The Christmas Season is upon us!  The lights, the gifts, the singing children, and those church giving statements.  Yes, the stockings hung by the chimney with care serve as a reminder to send outgiving your year-end donor statements!

Churches should send out giving statements at the beginning of the year, no later than January 31st, to comply with IRS regulations.

This time frame ensures that:

Tax Deduction Deadline: In the U.S., donors need their giving statements by January 31st to use them when filing their taxes. Don’t make them wait! The IRS requires individuals to document contributions of $250 or more during the year. Most churches choose to send statements to all donors regardless of the amount. (We recommend this.)

Annual Giving Summary: The statement should summarize the total contributions a donor made during the previous year, usually broken down by donation type (e.g., regular giving, special offerings, or event donations). This helps donors ensure their records align with the church's documentation.  Corrections can then be made as needed before filing taxes.

Best Practices for Churches:

Prepare and Review: Ensure that the records are accurate, double-checking contributions, and resolving any discrepancies before sending them out.

• Digital and Paper Options: Provide statements either digitally (via email or church management software) or by mail, depending on donor preferences. This can also reduce costs and increase convenience for both the church and the donor.

• Include Important Information: Include the church’s name, the donor's name, the tax year, a summary of donations, and a statement affirming that no goods or services were provided in exchange for the donation (if applicable).

• By sending giving statements within the first few weeks of the year, churches help ensure donors have the necessary information for their tax filings and show that they are organized and transparent in their financial dealings.

Why are these statements important?

Tax Reporting and Compliance: Donors often expect their donations to be tax-deductible. Accurate records are necessary for providing donors with the proper documentation (such as donation receipts or year-end statements) required for tax purposes. This helps ensure compliance with tax laws and prevents any legal issues for the church.

Financial Transparency and Accountability: Accurate donor records help churches demonstrate financial transparency. Donors expect their contributions to be used effectively and for the intended purposes. Proper records allow churches to report financial data clearly and respond to any inquiries from stakeholders.

Donor Relationship Management: Knowing who the donors are, their giving patterns, and how often they contribute helps the church maintain strong relationships with them. Churches can personalize communication(e.g., sending thank-you notes, prayer requests, and special updates) to make donors feel appreciated and valued. This can encourage continued support and increase engagement with the church's mission. 

Budgeting and Planning: Accurate records of donations help churches better understand their revenue streams, which is essential for budgeting and financial planning. Knowing how much the church receives in donations allows for more effective decision-making in terms of staffing, program planning, and facility maintenance.

Donor Retention and Growth: By tracking donor behavior, churches can identify trends in giving and take steps to engage donors more effectively. For example, churches can reach out to lapsed donors or identify major givers for special campaigns. Understanding donor history allows churches to develop strategies for retaining existing donors and attracting new ones.  There are software options available to help manage donor giving. (We can advise you!)

Legal Protection and Audits: Churches may be subject to audits by government agencies or independent auditors. Accurate records ensure that churches can demonstrate they are following proper procedures and guidelines when accepting and handling donations. This also protects the church from any potential legal challenges regarding misuse or mismanagement of funds.

Accurate donor records are essential for legal compliance,financial transparency, relationship management, and effective planning, all of which contribute to the long-term health and sustainability of the church's mission.

Send your Christmas cards out, then get those giving statements in the mail!