Holding a Gift Day for another ministry: What your church needs to know

Many of our churches have a strong tradition of holding Gift Days for other Christian organisations.  

It makes sense for churches to partner with experts who are working on the ground, sharing the Gospel in particular ways or with particular groups. And it’s great to see a church’s culture of generosity overflowing into blessing other ministries.

However, there are some practical issues for churches to consider, to make sure that their generosity doesn’t end up getting them into regulatory hot water.

Is your church acting as agent or principal?

The first thing to consider is the capacity in which you are acting. Are you acting as agent or principal? This might seem like a fine distinction, but it has important practical consequences.

If your church is collecting funds as an agent, your trustees are not exercising their discretion and you’re simply a conduit, channelling funds to the other ministry per donor instructions. The Gift Day recipient is the other ministry, not your church.

If your church is collecting funds as principal, your trustees are exercising their discretion to fund the other ministry. Your church may set up a restricted fund for the support of the other ministry and then invite your church family to contribute. The Gift Day recipient is your church, and your church will then make an onward grant to the other ministry.

What are the consequences of holding a Gift Day as an agent?

Importantly, this means that the other ministry is the donee, rather than your church. So donations do not form part of your church income. You can’t claim Gift Aid on the donations. These donations shouldn’t be included as income in your accounts, although the accounts will include a note explaining the transaction.

We’d recommend you go a step further and encourage the congregation to give directly to the other ministry so that it can collect Gift Aid declarations from your members.

Alternatively, you could set up a Stewardship Fundraising page for the other ministry, so you can track your congregation’s fundraising: Fundraising for Supporters.

What are the consequences of holding a Gift Day as principal?

Your church is the Gift Day donee, so donations form part of your church income and should be included in your accounts. You can claim Gift Aid on the donations under the usual rules, and you should add this Gift Aid to the restricted fund in support of the other ministry.

The Gift Day funds become yours, so your trustees are legally responsible for the onward grant.

We’d recommend that you set up the restricted fund and a clear tracking mechanism in your finance system in advance of the Gift Day.

Alternatively, you could add a Gift Day Project to your Stewardship Partner page, so you can easily track gifts for this purpose.

What are your legal responsibilities when making a grant to another ministry?

Firstly, you should check that the ministry is a UK registered charity. If you make a grant to a non-profit which is not a charity, for example a Christian lobby group, a Community Interest Company or a social enterprise, you’ll need to take extra steps to avoid non-charitable expenditure and a potential tax charge for your church. See the Charity Commission guidance here: Grant funding an organisation that isn’t a charity - GOV.UK.

If you’re wanting to grant to an overseas ministry, extra considerations also apply. In summary, you’ll need to ring-fence the funds for a specific charitable project and to take more responsibility for verifying the end use of the funds. See our briefing paper: Guide to churches making payments overseas.

As with any activity of your church, a key question is whether making this grant will further your charitable objects. In order to answer this, you’ll need to look at the ministry’s objects and your own. For example, a youth evangelism charity will almost certainly be within your church’s objects. However, for a local youth club, it might depend on how widely your own church’s objects are drawn. Are your objects purely to advance the Christian faith, or do they also include ancillary objects such as education and poverty relief? If there is a partial overlap of objects, you might be able to ring-fence your grant for a specific project which is within both charities’ objects.

Before making a grant, you should undertake due diligence which is proportionate to the value of the grant and the risks involved. You should consider the ministry’s charitable impact, financial position, governance, approach to safeguarding and any reputational issues. We’d recommend that you check their filings are up to date on the charity regulator’s website and consider a Google search of the charity and any key personnel, to flag up any potential issues.

Finally, consider whether a written grant agreement or other documentation is needed. This is more important for a larger or riskier grant or one for a specific purpose. Also consider any follow-up you’d like, for example a report from the ministry on how the funds were spent, or a site visit by members of your congregation. Follow-up reporting should, of course, be proportionate to the amount of the grant.

You can find more detailed information in our briefing paper: Do you know how your church or charity's grants are being used? 

Conclusion 

Holding Gift Days for other ministries is a wonderful way for your church to help advance the Kingdom of God. We’d recommend that you’re clear about the basis on which you’re holding your Gift Day and that your trustees understand their legal duties when making an onward grant.