Most churches have two different types of employee classifications for WC purposes:
- Professional staff (aka, clergy and office workers); their WC code number is 8868
- Other staff (janitors, food service, and maintenance); their WC code is 9101
WC insurance assigns premium rates to each employee classification depending on the type of work on their potential injuries and severity. For instance, office staff and clergy do not engage in typically dangerous activities so their premiums are pretty low. However, kitchen staff use knives, ovens, and slicing machines; custodians use vacuum cleaners, ladders, and heavy equipment.
Insurance premiums are charged per $100 of income based on the employees’ actual wages as reported on the W-2. Many WC insurance companies will perform a spring time audit of W-2s and use that information to retroactively correct the prior year’s total premium. If they charged too much, they’ll send a refund and if they charged too little, they’ll send an invoice. The premium for code 8868 is in the range of 30 to 40 cents per $100 of income. The premium for 9101 is about $2.50 per $100.
There is a third code which affects some churches, 8869. This code covers child care workers and it has a rate of about 60 to 75 cents per $100. Working with children, especially their poop and their biting can be dangerous to employees. Remember, WC does not cover the children, only the employees.
Workers’ Compensation Insurance is legally mandated for employers. In Virginia (and probably in most US states) it is required for all employers with more than two employees. That means that ultra-small employers (like mom & pop companies) do not need WC insurance but everyone else does.
WC insurance covers the medical expenses of employees who are injured or killed while working. It pays for most work-related injury expenses. However, I have seen work-related accidents which were determined by the insurance company to be non-work-related.
When a person goes to the hospital with an injury, especially the emergency room, one of the questions is, “Was this caused by a workplace accident?” This question should always be answered truthfully – never try to protect an employer from claims or insurance price increases by lying about the nature of the accident. Employers must encourage their employees to claim WC insurance especially on injuries which could cause chronic pain or prolonged recovery. Those long-term consequences can be expensive if the employer or employee pay for them.
WC insurance is obtained from the insurance company which handles the employer’s property & liability insurance. It is typically not expensive and it is based on several factors:
- The work performed by the employee
- The employee’s actual wages
- A discount or premium charged based on prior claim history
After the terrorist attacks on the US on September 11, 2001 the insurance industry lobbied Congress which permitted a non-negotiable terrorism fee which is assessed on all WC policies.
One of my clients received this letter from a church member. It is a great example of truly trusting God in everything, including finances.
A few years ago, we attended the church during the tithing challenge. We saw so many wonderful blessings that could only have been the hand of God. Through the years, we would miss church and not tithe for those missed weeks. Even this week, I went into the app yesterday to give and did a smaller amount than usual. I rationalized the reason is so I can give to so many other people at Christmas time. After leaving the service, I knew I was wrong and gave more. I know I can skip a few luxuries to make the budget work, but I didn’t UNTIL I heard the service Sunday.
I type this as a reminder to myself and for you to know, I saw God work in ways that would only be possible through my worship of giving to Him.
Within the first weeks of really tithing, we had a government agency sending bills for months. I would tell them why their bill was wrong. I contemplated paying it because it was “only” a $600 bill and no matter how many forms I filled out, they would send me a new bill the following month with interest accruing. After I was tithing, I received a phone call from the government agency saying they needed some info to process a refund. Seriously, a refund of hundreds of dollars.
My frugal father called and said he wanted to thank me for helping him so much through the years and give me a gift of $500. NEVER would we have expected this!
Small things happened too. Eating out at a restaurant we talked about how God was blessing us and tithing was incredible way to KNOW without a doubt His presence. Within a minute a manager came over and told us our meal was on the house!
I am thankful and truly appreciate the brilliant ways my church has us learn from scripture. God bless you all!
Several times during the year it is a good idea to place in the Sunday bulletin, the quarterly donor gift statement, or other form of communication a reminder that people can give stock to the church. Below is the bulletin “blurb” which I use regularly.
Many members of (insert church name) donate appreciated stock. They give to the ministry budget, to missions’ offerings, the church’s endowment, or the building campaign. You can transfer your stock electronically to (insert church’s name)’s account by contacting (insert church’s broker) at (insert brokerage name and phone number) or (insert church contact) in the church office (insert church phone number). To give electronically, your broker will need a DTC number (insert number) and the church’s account number at (insert account number).
When stock is donated, it must be acknowledged by the church. It can be posted on the person’s giving record so that there is permanent record of the gift. It is also an excellent practice to send the donor a separate letter with the details of the transaction. Below is a sample letter which I use regularly.
