Income includes offerings, tax reclaims, property lettings, interest and investment income or donations received from Methodist or external organisations, including grants from external bodies.
Offerings come by way of cash, cheques, contactless payments, Gift Aid, online bank transfers and the envelope system and generally, this forms the main income of the Church.
There are several important things to note:
- Right from the point when an offering is received, it becomes charitable funds.
- Loose cash from collections should always be counted by two people who are not related to each other and both should sign the book or offerings record sheet to confirm the check.
- Uncounted collections should not be taken away from the local church building to be counted elsewhere under sole control.
- Details of any offerings received during a service should be recorded in the offerings journal. The journal should be prepared, signed and handed to the treasurer giving details of amounts collected at each service.
- The amount given by way of the weekly envelopes and the individual envelope number should be recorded for identification purposes. This system supports the Gift Aid process, as individual donations can be linked to individual donors who have made a Gift Aid declaration. Click here to find out more about Gift Aid.
- Direct contributions via bank and standing orders to the Church bank account will be evidenced on the bank statement. Some churches provide tokens for regular online givers to put in the collection plate as a symbol of their giving.
- Offerings can also be made online or via contactless payment. Churches may wish to obtain a card reader so that donations and congregational giving can be streamlined. There are associated costs, and Church Councils should investigate to confirm that this is a suitable service in their context. Details for the arrangement made with Dona Donations is listed below.
- If a church has income other than that described above, a cash receipts form can be used to detail the transaction and issue a receipt; this ensures that income is not overlooked and is recorded correctly.
Methodist Publishing produce the following which may be helpful:
VAT
Any church that runs a business, such as a café, shop or bookshop may need to be VAT registered in order to be compliant with HMRC. Click here to check if your church should be VAT registered.
It is worth checking that the primary purpose of the café, shop or bookshop is to advance the church’s religious purposes. The rules around trading income for charities are complicated and there are limits on how much and what trading a charity can undertake. A separate trading company may need to be established to both protect the managing trustees and ensure the trading is tax efficient. If the church is undertaking a large building project, it may be worth getting tax advice regarding VAT.
For further information please see:
Contactless Donation Terminals
Dona Donations is a UK organisation that provides our churches with a secure and streamlined way of collecting donations via card payment. Dona provides contactless donation terminals and online donation webpages to help thousands of churches and charities maximise fundraising. Their system fully supports Gift Aid.