page through social media, email, and other outreach methods.  
  • Peer-to-Peer Fundraising: Peer-to-peer fundraising involves supporters fundraising on your behalf. They often set up their own donation pages to raise funds from friends and relatives. According to WP Experts, peer-to-peer fundraising has a 71% success rate.  
  • Community Events: Churches can host various community benevolence events to raise funds. Anything from a casual event like a bake sale or car wash to a formal gala can be effective for fundraising.  
  • Corporate Partnerships: Corporate partnerships involve a church partnering with a local business to raise funds. They may return the favor by advertising the business at one of their events. According to Fundraising IP, corporations give nonprofits an average of $21 million each year making them an excellent donation source.  
  • Direct Appeals: Direct appeals can be sent out via email, social media posts, newsletters, and direct mail. Include a CTA leading donors to your donation page for optimal results.  
  • Tithe: A good percentage of benevolence funding is collected through tithing. Although many adults don’t give the 10% of their income churches recommend, they contribute substantially. The average church offering per person ranged from $1,144 and $3,432 in 2021. 
  • Grant Writing: Grant writing involves creating a written proposal to request funding from a foundation or organization. You must find potential donors, read the instructions to ensure your letter meets requirements, develop a compelling narrative, create a detailed budget, and include supporting documents. Grant writing is a skill that must be learned over time. Here is a helpful resource to help you get started.  

 

What Should Be Included in a Benevolence Policy?  

A benevolence policy should include some key features including the following: 

 

Key Elements of an Effective Benevolence Policy 

 A benevolence policy should include:  

  • The criteria for qualifying for funds 
  • The approval process 
  • How needs will be determined 
  • The duration of the funding 
  • The application process 
  • The review process 
  • The responsibilities of the policy administrators 
  • A sample application form (optional) 

 

What is an Example of Benevolence Policy for Churches? 

Benevolence policies typically outline how funds are distributed to church members and their qualifying financial needs. These may include unemployment, natural disasters, a death in the family, and other hardships. Here are some benevolence examples: 

  • In 2021, Valley Real Life Church raised $300,000 and used the money to pay high medical bills for people in the Spokane, WA area.  
  • In 2020, Shepherd of the Valley Lutheran Church gave 1789 families a total of 229,991 pounds of food from their food pantry and donated an additional $58,829.  

 

Importance of Confidentiality and Accountability  

Confidentiality is necessary for effective benevolence fundraising. A church will need financial details and documentation from members requesting assistance. That information should remain private.  

Cybersecurity is another concern. According to ACST Technologies, the financial sector is among the top five most targeted industries for cyberattacks. Churches are particularly vulnerable.  

Make your donors and recipients feel confident by highlighting the importance of confidentiality and security in your program practices. Enforce access restrictions and encryption to ensure sensitive information is stored securely.  

The church must also be accountable for following ethical and legal guidelines. A carefully crafted written policy can prevent misunderstandings. It can also protect the church if it is audited. It provides evidence that your program is consistent with your exempt purpose.  

For optimal accountability, avoid allowing one person to oversee the program. Ensure funding is approved by all program members to eliminate confusion.   

 

Decision-Making Process for Fund Distribution 

The church’s written policy should outline the decision-making process for crisis relief fund distribution. You should determine the amount of funding needed and the length of time the recipient will require finding. Administrators should also confirm that the requester lives in the affected area and is not receiving funds from another benevolence provider.  

Larger disbursements may require a more intensive process. You may want to collect information on the recipient’s employment status, dependents, church involvement, income, expenses and assets. References should also be requested.  

This activity will ensure you are distributing adequate funding to a deserving individual.  

 

How to Manage Benevolence Funds Effectively 

Benevolence funding must be managed effectively to ensure money is distributed wisely and all transactions are accounted for. Here are some tips to keep in mind.  

 

Best Practices for Managing and Distributing Funds 

Administrators should work out a system for distributing funds. They should make a list of information that must be verified before funds are distributed. Income needs and status should be considered before funds are released.  

Additionally, funds should never be withdrawn from the offering plate or a bookstore cash register. Doing so does not provide a record of assistance. It doesn’t offer the accountability expected of a Catholic organization.  

Documentation should always be collected before a transaction is finalized.  

 
Tracking Donations and Disbursements 

Administrators must also work out a system to track donations and disbursements. They must record the following information: 

Donor Information:  

  • Donor name 
  • Donation amount 
  • Date of donation 
  • Designation if any 

Recipient Information: 

  • Recipient name 
  • Address 
  • Date of disbursement  
  • Amount disbursed  
  • Purpose of disbursement 
  • Supporting documentation 
  • Decision-making information such as the date the application was received, the viewing benevolence committee members and the approval date 

Administrators will be more organized by following these best practices: 

  • Use a dedicated accounting system: Several online accounting systems make it easy to keep track of church funding. A fund accounting method is recommended. If the members of your committee are unfamiliar with fund accounting, you may seek assistance from a professional.  
  • Clear Categorization: Your system should provide features that allow you to categorize various benevolence needs such as food, housing, or medication.  
  • Include Detailed Documentation: Your records should document each recipient’s income and needs, benevolent application form, and meeting minutes.  
  • Regular Reporting: Generate reports regularly for insight into fund usage and to ensure compliance.  

This video on fund accounting can guide you in the right direction.  

 

Reporting and Accountability Measures 

Accountability is essential in any financial transaction, but it is especially important in benevolence funding. A lack of accountability can lead to tax issues and mistrust of the church.  

