Church HR, Staffing & Child Safety

Can a Volunteer Be Reimbursed Without Becoming an Employee?

Published 2026-08-17 · Church HR, Staffing & Child Safety

Short answer: yes. Reimbursing a volunteer for actual, documented expenses they incurred on the church's behalf, under a written accountable plan, is a reimbursement, not compensation and not a wage. What changes the answer is paying a flat amount that isn't tied to receipts. A monthly stipend, a round "gas money" payment or a regular gift card is compensation regardless of what the church calls it.

The children's ministry coordinator spends her own money on craft supplies most months. The board wants to stop that, sensibly, and someone suggests just giving her a set amount each month so nobody has to chase receipts.

That single decision, convenience over documentation, is what turns a volunteer into a person the church is paying. Everything downstream of it becomes more complicated: reporting, possibly payroll, and a question about whether she's still a volunteer at all.

The good news is that the line is clear and the fix is administrative. A volunteer reimbursement church boards can defend is one backed by a receipt, a purpose and a written accountable plan.

Where the line actually sits

Two different transactions that look identical when the check is written.

A reimbursement puts a volunteer back where they started. They spent their own money on something the church needed, they showed you what it was, and you made them whole. Nothing was earned.

Compensation is a payment for service. It isn't tied to a receipt, it doesn't vary with what was actually spent, and the person is better off afterwards than before.

The test isn't the amount and it isn't the label on the check memo. It's whether the payment is tied to documented expenses the church would have paid anyway.

The accountable plan, in three requirements

An accountable plan is the written policy that makes reimbursements non-taxable, and it's the same framework whether the person is an employee, a minister or a volunteer. Under the rules at IRC §62(c) and the related regulations (IRC §62, Adjusted gross income), a plan needs three things:

1. Business connection. The expense was incurred in performing services for the church. Craft supplies for the class she teaches, yes. Her family's groceries, no.

2. Substantiation. Within a reasonable time, the person gives the church enough detail to establish what it was, when, how much and for what purpose, with receipts (IRS Publication 463, Travel, Gift, and Car Expenses). A number written on a scrap of paper isn't substantiation.

3. Return of excess. Any advance not spent goes back within a reasonable time. If you hand someone cash for a trip and they keep the change, the plan has failed at the third requirement.

Miss any of the three and the payments fall into a non-accountable plan, where they're treated as taxable income and reported accordingly. The mechanics are worked through in what an accountable reimbursement plan is, and the plan itself has to be adopted by the board. A policy nobody voted on isn't a policy.

A worked example

Maria coordinates the children's ministry as a volunteer. In March she spends money on three things: craft supplies for the classes, a set of storage boxes the church asked her to buy, and a family birthday present bought on the same shopping trip.

She submits a form listing the craft supplies and the storage boxes, with the store receipts attached, the date, and one line describing the ministry purpose. She doesn't claim the birthday present.

The church reimburses the two documented items. Nothing is reported as income, nothing goes on payroll, and Maria is exactly where she was before she went shopping. The file holds the form and the receipts.

Now change one thing. Instead of the form, the board votes to give Maria a flat monthly amount "for supplies", paid whether or not she buys anything and with no receipts required.

Same person, same ministry, different transaction. That payment isn't tied to documented expenses, so it isn't a reimbursement. It's compensation to a non-employee, and it brings information-reporting obligations and a real question about her status (IRS, Independent contractor or employee). Nobody intended any of that. It happened because the church wanted to skip a form.

What quietly turns a volunteer into someone you're paying

• A flat monthly or weekly stipend, however small.
• Gift cards. These are cash equivalents. There's no de minimis exception that makes a gift card invisible.
• "Love offerings" collected and handed over for someone's service.
• A round per-mile or per-week "gas money" figure with no log behind it.
• Free use of something of value provided because of the service: housing, a vehicle, waived tuition or fees.
• Paying an employee's spouse for volunteer work, which invites a look at both.
• Reimbursing more than was spent, which makes the excess compensation even if the rest was fine.

None of these are wrong to do. They just have to be done knowingly, through payroll or with the proper reporting, rather than by accident through the supplies budget.

The wage-and-hour question nobody asks

Tax is only half of it.

There's a separate body of wage-and-hour law about who may volunteer and for what. Broadly, people who genuinely donate their time to a religious or charitable organization without expectation of pay are treated as volunteers, but the analysis changes when there's an expectation of compensation, and paid employees generally can't volunteer to perform the same services they're paid to do.

