Gift Letters or Statements of Contribution

Posted on November 14, 2012 Written by

Gift letters (also knowing a statements of contribution) have several purposes:

  • To acknowledge and thank donors for their gifts
  • To ensure the church received the gifts and credited them to the correct fund
  • To give members a chance to see how much or how little they’ve given to their church
  • To provide an opportunity to the church to include a letter explaining to donors how their gifts were used and the people whose lives are being changed because of the generosity of the givers
  • To instill confidence by donors in the integrity of the church’s Finance Office so they can see that the staff is handling gifts accurately

Gift letters should have all of the following elements:

  • Name and address of the church or 501(c)(3).
  • Logo of the organization would be great, too.
  • Tax Identification Number of the organization. This is known as a TIN; sometimes it is called an EIN or FEIN (Employer Identification Number or Federal Employer Id Number)
  • Name and address of giver
  • List of checks which includes
    • Date of gift
    • Form of gift – check number, cash, online, or other description of manner of gift
    • Amount of gift
    • Purpose of gift – was it for the ministry budget, building, missions, etc.
  • (Pledge – if you use pledges, they should be on the letter, too)
  • Total of all the gifts by category and grand total
  • Thank you sentence from the Finance Office and who to contact if there are any errors
  • Sentence required by the IRS for tax-deductible gifts. Here is the one I use:
    • For IRS purposes, I must inform you that the gifts contained in this letter are based on intangible religious benefits. You did not receive any goods or services from _____ Church for this contribution. Please keep this letter as documentation of your gift.

Every time you send out gift letters, you should be accomplishing all of the purposes listed above and your giving statements should have all of those elements. Anything less means you’re not getting as much value as you could.

Maximize the impact of your gift letters by including a cover letter which has several additional elements:

  • Paragraph 1 – several sentences thanking people for their generosity (please use that term – it doesn’t have any negative connotations and is viewed very positively by people; people like to be told they were generous)
  • Paragraphs 2, 3, and 4 – three brief stories that have happened at your church within the past 3 months where people were changed for the good because of what your church did, events that had an impact on children or youth such as a mission trip or Vacation Bible School, and/or activities that reached the community or world with the Good News of Christ. Tell stories – people remember stories; if parables were good enough for Jesus, they’re good enough for you, too!
  • Paragraph 5 – conclude the letter with another acknowledgement of their gifts and generosity. Also, mention who and how they should contact if there is an error in the giving statement.

Finally, how should you send them: I like sending them out by email because it is free. Society has trained people that email is normal, so use what society has taught people. For people without an email you’ll have to use snail mail. In a few instances, you’ll have to use snail mail for some situations where people’s giving needs to be kept confidential from another person in their home who has access to the family email – those are rare and sensitive, but you need to be aware of those. Snail mail costs about $1 for each letter (postage, envelope, paper, ink, and labor) whereas email costs just the labor (which you have to do anyway).

Lead On!
Steve

Filed Under: budget, church finances, church financial statements, communications Tagged: , , ,

1Q2012 Statement of Contribution

Posted on March 22, 2012 Written by

One quarter of 2012 is almost over so you need to prepare now to send out your first quarterly contribution statement of the year. Some churches send out statements only once a year – let me encourage you to send out statements each quarter plus one more:

  • 1Q2012 – send out in the first 10 days of April
  • 2Q2012 – send out in the first 10 days of July
  • 3Q2012 – send out in the first 10 days of October
  • 4Q2012 – send out the yearly statement by January 31

PLUS

  • Send out a statement for the first eleven months (January through November) in the first 10 days of December. Why? So that people can see what they’ve given or not given so far in the year.

But let’s get back to 1Q2012!

