Can You Give From a DAF to Your Own Church? Common Questions

People who open a donor-advised fund often ask the same thing first: can I use this to give to my own church? The short answer is generally yes. Churches are public charities, and grants from a donor-advised fund to an eligible church are among the most common grants sponsors make.

But once the first yes is settled, a string of follow-up questions shows up. They are good questions, and most of them come down to one principle: a grant from your fund has to be a gift to the church, not a payment for something you receive.

Does My Church Qualify?

Churches are treated differently from most charities. A church that meets the requirements of section 501(c)(3) is generally considered tax-exempt without ever applying to the IRS for a determination letter. That is good for churches, but it can create a small hiccup for grants.

Because some churches never applied, they may not appear in the IRS Tax Exempt Organization Search. Your sponsor may ask for extra information: the church's EIN, a letter confirming its status, or proof that it is covered under a denomination's group exemption. A quick call to your church office usually sorts this out.

Can a Grant Pay My Pledge?

This one depends on your sponsor. In 2017 the IRS proposed, in Notice 2017-73, that a grant could go toward a pledge if the grant letter does not mention the pledge and you receive no benefit from it. That was a proposal, not final law, and the question is still unsettled. Your sponsor's policy is what governs. Many sponsors, though, set stricter policies of their own and do not allow grants to fulfill personal pledges at all.

Read your sponsor's grant policy before you make a pledge you plan to fulfill from the fund. If your church runs a capital campaign, you can often tell them you intend to recommend grants from your fund, without making it a binding personal pledge. Ask the sponsor what language they prefer.

What a Grant Cannot Cover

Churches do a lot of things that involve fees, and those fees are where most grant mistakes happen. A grant from your fund generally cannot provide more than an incidental benefit to you or your family. That rules out:

• Tuition at a church-run school for your own children.
• Camp, retreat, or conference fees for anyone in your family.
• Tickets to a fundraising dinner, concert, or golf outing, even partially.
• Membership dues, facility rental for your event, or goods you take home.

Pay for those things personally, the same way you would pay any bill. Then let your fund make gifts that are purely gifts. It keeps things clean for you, for the sponsor, and for the church.

Receipts, Statements, and Getting Credit

Your deduction happened when you gave to the fund. The sponsor sent you that acknowledgment. So when your fund makes a grant to your church, there is no second deduction, and your church should not send you a tax receipt for it.

Church finance teams handle many kinds of gifts, and now and then a DAF grant lands on a year-end giving statement as if it were a personal gift. If that happens, a friendly note sorts it out. Keep the grant off your own charitable deductions either way.

1. 1

   Gift to the Fund

   This is your deductible gift, if you itemize. The sponsor acknowledges it.

2. 2

   Grant to the Church

   The sponsor sends the grant. The church may thank you, but this is not a new deduction.

3. 3

   Year-End Statement

   Check that DAF grants are listed separately or not at all on your personal giving statement.

Designations, Privacy, and Rhythm

Most sponsors let you suggest a purpose for a grant: general fund, missions, a building project, the church's benevolence fund. What you generally cannot do is direct a grant to a specific person or family, even through the church. If helping people through hard seasons is on your heart, a grant to the church's benevolence fund, used entirely at the church's discretion, is a wonderful path.

Many sponsors also let you choose how your name appears. You can often give in your name, in the fund's name, or anonymously. And many allow recurring grants, so your church can receive steady support every month or quarter instead of one lump each December.

Paul was careful with the gifts he carried, so that no one could question how they were handled. Following the grant rules is a small version of the same care.

A Word to Church Finance Teams

If you serve on a church finance team, it helps to have a simple process for grants from donor-advised funds. Record them separately from personal gifts. Thank the donor warmly without issuing a tax receipt. And if a grant arrives with a note tying it to a ticket or tuition, call the sponsor before you deposit it.

Churches that make grants easy to give tend to receive more of them. A short page on your website with your legal name, EIN, and mailing address goes a long way.

One honest reminder: giving always costs you more than it saves. A deduction lowers your tax by a fraction of the gift, never the whole gift. Give because you want the money to do good, and let the tax rules make that generosity go further.