After Disaster 2: Preparing to be Benevolent

By Raul Rivera

As the Body of Christ, we are called to meet the needs of those not only in our churches, but also those within our communities. When a natural disaster occurs, we feel the calling even more so to help those who have been affected.

When a church helps to meet the needs of an individual, it is commonly referred to as benevolence. 

While generosity and benevolent acts seem to be a part of the Church’s DNA, it is not uncommon for many churches to give benevolence without a comprehensive plan.

Although it may seem unfortunate, the truth of the matter is that how your church gives benevolence matters, even when a natural disaster strikes. 

Because of this, I want to show you how your church can create a benevolence program that not only helps you to meet the needs of those affected by natural disasters, but one that also meets the requirements of nonprofit law. 

Before I do that, however, it is important that you understand how the IRS defines benevolence and who actually qualifies for benevolence.

How the IRS defines benevolence

Using a U.S. Supreme Court decision (see Commissioner v. Duberstein*), the IRS defines benevolence, under Internal Revenue Code section 102, as a gift given from “detached and disinterested generosity” and out of “charity or like impulses.” 

This current interpretation of benevolence allows the recipient to receive the benevolent (charitable) gift tax free; and, in turn, your church does not have to issue the recipient a Form 1099-MISC. 

However, in order to fully understand benevolence, you must also understand who qualifies to receive benevolence.

Income Tax Regulation 1.501(c)(3)-1(d)(2) defines those who qualify for benevolence as the following:

“[P]ersons who are financially unable to care for themselves as a result of sudden and severe or overwhelming financial burdens arising from events beyond their control are proper objects of charity because they are considered to be ‘distressed.’” (Emphasis added.)

Additionally, Income Tax Regulation 1.170A-4A(b)(2)(ii)(D) defines “needy” as a “person who lacks the necessities of life, involving physical, mental, or emotional well-being, as a result of poverty or temporary distress.”

Based off of these two definitions from the IRS, one would assume that individuals affected by a natural disaster would qualify to receive benevolence from your church or ministry.

Yet, is it possible for someone to meet the IRS’s definition of a “needy” person and still not qualify for benevolence from your church or ministry?

When the “needy” do not qualify for benevolence

This may come as a surprise to you, but not everyone is able to receive benevolence from your church. Let me explain. 

Treasury Regulation 53.4958-39(b) details those who are considered “disqualified persons.” In essence, those who have substantial influence in your church, along with their family members, are disqualified from receiving benefits from the organization.

Therefore, board members and their family are ineligible to receive any financial benefits (including benevolence) from your church. 

When a disqualified person receives benevolence from your church that “gift” becomes taxable to the individual. In addition, benevolence to a disqualified person could lead to what is known as an excess benefit transaction, which could result in penalties known as intermediate sanctions of up to 225% of the benefit received.

4 steps to take when creating a benevolence program

Now that you have a better understanding of benevolence, as well as those who qualify for benevolence, I hope you are beginning to see the importance of having a benevolence program in place. 

Below are 4 steps that your church or ministry should take when creating a benevolence program: 

1. Establish a benevolence committee.

This committee is responsible for crafting a mission statement and benevolence policy. It also reviews the needs presented to the church from impoverished persons and determines the best course of action for meeting those needs through the benevolence fund. This committee is ultimately responsible to the board of directors. If you are unable to create a benevolence committee, then the board of directors will assume all responsibilities.

2. Determine how your church will serve those in need.

You must determine the specific kinds of resources that your benevolence program will offer. When determining the types of resources and assistance to offer, you want to keep your mission statement and program goals in mind. 

3. Establish a benevolence policy.

It is imperative that you establish a benevolence policy that provides guidance and structure for the procedures to implement your benevolence program. Every church and ministry that goes through our StartRIGHT® Program receives this type of policy. If you have questions or need assistance with this policy, feel free to give us a call at 877-494-4655.

4. Create a benevolence application or request form.

Your church or ministry should require that anyone requesting benevolence complete a benevolence application or request form. This will help your benevolence committee (or board of directors) identify and meet the needs of those in your church and in your community.

To further assist you in creating a benevolence program, we have created a detailed and comprehensive resource for churches and ministries called “Benevolence.” You can click here for more information.

You are blessed to be a blessing

Being benevolent is who we are as followers of Christ and as ambassadors of God’s kingdom. Yet, the world in which churches exist and operate today is not as it once was in the past. It is not as easy to simply meet a need and not think twice about it these days.

If you need to establish a benevolence program for your church but do not know where to begin, I encourage you to utilize the Benevolence Applet resource we have created to help. The Benevolence Applet is a part of our Secretary’s Suite. 

Lastly, if you feel called to start an organization that brings relief to areas that have been affected by natural disasters, then we can help you.

Give us a call today at 877-494-4655 and ask about our Disaster Relief CDC Package that includes a free expedited service (a $399 value) or you can click on the link below for more information. 

Recommended articles for you:

• "After Disaster: Understanding Designated Funds"
• "How to Send Volunteers to Help With Relief Efforts"
• "Can the IRS Tax Pastor Appreciation Gifts?"

*Sources:

• Commissioner v. Duberstein, 363 U.S. 278, 80 S. Ct. 1190 (1960)

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