Sending a statement out in early April makes sense for several reasons:

  • Use this opportunity to send a letter with the statement of contributions explaining to people what their money has been used for. They want to know what the church did with it – so tell them all the good things you’ve been doing and are planning to do. Share with them a couple of compelling stories – that will make all the difference in the world to some readers.
  • At this time of year (tax-filing season in the US), people’s awareness of how much they’ve given or not (and thus able to deduct from their tax return) is heightened. Since many people have just completed their annual tax forms, they’re making promises to themselves to give more away to charity so they can give less to the government. Sending a letter in early April gives them a great reminder to give a check to their church.
  • Easter is typically in early April. Most Christians will come to church on Easter and they’ll usually hear a sermon about God’s gift to us through Christ. They will hear about giving and sacrifice – this letter is a way to encourage them to tangibly respond with their own gifts.
  • Gentle reminders throughout the year of how much people give to their church are good for both the church and the donor. These reminders are not heavy-hitting or guilt-inducing. These letters are simply nudges in reminding people to be financially faithful to their church – and you’re sending these letters to the people who have already “bought in” to the vision of the church, they’re already giving!

So, here’s your homework for this weekend: find two great stories about what has happened in your church these past three months (since Christmas), put them in a letter, and send the letter with the quarterly statement of contributions.

Oh, one very important fact: send your letters with first class postage. Yes, that is a lot more expensive than bulk mail. But realize that the “open rate” (as opposed the “throw in the trash can rate”) of first class stamped envelopes to bulk mail envelopes is something like five to one (don’t quote me on that ratio, but it is way up there). People will open an envelope with first class postage far more often – and you want people to open envelopes to read the letter and the statement of contributions. Okay, back to your homework.

Lead On!
Steve

Filed Under: budget, church finances, church financial statements, communications Tagged: , , ,

New Year’s Letter

Posted on January 1, 2012 Written by

I’ve got a job for the leader of your faith community: write a letter to your congregation about your dreams for 2012. Technically it is not a “New Year’s Resolution” letter but it is a letter about your hopes and vision for the church for the new year. Call it a “New Year Vision Letter.”

What should be in this letter? Well, it should be no more than one page – please don’t get long-winded or else people will stop reading after about two paragraphs (if you’re lucky). Use a 12 point font to make the letter easier to read – don’t cheat by using 8 point font to cram in more words! Make the letter no more than five paragraphs long using the following template:

  1. Intro Paragraph – Write about 2011 and where the congregation has come in the past 12 months and even the years before then. Be brief, be very brief in this synopsis – this is NOT the purpose of your letter; this is just a starting point so that everyone is on the same page.
  2. Next Two or Three Paragraphs – give three concrete (lots of details) ideas of what you want to accomplish in 2012. Flesh out each idea in one paragraph with financial costs, numbers of volunteers needed, dates by which the goals need to be met, and the promise of a party when each goal is reached. (I believe the church doesn’t party enough – we need to celebrate accomplishments more often but that requires knowing where the finish line is in each goal.)
  3. Final Paragraph – a prayer of blessing on each reader and an acknowledgement of the generosity by the family of faith which has permitted the church to do all is has done so far. Being sincerely thankful is very important.

This letter should go out to every person in the church because it will help set the tone for the church in 2012. A good way to send out the letter is to include it in the 2011 statement of contributions which every church mails out to every member (at least to every donor) of the church. Every person will open that letter because they want to see how much they can write off on their taxes – when a letter from the pastor falls out, they’ll read that, too. Who knows, your letter may spark some dialogue with people – it can certainly be a conversation starter with your leadership. I know they want to know what your dreams are and how they can participate in making them happen – to benefit the church and the Kingdom.

Lead On!
Steve

Filed Under: church administration, church finances, church financial statements, communications, leadership, strategy Tagged: , , , , ,

Telling Stories

Posted on July 24, 2011 Written by

Here are two secrets – people that give money to churches and other non-profit organizations really, really want to know what their money was used for. AND, if you tell them and it is a compelling and life-changing story, they’ll give you more money.

Most churches do a poor job of telling stories to their constituents. Churches just presume that people will continue to give “because that’s what the Bible teaches.” Sorry, that doesn’t cut it any more. Our society has trained people, especially the under-40 crowd, to ask questions about “what happened to my money.” They want to know – they expect and demand to know. There are two consequences:

  • Tell people where their money went
    • Once people see the good things that happened as a result of their money, they will tell others about it and, very often, give you more money. Telling stories is a game-changer: people will step up to the plate like they’ve not done before and they’ll tell others the stories they are hearing. Telling stories is huge!
  • Don’t tell people where their money went
    • If you do not prioritize telling people about how their money was used and you just presume that money will continue to come in, then you continue to operate as you are now. You may not see a decline in giving but you will probably not have an increase either.

