Fund Raising Clarified

The Church has amended and is reemphasizing its policy on fund-raising events.

As a general rule, the Lord has directed that Church programs be funded by tithes and voluntary offerings. Excessive fund-raising activities should not take the place of offerings and should not interfere with priesthood responsibilities.

If and when priesthood leaders determine that fund raising is necessary, they should be aware that the Church in the United States is now required to report income, pay taxes, and be subject to U.S. Internal Revenue Service audit on taxable fund-raising activities. Federal income tax amounts to 48 percent of such profits, and is in addition to state tax.

Service activities, where all labor is donated, do not require tax reporting. These include car washing, yard work, child care, paper collection, talent shows, and similar activities. These should not, however, be conducted on Church property on a regular or frequent basis in order not to jeopardize the property tax exemption. Also included in the not reportable category are activities for which all merchandise has been donated, such as food for ward dinners, handicraft items, and items repaired prior to sale. Rummage sales are also in this category, but should be held only in those areas not serviced by Deseret Industries.

Activities that require a report and are subject to income tax on profits are those that involve payment for personal services. Examples are: any commercial activities involving paid labor, sale of Church directories or similar publications containing paid advertisements, if the advertising revenue exceeds the cost of publication. Paying traveling expenses for entertainers is not considered “payment for services rendered” if the Church unit buys the tickets directly rather than reimbursing the entertainers.

All reports of such activities should be sent to Church headquarters, where all tax returns will be prepared.

Activities such as dinners, dances, and movies, if conducted for social purposes, are not reportable for income tax purposes if the following criteria are met:

1. The activity is held only for persons living within the boundaries of the Church unit sponsoring the activity and there is no advertising or solicitation of the general public.

2. Attendance is by budget donation or by direct voluntary contribution. It is permissible to suggest a donation per individual or family for the purpose of defraying costs; however, a mandatory admission charge cannot be assessed.

If any social activity is conducted in which the income collected for that activity exceeds expenditures by $500 and as to which any one of the above criteria is not met, that activity is reportable.

The First Presidency has specifically asked that Church units not engage in activities involving merchandising. This includes buying and selling food, food storage items, wheat grinders, and any other items not directly related to the Church. However, the buying and selling of priesthood and auxiliary manuals, Church books, temple garments, and genealogical supplies are permitted. These regulations apply to all Church-sponsored organizations, including Boy Scout units.

Because Church property is exempt from property tax only if used exclusively for religious purposes, it should not be rented or leased out for commercial purposes such as nursery schools, athletic events, concerts, business meetings, posting of commercial advertisements, or any other business ventures. If other facilities are unavailable in the community, civic or professional groups could be permitted to use Church facilities on an infrequent basis.

“These policies are not intended to curtail any proper fund-raising program, whether it be taxable or nontaxable. Priesthood leaders who approve any taxable fund-raising activity, however, now have the responsibility to file a timely report with the Church Financial Department. Strict adherence to this policy is necessary for the Church to fulfill its tax reporting obligations,” the First Presidency said.