5 Ways to Increase Church Giving

By Angie Joya

When people believe in the vision and mission of your ministry, they are generally inclined to support you financially. Yet, what happens when giving begins to decline?

According to Church Law & Tax, “Individual giving took a hit in 2018, with a decline from the previous year of 1.1 percent (or a decrease of 3.4 percent when adjusted for inflation), according to Giving USA 2019.” These statistics are intimidating and may seem downright disheartening. 

But don’t let these facts deter you from fulfilling God’s call over your life. Most churches overlook the fact that fundraising can be done in more ways than just taking up tithes and offerings on Sunday mornings. 

In this blog, we’ll look at five fantastic ways your church or ministry can increase giving and raise the funds it needs to thrive.

Public support

Before we jump into fundraising strategies, it is important to acknowledge why raising money is so important. One of the requirements of maintaining tax-exempt status for a charity is to be publicly supported. Therefore, outside of needing funds to operate, nonprofits also need incoming funds from the general public to be tax-exempt. 

According to Treasury Regulation 1.170A-9(f)(2), an organization is considered publicly supported if it normally receives a substantial part of its support directly or indirectly from the general public, from a governmental unit, or from a combination of these sources. The public support requirement is known as the public support test, and the term “substantial” in this instance means that at least 33 1/3% of the organization’s finances come from public support. 

The public support test proves that a 501(c)(3) organization is not a private foundation and that it may receive charitable contributions.

Five fantastic forms of fundraising 

Below are five out-of-the-box ideas to help you come up with ways to increase giving for your church. 

1. Create multiple avenues for your church to receive donations. One of the most common way for churches to receive donations is through the receiving of tithes and offerings during a worship service. For most churches, this means the passing of a collection plate or having a  designated area where members, and non-members, can give their donation. In addition, many churches utilize today’s technology with online giving, giving kiosks, and “text to give” options. In general, the more options given to your members, the more likely they are to give.
   
   If your church or ministry doesn't have a website yet, check out our StartSITES here. You can increase donations by 32 percent when you create an online giving platform. And our StartSITES makes it easy for you to create your own customizeable website in one hour.
   
   
2. Start a thrift store that sells only items that are donated. According to IRC § 513(a)(3), “the selling of merchandise, substantially all of which has been received by the organization as gifts or contributions” is not subject to unrelated business income tax. 
   
   Now, you must be thinking, “Cool. What does that mean and how does that apply to my church and me?”
   
   Essentially, proceeds or revenue that thrift stores receive from the sale of donated items is tax-exempt income that a church can receive. This is also a good fundraising option for outreach-focused ministries because it allows the needs of the community to be served, while also generating additional tax-exempt income.
   
   
3. Provide meals before and after service for the convenience of church members. Between work, school, church activities, sports, and the myriad of activities that one family has to manage, many families are looking for an easy lunch option on Sundays. Some churches have found that providing meals before and/or after their services is not only a blessing to their members but also a way to generate additional income for the church. These meals are usually offered at an affordable price. Because the activity is offered for the convenience of the members and it coincides with church activities, the revenue made from the sale of these meals is tax-exempt to the church.
   
   Take note, however, that because the members are receiving something in return (a meal) for the money given/paid, they may not claim that amount as a charitable contribution.
   
   
4. Operate a bookstore or coffee shop before and/or after service. Similarly, the sale of these items is related to the tax-exempt purpose of the church, and the service provided is for the benefit of church members. Aside from the extra cash the church can bring in, an added bonus to a coffee shop is having church-goers be awake and energized during the early service! 
   
   
5. Host the occasional Christian concert, or dinner, run by volunteer staff. Fundraisers that generate income from the sales of tickets are acceptable, as long as these activities do not take place on a regular basis. IRC § 513(a)(3) also states that when activities are carried out by volunteer staff (those who do not financially benefit from the profits), the income is not taxable.

How much is too much fundraising?

Though the IRS doesn’t specify a dollar amount as “too much,” it is important that certain fundraising activities not become substantial. According to IRC § 513(a), when a tax-exempt organization carries out a “trade or business” that is not “substantially related” to the organization’s exempt purpose, the income therefrom may be subject to unrelated business income tax, which can jeopardize an exempt organization’s tax-exempt status with the IRS.

Furthermore, IRC § 512(a)(1) states that “the term ‘unrelated business taxable income’ means the gross income derived by any organization from any unrelated trade or business . . . regularly carried on by it.” You can read more about unrelated business income here.

While all of these are excellent methods of fundraising, a more steady alternative might be investing in a for-profit arm.

When fundraising isn’t enough

Fundraising is an excellent starting point, but it may not suffice to cover all the additional income your church or ministry needs to achieve its goals and projects. Fortunately, there are other avenues to explore. One viable strategy is for the church or ministry to establish a for-profit business corporation. This entity can generate profits, which are then distributed to the church tax-free.

We call it a “For Profit Arm.” In Section 502, the IRS calls it a “Feeder Corporation,” and describes it as a business operated for the primary purpose of carrying on a trade or business for profit even if the profits are distributed to your church tax-free 

A church can start a videography or event-planning business that transfers the profits, after all, taxes and business expenses have been paid, to the church through the shares it owns. By being the majority shareholder, the nonprofit may control how that organization operates. Remember that the business itself is responsible to comply with state and federal regulations regarding for-profit corporations.

Funding the future

Maybe you, like many pastors throughout the country, find yourself at a crossroads. Perhaps you want to invest in God’s vision, but find it difficult to fulfill that vision with limited funds. 

I encourage you to give us a call at 877-494-4655 to explore additional ideas to fund the future of your church or to discuss how your church can start a for-profit arm. And while you’re speaking with one of our church planting specialists, ask how you can take the right steps to keep your church or ministry protected. 

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