That last one catches churches. The part-time custodian who "volunteers" to clean up after Saturday events is doing the job he's paid for, off the clock. The office administrator who "volunteers" to run the newsletter is doing administration.

The rules here are fact-specific and depend on the role, the work and where you are. If you have paid staff also serving in unpaid capacities, that's worth one conversation with a licensed attorney rather than a decision made by the person who runs payroll.

Mileage is its own question

Reimbursing a volunteer's driving is the most common case and the one with a wrinkle.

The standard mileage rate that applies to an employee's business driving isn't the same figure that applies to driving for a charitable organization, and reimbursing above the applicable rate can create a taxable amount. The figures change, so don't take a number from an article, including this one. Read the current ones at the source (IRS, Standard mileage rates).

Two safe paths:

• Reimburse documented actual costs under the accountable plan, with a log showing date, purpose, and miles.
• Or confirm the current applicable rate with your tax adviser before you set the church's rate, and write the rate into the policy so it's applied consistently.

Either way, require the log. A mileage payment with no log fails the substantiation requirement no matter how reasonable the rate is.

How churches get this wrong

No written plan. Reimbursing carefully without an adopted policy is doing the right thing with no evidence of it.

Receipts optional for people we trust. The exception is where the plan breaks, and it's always granted to the most faithful volunteer.

Reimbursing out of a cash box. No trail, no substantiation, no return of excess.

Calling a stipend a reimbursement. The label does no work. The documentation does.

Advances that are never reconciled. Money handed out for a trip and never squared up afterwards fails the third requirement.

Treating small amounts as invisible. There's no threshold below which the rules stop applying. Small and documented is fine; small and undocumented is still undocumented.

Volunteer agreements that promise payment. A volunteer agreement should state that the role is unpaid and that reimbursement is for actual documented expenses only. The wording is covered in volunteer agreements and codes of conduct.

What to do about it

1. Adopt a written accountable plan by board resolution, and minute it.
2. Use one reimbursement form for staff, ministers and volunteers alike.
3. Set a submission window of a stated number of days after the expense, and hold to it.
4. Require receipts, with a stated rule for the rare case where one genuinely doesn't exist.
5. List what the church will and won't reimburse, so nobody has to guess.
6. Review anything paid on a flat basis and decide, deliberately, whether it should be reimbursement or compensation.
7. Ask your tax adviser about anyone currently receiving regular payments who is treated as a volunteer.

Common questions

Is a small gift card at Christmas really a problem?

It's a cash equivalent, and there's no exception that makes it disappear. Many churches choose to give volunteers something of genuine but non-cash value instead: a meal, a book, a gift chosen for them. If you're giving cash or cash equivalents, do it knowing what it is rather than hoping it doesn't count.

Do we have to report reimbursements to the IRS?

Reimbursements made under a properly operated accountable plan generally aren't reported as income. Payments that fail the plan's requirements, and payments for services, are a different matter and may require information reporting once the annual amount reaches the IRS threshold (IRS, About Form 1099-NEC). Check the current threshold and the correct form with your tax adviser. Don't carry a number over from a previous year.

Can a volunteer deduct expenses the church doesn't reimburse?

An individual's deduction is their own tax question, and the rules for unreimbursed expenses in service of a charity are specific. Point them to their tax preparer rather than advising them. What the church controls is whether it reimburses properly.

Does the accountable plan need to be separate for volunteers?

No. One plan covering everyone who incurs expenses on the church's behalf is simpler and more consistent. The difference between accountable and non-accountable plans applies identically to a volunteer.

We've been paying someone a stipend for two years. What now?

Stop guessing and get advice. This is a correction question with reporting consequences, and the right answer depends on the amounts and the facts. A short conversation with a tax professional, and possibly a licensed attorney, is the appropriate next step, not a quiet change in how the payment is coded.

Keep the paperwork and keep the volunteer

The distinction isn't fussy. It's what lets a church support the people who serve it without accidentally putting them on the payroll.

One adopted plan, one form, receipts required, no flat payments. That's the whole discipline, and it takes a volunteer about four minutes a month.

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Adopt the plan, then use the form. The Accountable Reimbursement Plan is the written policy under IRC §62 with the adopting board resolution: the document that makes a reimbursement a reimbursement, for staff and volunteers alike. $49, instant download. The volunteer onboarding forms it works alongside are in the volunteer application set, and the rest sits on the Run My Church hub.

*Faith Docs provides self-help document templates, not legal advice. We are not a law firm. For representation, consult a licensed attorney.*