Mr. and Mrs. John Smith
1234 Maple Ave.
Hometown, US 12345-6789
Dear Mr. and Mrs. Smith:
Thank you for your contribution to Grace Family Fellowship. Your gift of stock was:
Name of stock:……………………………………….. Apple, Inc. (AAPL)
Number of shares:………………………………….. 25 shares
Date of transfer:…………………………………….. January 3, 2018
Stock high on date of transfer:…………………………… $412.50
Stock low on date of transfer:……………………………. $409.00
Average value per share on date of transfer:………. $410.75
Total value of contribution:…………………………… $10,268.75
Fund contributed to:
- 2018 Operating Ministry Budget
The date of transfer is the date on which the stock was transferred to Grace Family Fellowship. The IRS requires that stock gifts be valued at the average of the high and low of the stock on the date of transfer. Grace Family Fellowship sells all stock gifts immediately. The cost of the commission and fees related to the sale is netted from the value of your gift.
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 Grace Family Fellowship for this contribution.
Thank you again for your gift. Your continued support of the ministries of Grace Family Fellowship is greatly appreciated. If I may be of further help please let me know.
Virtually all stock in the US is common stock. There are lots of other kinds of stock (preferred, private, etc.) but common stock is typically what is traded on the major stock exchanges. Almost all stock is now held in “street accounts” or an electronic account in a brokerage. Paper stock is available but it is cumbersome to transfer so most people use electronic stocks. For purposes of this post, stock gifts include mutual funds.
Stocks which have increased in value since their purchase are an excellent way for members to make gifts to their church without incurring tax consequences. Churches can accept paper stock gifts without having an account with a stock broker. However, only brokerage firms with selling rights in a stock exchange (think NYSE, New York Stock Exchange on Wall Street) can sell the stock. Churches without an account with a broker cannot accept electronically transferred stock from a member’s street account.
Churches which may get stock gifts should be pro-active and establish a brokerage account. This will require the authorized body of the church to approve a required corporate resolution (the wording is provided by the brokerage firm) which authorizes specific people in the church to sell stock. Typically the people who are named on the resolution are the church’s treasurer, chairperson of the Finance Committee, and the staff person responsible for the church’s finances.
Once the account is established and the resolution is approved, then the church can accept and sell donated stock without much trouble. All stock gifts must be acknowledged by the church and there is a specific way to value stock gifts.
Staff org charts are absolutely necessary. Every organization, including churches, must have an up-to-date org chart. These charts help all staff (and non-staff) understand who supervises who, where the buck stops, which department has which personnel, and so many other questions. And, as organizations grow and change, the org chart must do the same, too.
Ideally, the church leadership will think about three to five years out and dream about what staff is needed to accomplish the mission and vision of the church. Then, they will put in a timeline of which staff person to hire in which order (as budget funds are available). This planning helps keep the staff and personnel committee focused on its goals and using its people resources to reach those objectives. This is called strategic planning or a strategic org chart.
However many orgs, especially churches, fail to do this. Instead, the leadership reacts to complaints and requests from members who want to have a staff person to take care of a specific ministry area (usually the one the member cares most about). And too often the personnel committee and/or pastor will acquiesce and make that new staff person a priority even if it has nothing to do with the church’s mission and vision. This is called an organic org chart (it is also called a disaster).
Org charts must be intentional and well-reasoned. Otherwise, you may end up with an org chart in which the senior pastor has 10 or 12 people reporting to him; those org charts have the appearance of being a circus tent (which may be appropriate). Make sure your org chart looks well-planned and not like it was created by the monkeys in the circus.
In December 2015, the US Congress made permanent a tax break that benefits older donors: the ability to gift to a charity funds directly from an IRA (Individual Retirement Account). There are several rules for this:
- Donors must be 70.5 years or older
- IRA gifts cannot exceed $100,000
- Gifts must go to a 501(c)(3) – FYI: the IRS considers all churches in the US to be 501(c)(3)s.
There are some interesting nuances to IRA gifts:
- The IRA transfer does not show up in the donor’s income but it does meet the mandatory RMD (required minimum distribution) of IRAs
- The church must provide an acknowledgement letter to the donor but the IRA gift does not show up on the donor gift statement from the charity. The reason is that because this IRA amount doesn’t show up on the donor’s Form 1040 under income, it can’t show up on the Form 1040 as a contribution (this prevents double-dipping).
- Checks sent to churches from an IRA sometimes do not have the name of the donor on it. The church will need to research who the donor is in order to send an acknowledgement.
- This gift will benefit some donors more than others. Thus, it is in the interest of the donors to consult their tax or accounting professional to determine if this will help their individual situation.
Churches will be wise to encourage IRA gifts from eligible donors. The following text can be included in the Sunday bulletin during the year.
- The IRS permits people to give from their IRA (Individual Retirement Account) directly to the church. This transfer can be a significant tax advantage. Please consult your tax or accounting professional to see if you should make a gift from your IRA to the church.