SAMPLE IRS LETTER WITH INSTRUCTIONS
You can either use this letter as it stands, modify it, or come up with one on your own. I would like to have you run the final version by me though just to make sure that the person contributing will be able to take a tax deduction. The IRS has some specific guidelines on deputized fund-raising that should be adhered to by everyone.
Many ministries practice deputized fund-raising, particularly mission agencies and evangelistically oriented ministries. This practice is sometimes referred to as "self-supported, deputational, or staff support-raising. Under the deputized fund-raising concept, the ministry generally records amounts raised in support accounts for each worker.
The IRS acknowledges deputized fund-raising as a widespread and legitimate practice. While contributions properly raised by this method are tax deductible, it is clear the IRS feels that some deputized gifts are non-deductible, pass-through gifts to individuals who ultimately benefit from the contribution.
The IRS has proposed two general tests to determine whether a tax deductible contribution was made to or for the use of a charitable organization, or whether a gift is a non-deductible, pass through gift:
1. The intended benefit test. The purpose of this test is to determine whether the contributor's intent in making the donation was to benefit the organization or the individual. For this reason all checks should be made payable to GraceCommunityChurch--memo the check as 2009 Dominican Trip. The funds will be expended only for the Dominican trip, the church is merely receiving the money,recording it, and holding it for trip expenses. Your name can not be on the memo line of the check; however, a copy of your letter will allow the treasurer to add the funds to your column. We will not deny the trip to anyone who has not raised sufficient funds, however, it is important that all of us raise enough so we have money to complete our intended projects.
2. The control test. The IRS uses the phrase "discretion and control" to indicate a charity's obligation regarding deputized funds. We will be meeting to determine what projects we will fund, how to allocate the money, buy the airline tickets through the church, etc. to remain compliant with this issue. Once the money is collected, no individual will be paid a salary, nor have any sole discretion over the funds they collect. You will need to bring your own spending money for tourist type expenditures.
It is a good idea for everyone to add this line at the bottom of their communication:
Contributions are solicited with the understanding that the donee organization has complete discretion and control over the use of all donated funds.
There are pages and pages of IRS rules and regulations regarding deputized fund raising and we want to do everything in our power to ensure that donors are allowed to take their respective tax deductions.
Most charities request that you send out approximately 75 letters. We would like you to send letters to all friends, family, business associates, and acquaintances; but we have no minimum or maximum in mind. You will be amazed at the number of even casual acquaintances that are willing to contribute to this type of thing when they know one of the participants. They can't go, but can help you go. This is important work--every penny will be spent prudently and be put to good use.
Dear Family & Friends,
Greetings! I pray that this letter finds you and your family well. Many of you already know of my intentions to participate in a mission trip to the Dominican Republic from January 21 to February 4, 2009. For those of you who were unaware of this trip, I would like to briefly describe our mission:
On January 21st, a small group from Battle Creek, Michigan will be departing on a humanitarian mission trip to the Dominican Republic for two weeks in the capital city of Santo Domingo. We will be working on the construction of two homes, distributing food and clothing to the poorest of the poor, visiting families in their homes as we distribute the goods, and conducting a few 2-3 hour youth camps for the younger kids. We will be staying at the home of Gustavo Guzman and he is arranging everything from transportation to the work site to what we eat. The homes that we construct will be from start to finish and cost approximately $3,800 each. We had several occasions last year that we ran out of bibles—so this year we would like to purchase and distributeat least 200 Spanish bibles .
Time permitting we will visit some of the children sponsored through Project Santiago. While in Santiago some of us will visit Dan’s Place in the Cienfuegos area that was constructed from donations received from the many friends and acquaintances of Dan Truax. This community center will enrich the lives of 5,000 children and their families every year.
The trip is being funded entirely through donations and by those going on the mission trip. Every penny of the money collected will be used to directly benefit the needy people of the Dominican Republic for purchase of building materials, furnishings, clothing, and food.
To say I am excited about the opportunity to serve and minister to the needs of the Dominican people is an understatement, and I am asking you to join me in this ministry. I am seeking your support and prayers for this mission trip. If you are able to assist financially, please mail a check to GraceCommunityChurch - 9037 Pennfield Rd - Battle Creek, MI49014 along with a copy of this letter. Please mark clearly on the memo line of the check - 2009 Dominican Trip. Do not include my name on the copy of the check to ensure tax deductibility of the donation. An accounting of all funds will be available upon completion of the trip. On behalf of everyone taking this trip, thank you for your prayers and financial support. May God bless you richly!
Thanks again,
Rick & Sherry Raymond