How do you tell people? That’s easy. Every way you possibly can.  Use every medium possible from print to social media to illustrations in sermons to my favorite, completely altering the offering time.

Telling stories during offering time
The offering time has changed in the past couple of decades. It used to be a time for special music to show off some piece the choir or a soloist worked on and wanted to fit in the worship service. Not any more. Offerings need to be interactive and here’s how.

  • Every Sunday of the year, have a story about how the offerings have been used. You’ll need to coordinate the stories – don’t just insert stories – make them relevant to the message and/or to something going on in the life of the church at that time.
  • If you don’t have 52 stories, you’ve got serious problems and they’re not financial – your church is dying because you’re not aware of how at least 52 lives have been affected by your church.
  • Take 3 or 4 minutes each week during the offering to tell a story in different formats
    • Use videos of different things, slide shows, live interviews on stage, narratives, songs by children, conversion and baptism stories, etc.
    • Alter the format each week to keep the story-telling time fresh and interesting
    • Give each ministry of the church (missions, education, worship, fellowship, care, and administration) two or three times during the year for them to tell an interesting story about their ministry and how people’s contributions made all the difference.
    • If you’re doing a live interview, rehearse with the people you’re interviewing so that you’ll know their story and can help them get over their nerves about standing in front of “the whole church.”
    • When planning a story, think about the end first. What do you want people in the pew to hear and take home? Then backtrack till you come to an appropriate place to start the story. But always, always think about the end of the story first and then decide how to start the story.
  • Tell stories about
    • The youth mission trip that you’re raising money for, that is going out next week, and that just came back. That’s three times to tell the same story with different angles each time.
    • The Vacation Bible School that is coming next week and that happened last week. Two times for stories.
    • People!!! Every story is about people – every story must be centered around a person or group of people. Stories should have names (first name is enough) of lives that have been changed because of what people gave. I can’t emphasize this enough – even if the story is about how members gave money for a building, then talk about who will use that building and why!

Critical Elements
There are two things that need to be in every story-telling time. These two things need to be used every week and they need to be said in different ways so that these words are honest and genuine, not a refrain that everyone tunes out.  Here they are:

  • Thank you
    • Say thank you every time you can. People like to be thanked, even if they only gave a couple of bucks. If people are shown appreciation and not taken for granted, they’re more like to give next time. Say thank you as often as you can and be innovative in the ways that you use those words.
  • Generosity
    • Use the words generous and/or generosity as often as possible. Generosity has replaced “stewardship.” There are no negative connotations to generosity while stewardship can have some minor misunderstandings. Use these words – generous is a more accurate depiction of what God has done for each of us in opening his hand to share with us his wealth of love and in spreading his arms out to die for us and in holding us close to him in times of our distress.

We need to encourage our constituents to be generous, like God, and thank them for their generosity. Tell them stories about how generous God has been with us and how their own generosity has changed the lives of so many people.  So please, TELL STORIES!!

Lead On!
Steve

Filed Under: budget, church finances, communications, generosity Tagged: , , ,

Photos on Websites

Posted on November 3, 2009 Written by

Okay, I’m not a Web guru – far, far from it. But I keep getting asked this question, “What is a policy or guideline for churches regarding posting pics on their Websites and other communications materials?”

Here’s my answer: I don’t have a policy on this matter but I do have some guidelines. To be completely clean and clear, you should have a permission slip from every person in every picture. In reality, that is impractical at best and impossible at worst. I use judgment – use pictures of your members only for in-house slide shows and publicity. Any publicity on the Website or mass-distributed materials (postcards, brochures, etc.) has purchased stock photos. Those pics are better quality and you don’t have to remember every person in every pic on your site in case a person dies or moves away.

