Does your church currently have a ministry school or oversee a Christian school? Do you currently have any scholarship funds set up? If so, you might be shocked to find out that you may not be obeying the law. The donations you are receiving may not be tax deductible by the IRS. Here is a scenario of a Pastor whose church oversaw and operated a Christian school as their ministry and had some questions. They contacted the Christian Law Association, seeking some professional legal advice on what to do in regards to scholarship funds for their ministry school. You might find the answers to his questions very surprising.
Can You Have A Scholarship Fund For Your Ministry School?
Can a church or a ministry operate a scholarship fund for the school that they operate as a ministry?
With a word of caution for today’s ministry leader, here is attorney David Gibbs, Jr. of the Christian Law Association.
A church operated a Christian school and maintained a scholarship fund to help to fray the costs of tuition for needy students. The Pastor contacted the Christian Law Association with two specific questions about the scholarship fund.
Question #1
Are all donations to the scholarship fund considered tax deductible by the Internal Revenue Service? Here’s the answer, donations to the general scholarship fund are tax deductible. Donations for a specific student are not.
Question #2
What stipulations must be made when choosing how to distribute the funds? The answer to that is that the children of those in leadership, those who can influence how the funds are dispersed cannot, by law, be eligible to receive any of the funds.
When you give church or ministry money, and you are doing it in order to help the needy, be careful that indeed you obey the law.