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blessing the family of God - that's OK - isn't it?

By Stephen Matthews | 18 March 2014 | Comments (2)

Blessing the family of God

"Church" is the people of God fulfilling the biblical command to love others (whether associated with the church or not). Also, in the UK they are normally structured as a legal charity governed by charity law with a charitable purpose. This can include supporting those in financial need; the "relief of poverty". There are times, however, when members of the church will rightly want to bless others in the church family in ways that are more about friendship than for charitable purposes. Examples would include: gifts in recognition of a marriage; an expression of appreciation; or as an act of friendship.


Funds used to meet either aim are often known as benevolent funds and in many churches, this distinction between church as a charity and church as a family appears to be a subtle one and is therefore often ignored or not even considered. However, the funds are used for different purposes and have different legal implications. Churches that start out with the best of intentions can find themselves falling foul of charity law if they operate in this space.


To some the distinction might appear trivial, however, the ramifications are significant and the treatment that applies to each fund is very different. A benevolent fund which falls within UK charitable law as part of a church charity will attract Gift Aid on eligible gifts; interest earned on balances held can be retained gross of tax; and the fund can be intermittently "topped up" from general church funds as and when required.


Not so for a non-charitable fund whose aim is to support the church family. Such a fund does not operate within the legal charity and as such gifts to it can't generally attract Gift Aid; interest must be received net of tax: and the fund cannot be fed from a church's charitable funds as it falls outside of its charitable work.  As the distinction between the purpose of these funds is not always understood or appreciated, often both are treated in the same way or more than likely one fund is used to meet both aims.


At Stewardship, we suggest that any fund that is held whose aim is essentially to support the church as a family is kept completely separate from any other church funds. To avoid confusion, we would suggest that the account has a different and distinct name from any other used within the church and that those that give to this fund are clear in their understanding that they are not giving to a UK charitable cause but are giving to something that is totally different from the other work of the church and that Gift Aid can't be claimed.  Monies that flow through this fund do not form any part of the church's financial accounts.


Although not part of the church's accounts, there is still potential for the funds to be used inappropriately and we would encourage a level of control to be exerted to ensure that the fund is used for the stated purpose. Where monies are paid to church employees, these will be taxable if they are paid because the individual is an employee rather than for a completely different reason.


We would not want to hinder churches generously supporting church as a family, but any benevolent fund operated for this purpose must be done with eyes open and in recognition that it is not part of the UK charity.


To find out more about this, download our briefing paper here.


Peter F Whyte

February 3, 2015 10:23 AM
Just wanting to clarify this phrase in the article:

"and the fund can be fed from a church's charitable funds as it falls outside of its charitable work."

Am I correct that "can" should actually read "cannot"? It doesn't seem to make sense otherwise.

Tim Smith

October 17, 2015 7:02 PM
Very useful, thank you.

If the church uses it's 'charity status' funds to help someone in the membership who is in financial trouble, surely this is acceptable. Call it blessing, or discretionary gift or whatever, surely as long as the proportion of such help is reasonably small compared to overall budget, that would be permissible, as it meets genuine need. Granted of course, that the leadership must have clear rules on who and how and when such help is given.

Regards TS

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