Administrators can ensure accountability by:  

  • Record Keeping: Records record donation amounts, reasons for the donation, the decision-making process and supporting documentation. They can be shown if anyone challenges the donation, whether it be a church or committee member or the IRS.  
  • Oversight in Decision Making: Decision-making should never be left to one person. It should be conducted with the oversight of a church elder and other committee members. This ensures all decisions are made fairly.  
  • Check-ins and Updates: Church and benevolence committee members may check up on cases to ensure they are moving along smoothly. Information gleaned during these updates should be shared to ensure no information is withheld.  

 

What are the Challenges in Benevolence Programs? 

Benevolence programs are beneficial to the community, but they come with their share of challenges. An awareness of challenges can help you overcome obstacles. Here are some common difficulties administrators face.  

 

Common Hardships Faced by Applicants 

The hardships applicants face are typically felt community-wide. They may be dealing with: 

  • Unemployment  
  • A death in the family 
  • Homelessness 
  • Natural disasters 
  • Other emotional losses that lead to financial hardships 

Committee members often feel helpless because they cannot do enough to help the person in need. While funds are limited, they may be able to connect these individuals with additional support services so they can find a solution to their problems.  

 

Addressing Misuse of Benevolence Funds 

There are various circumstances in which benevolence funds are misused. Examples include: 

  • Funds given in exchange for work done: Benevolence funds should not be used to pay workers, nor should they be given with the expectation that the recipient should volunteer or work for the church. In this instance, the funds would no longer be a donation but taxable compensation.  
  • An Unlevel Playing Field: This occurs when administrators favor certain people in need because they have close relationships with them or have done a lot for the church.  
  • Gifts are Earmarked for Certain Individuals: Distributing funds to a specific individual is not illegal, but these designated funds would not be tax deductible.  

Misuse can be avoided with a strict approval process that is followed regardless of the circumstances.  

 

Balancing Compassion with Financial Accountability 

Administrators may feel compassionate to people in need and may want to give them a bigger gift than the committee allows. However, this can lead to a lack of financial accountability. You run into misuse issues that can lead to IRS audits and a lack of faith in the church.  

 

How to Evaluate the Effectiveness of a Benevolence Program 

Just like any fundraising effort, the church should track metrics to measure the success of its benevolence programs. Here are some to consider.  

 

Metrics for Measuring Program Success 

Several metrics can help you measure program success. They include: 

  • Outcome Impact: How has the compassion fund helped your recipient families?  
  • Donations Raised: Are you reaching your donation goals?  
  • Donor Activity: Are your donor numbers and amounts increasing or decreasing?  
  • Financial Efficiency: Does your committee use funds wisely to reach its goals?  
  • Sustainability: Does your program show promise to maintain or expand over time? When measuring sustainability, you must consider scalability and how your infrastructure will hold up long term.  
  • Innovation and Adaptability: How well does your organization adapt to new technologies and ideas? 

 

Feedback from Recipients and Donors 

In this age of technology, metrics can be gleaned through various online platforms. For example, you can use social media analytics to measure engagement. Your financial reporting will indicate whether you are raising enough money to reach your goals. However, only direct feedback will reveal the level of customer satisfaction.  

You can collect feedback through surveys and by directly asking members what their experience was like. Here are some examples of the questions you may want to ask.  

Donors: 

  • Did you find it easy to use our online donation platform?  
  • How satisfied were you with our communications? 
  • What can we do to better engage with donors? 

Recipients 

  • How did the charitable fund help you through financial hardships?  
  • Did you experience an easy application and approval process? 
  • How can we improve our funding system?  

 

Improving the Program Based on Evaluation Results 

Collecting feedback and evaluating metrics won’t do much good unless you use the feedback to improve your church assistance program. Consider how you can streamline your process and increase engagement. Consult with your committee to determine what’s doable and which projects to tackle in the future.  

 

Benevolence Fund FAQs 

 

What are the IRS rules for benevolence? 

The IRS has several rules for benevolence. For example, the donation is tax deductible provided it is given to the committee and not the individual. The recipient is not taxed for the donation. 

The money donated cannot be used for private purposes. It must help an indefinite charitable class of people, not just church members.  

Churches must put limits on benevolence to ensure they can help multiple individuals. An application process should be in place to ensure the individual needs the funding.  

 

What does benevolence mean in a church? 

In a church setting, benevolence is defined as actively helping those in need with financial assistance and other forms of aid.  

 

What does the Bible say about benevolence? 

Benevolence is mentioned several times in the Bible. Here are some examples: 

  • James 1:27: Pure religion is caring for widows, orphans and keeping oneself separate from the world’s corruption.  
  • Proverbs 28:27: Those who give to the poor will not be in need, but those who turn away will be cursed.  
  • Acts 20:35: It is more blessed to give than receive.  

 

What is a benevolence gift? 

A benevolence gift is an act of kindness to help someone in need. Church benevolence typically provides funding to church members in need. Employee benevolence occurs when an employer helps a worker in need. Community aid benevolence happens when people help other members of the community.  

 

Is a benevolent gift taxable? 

No, a benevolent gift is not taxable.  

 

What is a benevolent fund example? 

A benevolent fund may be provided to assist someone needing hardship support due to a loss in the family, unemployment, or a natural disaster.  

 

Does my church need a benevolence policy? 

Every church that has a benevolence program needs a benevolence policy. The policy provides guidelines for procedures to ensure accountable giving. It keeps churches IRS compliant.  

 

Should a church have a benevolence fund?  

Yes, a church should have a benevolence fund. It sets an example to the members of the church and helps people in need. However, it is not a requirement.  

 

Unlock the Secrets to Stewardship in the Catholic Church with a Free eBook!   

Keeping the lights on, the doors open and missions funded aren’t what inspired most church leaders to pick their careers, but they are key to the health of each church and congregation. Discover how to become a master of church stewardship with our ultimate guide.    

The Complete Guide to Church Stewardship

 

 

 

Related Posts

Related Posts