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What Expenses Are Valid for a Church?

10/02/2019 | By: Brink's Money

Every church or other faith-based organization has to handle expenses. But there isn’t always clarity on whether or not an expense is valid and can be paid out of a ministry’s funds. 

In this article, you will learn some of the most common expenses churches have, as well as some guidelines congregations can put into place to lend clarity to other expenses.

 

Typical business expenses

Standards for valid expenditures don’t differ much between a church or non-profit and a for-profit business. If an expense is necessary for the ordinary operation of the organization, it’s valid.

For a church and its staff, typical expenses might include:

  • Office supplies like pens and paper
  • Equipment such as computers or other necessary technology
  • Rent, if the church needs additional office space
  • Mileage, airfare, tolls, parking, and rental vehicles for ministry travel
  • Continuing education and training courses for staff
     

Though these are common, some expenses might appear as personal spending. Conference travel, for one, might look like a personal expense. This is where additional documentation comes in handy. Notes on the nature of each expense can help protect against potential audits.

The list above is certainly not comprehensive. Staff and volunteers may need additional guidance for their expenses to ensure they are reimbursable before making purchases.The following rules would make a strong foundation for an expense reimbursement policy for your church:

  1. Any expense must be related to the business, meaning they must be incurred while your staff or volunteers performed services for your church. This is key. Any expenses that happened outside of official duties should be denied reimbursement.
  2. Staff and volunteers can only be reimbursed for expenses if they provide adequate accounting, such as receipts or proof of purchase, within a sensible time period.
  3. If a member of your staff or volunteer is reimbursed in excess, any overflow amounts should be returned within a reasonable period of time.
  4. Reimbursed expenses must come out of your church’s funds.

Without setting a reasonable and affordable spending cap and establishing certain stipulations, small churches may have trouble implementing an accountable expense reimbursement plan. The staff and procedures required may also prove challenging for any congregation, but expenses can be simplified even further. Prepaid business debit cards like Brink’s Business Expense offer seamless expense management for any sized organization. Churches could give individual cards to their staff and volunteers, set spending limits to ensure everything stays well within budget, and designate an administrative team to control and monitor funds. Expense cards take financial burdens off of church employees and remove the need for lengthy expense reimbursement processes.

 

Pastor’s expenses

It’s common practice for pastors to cover small (and not so small) business expenses out of their own pockets. As long as these expenses follow the church’s expense policy, pastors usually are reimbursed. 

Unfortunately, this leaves room for error. Pastors could incur expenses outside of the church’s budget or make purchases that don’t necessarily comply with the expense policy. In either of these situations, pastors are taking on undue financial burdens. Business expense cards help solve this problem by creating guard rails for pastors’ expenses. Card controls for Brink’s Business Expense allow churches to give staff the money they need for approved expenses while preventing purchases that aren’t within budget.

 

Changes to church expense tax law

Prior to the Tax Cuts and Jobs Act of 2017, pastors and other church employees could log business expenses paid out of pocket as itemized tax deductions. This is no longer the case. The standard deduction is higher, but pastors can’t rely on individual itemized deductions anymore when making up for expenses they handled out of pocket. This is again where business expense debit cards come in handy. Churches who implement expense card programs reduce or eliminate their pastors’ burden during tax season.

 

Learn more about business expense cards

Your congregation may need assistance with expense management, and Brink’s Money can help. To learn more about our solutions, contact our team online.