FB14. Can a church set up a fund to help people in distress in our community?

FB14. Can a church set up a fund to help people in distress in our community?

Short Answer

Yes, churches can set up funds to help people in distress if the purposes and objects of the church as a registered charity allow for this activity.

Long Answer

Often, churches that are registered charities operate programs for the alleviation of poverty. Churches call such programs benevolence funds, or sometimes Deacon’s funds or Good Samaritan funds, and use them to support the poor and the needy in the community. It is important to know that benevolence programs must be based on helping the poor and needy in the community and not just members of the particular church. In order to be considered charitable, all activities undertaken by the charity must be available to a wide enough segment of the public to qualify as being of benefit to the public.

Example: A family in our community recently lost their house and all their possessions in a fire. Can the church ask for donations specifically to assist this family? Can it issue tax receipts for any gifts that it receives that are specifically for this family?

If a charity offers particular programs that are covered in its objects and purposes, then it can allow a donor to direct his or her donation to the program of their choice. The church can issue tax receipts for gifts to a fund to help this family if the church’s objects and purposes allow an activity such as collecting funds for the victims of a disaster.

However, a donor cannot stipulate that the tax-receipted gift go directly to an individual or family. Individuals and families are not qualified donees under the Income Tax Act, and charitable resources may only be transferred to them through a qualified donee (usually a registered charity). Also, gifts to the fund cannot be accepted if a name is attached designating who is to get the money.

The church should develop a policy and a process around the distribution of these types of funds, and document the payments that it makes.