I want to believe that difference is sufficient to ward off any problems yet is a reasonable solution. What do you think?

Lead On!
Steve

Filed Under: communications Tagged:

Financial Leadership Mistakes Churches Make

Posted on October 26, 2009 Written by
  • Low Expectations of members – Are people living up to our low expectations? How high do churches set the bar or are we just too scared that people will go away? In reality, people are more willing to live up to higher standards if they know what they are.
    o Set the bar as high as God sets the bar. To do less is to undermine God.
  • Low Teaching by leadership of biblical financial principles – Many church leaders are scared to talk about money because they don’t know how to. They don’t know how to talk about money because they’re scared to talk about it. They’ve got to get off the merry-go-round. Find a God-model for your talk on biblical financial principles – “just because the church needs it” or “because tithing is biblical” is not sufficient.
    o Make biblical financial teaching a regular practice. As with all habits, once you do it enough, you’ll get used to it and do it regularly. However, get a God-model to challenge your members.
  • Low Accountability of church leaders (both paid and volunteer) – Who holds church leaders accountable for what they spend and how they spend it? Do those expenses advance the Kingdom or are they just frivolous spending?
    o Can church members get a copy of the church’s monthly financial statements without hassles? If your church’s checkbook were posted online, would you be embarrassed at any expenses? Did they spend church money wisely? I have a saying that church money should work hard twice – once when the donor earns it and again when the church spends that money.
  • Low Transparency of church finances – Do churches have fuzzy numbers? A church’s monthly financial statements should be in a readily accessible place and questions should be answered clearly and completely.
    o Make your financial statement accessible. Answer all financial questions to the satisfaction of the person asking the questions.
  • Low Leadership and Management – Leadership is guiding the church toward a vision that captures most people’s imagination and gets them on board the ship. Management is ensuring that you have the right people in the right places on the ship and rowing in the same direction. Leadership is about positions; management is about people.
    o Every five years do strategic planning so that you know what positions your church needs in order to accomplish its mission and vision.
    o Then, find the right people to put into those positions even if it means letting go of some great staff. If they can’t lead the church in its strategic plan, then help them move on so that your church can move forward.
    o This means that every few years you’re going to kill some neat programs that no longer fit into the church’s mission and vision and you’re going to let go of some fine friends and colleagues. But you’re the leader of the church – decide what is most critical to the future of the church – its mission or keeping people and programs that distract from the main thing.
Lead On!
Steve
Filed Under: church finances, communications, generosity, strategy, young adults Tagged: , , , , ,

Six Generations In Church – Part 2

Posted on October 15, 2009 Written by

The trend is for each successive generation to want to be more actively involved and see tangible results. They want control over when, where, and how each dollar is spent. Younger generations want to know, see and touch where their monies are go AND they want their monies to go to causes that change lives in direct, tangible ways. Several secular non-profits are successfully reaching younger generations who feel they can (and must) “save the world.” The questions for today’s church are:

  • Remove Roadblocks
    o How does the church change its governance, bylaws, and policies to facilitate giving?
    o How does the church develop new channels and methods of giving that are in line with younger generations’ patterns?
  • Tell Your Story
    o How does the church communicate (using Websites, social networking, and even printed media) its programming opportunities and building needs in ways that appeal to younger adults?
    o How does the church encourage financial support from non-members and non-attendees who believe in our causes?
  • Be Creative
    o How does the church (ministers and members) change its mindset from funding programs and activities through the annual budget to each one being self-funding?
    o How does the church expand the types of revenue streams so that we have a diversified portfolio and are less vulnerable to risk? See “The Baker’s Dozen.

The Baker’s Dozen – Ways to Increase Church Income
1. Undesignated Gifts
2. Wills, bequests and planned giving
3. Grants and foundations
4. Endowments, reserves, investments, and interest income
5. Fees for service
6. Rental income
7. Event registration
8. Cost recovery
9. Special offerings
10. Capital campaigns
11. Designated gifts
12. Sale of materials or resources
13. In-kind services

Lead On!
Steve

Filed Under: budget, communications, young adults Tagged: , , ,
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