Church Money, Donations & Financial Controls

Writing a Benevolence Policy: The Essential Sections

Published 2026-09-04 · Church Money, Donations & Financial Controls

Short answer: a working benevolence policy has eight sections: purpose and charitable class, eligibility, what the fund will and won't pay for, dollar limits, who approves what, the rule for staff and board members, how payment is made, and how the file is kept. Everything else is commentary. If your policy is missing the approval section or the insider section, it isn't doing the job the policy exists to do.

Somebody asks the treasurer a simple question in a board meeting: "What's our policy on this?" And the honest answer is that there isn't one. There's a habit, and the habit lives in one person's head.

That's where most church benevolence policies get written, about a week too late. The benevolence policy sections below are what has to be in one, and why each is there. If you're still working out whether the church should be doing this at all, start with how benevolence works without risking your exemption. None of it is complicated. It's one document, adopted once, that turns a series of improvised kindnesses into a program the church can stand behind.

What is a benevolence policy supposed to do?

Three things, in this order.

It makes the giving defensible. A church is a tax-exempt organization spending charitable funds, and it has to be organized and operated for exempt purposes (IRS, Exemption requirements for 501(c)(3) organizations). Somebody eventually asks the question: an auditor, a new treasurer, a disgruntled member, an agency. Did those funds relieve genuine need, or go to particular individuals for reasons that had nothing to do with need? A policy plus a file answers that. A pattern of checks doesn't.

It makes the giving fair. This matters more than the compliance point and gets discussed less. Without written criteria, help depends on who you know, how well you tell your story, and who happened to be in the office that Tuesday. Written criteria protect the people asking.

It protects the people deciding. Nobody should have to carry a hard "no" alone, and nobody should be in a position where a "yes" looks like a favor. A policy moves the decision from a person to a standard.

Which sections does a benevolence policy actually need?

1. Purpose and charitable class. Two or three sentences stating that the church provides temporary assistance to people in genuine financial need, that assistance is made from charitable funds for charitable purposes, and that it's available to an open class of people rather than to pre-selected individuals (IRS Publication 1828, Tax Guide for Churches). That phrase, an open class, is the load-bearing one. Charitable assistance is help offered to whoever within a described group turns out to need it. It isn't a fund set up to benefit one named family.

2. Eligibility. Say who may apply. Members, regular attenders, people referred by a member, and walk-ins from the surrounding community are all legitimate answers, and churches routinely help beyond their own rolls. What matters is that the policy states the answer instead of leaving it to whoever opens the door. Add the two disqualifiers most churches want and forget to write down: assistance isn't conditioned on giving history, and it isn't conditioned on membership status unless the policy says so plainly.

3. What the fund pays for, and what it does not. Be concrete. Utilities, rent or mortgage arrears, food, essential transportation repairs, prescriptions and medical bills, funeral costs. Then the exclusions, which are the harder half: business debts, legal judgments and fines, bail, gambling debts, and anything payable to a member of the requester's own household. Also state whether the fund covers ongoing support or short-term crises. Most churches mean the second and accidentally do the first.

4. Limits. A per-request cap, a per-household annual cap, and an overall budget for the year. Limits aren't stinginess. They're the thing that keeps the fund solvent in November. We work through how to set them in benevolence limits and approval authority.

5. Approval authority. Who can approve what, at which amount, and who must be a second signature. This is the section most often missing, and its absence is what makes everything else theoretical. Name roles, not people, so the policy survives a staff change.

6. The insider rule. Requests involving a board member, a staff member, a minister, or their close family go to the board, with the interested person recused and the recusal recorded. Assistance to insiders is the highest-risk category in this entire area, because church resources flowing to people with influence raise a private-benefit question (IRS, Inurement / private benefit). For church employees it usually stops being benevolence and starts being compensation. Read the extra rules for helping a church employee before you approve one.

7. Payment method. State the rule: the church pays the provider directly, meaning the utility, the landlord, the pharmacy or the garage, and cash isn't used. Direct payment is what makes the file self-proving, and it protects the recipient from a later question about what the money really was.

8. Records, confidentiality and review. Where files live, who may open them, how long they're kept, and when the policy comes back to the board. Benevolence files hold sensitive information about people in your congregation. They don't belong in a shared drive the whole staff can browse.

What about gifts donors want to earmark for one family?

This comes up constantly, and it's the part churches most often get backwards.

A donor may give to the church's benevolence fund and receive a contribution receipt in the ordinary way, because the church controls how the money is used. A donor who hands the church money and directs it to a specific named individual generally isn't making a deductible charitable contribution at all (IRS Publication 526, Charitable Contributions). The church is being used as a conduit, and the deduction usually fails.

So the policy needs one sentence: the church retains full discretion over the use of all benevolence funds, and contributions designated for a particular individual cannot be accepted as designated. In practice you say it gently at the counter, something like "we can put this into the benevolence fund and the committee will consider the need you're describing," and then you actually mean it. Handle the paperwork side with your donation receipt practices so the two documents say the same thing (IRS Publication 1771, Charitable Contributions).

If a family in the church wants to give money to another family, that's a wonderful thing and they should do it directly. It just isn't a charitable contribution routed through the church.

How do churches get the policy wrong?

They write purpose and eligibility, and stop. A policy without approval authority and limits is a mission statement.

They set a limit nobody can raise. If the only path above the cap is a full board vote and the board meets quarterly, the policy will be ignored inside six months. Build the escalation path into the policy so people don't have to route around it.

They never define "emergency." Someone will need a decision on a Friday night. Say who can make it, up to what amount, and who they report it to on Monday.

They copy a policy from a much larger church. A three-tier committee structure in a congregation of ninety people is a document that will never be followed. Write the policy your church will actually run.

They adopt it and never minute it. An unadopted policy is a draft. Put the motion in the minutes with the date.

They forget the application. The policy sets the standard; the form captures the facts. You need both, and the form should exist before the crisis does. See what to ask for on the benevolence application.

What does a worked example look like?

A congregation of about 200 adopts this in a single meeting:

• Purpose and charitable class: one paragraph.
• Eligibility: members, attenders, and community members referred by a member or a partner agency.
• Covers: utilities, rent arrears, food, prescriptions, essential auto repair. Excludes: fines, judgments, business debts, ongoing support beyond three months without board review.
• Limits: $500 per request, $1,500 per household per rolling twelve months, $12,000 budgeted for the year.
• Approval: pastor or benevolence deacon alone up to $250; two of the three named roles up to $500; anything higher, or any second request within ninety days, goes to the board.
• Insiders: any request touching staff, board, or their households goes to the board with the interested person recused and the recusal minuted.
• Payment: direct to provider only. No cash. No reimbursement without a receipt and a prior approval.
• Records: application and approval sheet filed together, kept with financial records, accessible to the treasurer and the board chair only.

That's one page. It took a board forty minutes. It will answer every question anyone asks about this fund for years.

Common questions

Does the policy have to be approved by the whole board?

Adopt it the way your bylaws say policies are adopted, and record it in the minutes. In most churches that's a board motion. The point isn't formality for its own sake. It's that the policy is the church's decision rather than one staff member's preference, which is exactly what you want to be able to show later.

Can we help someone who isn't a member?

Yes, and many churches do. Charitable assistance isn't limited to your own congregation. Just say so in the eligibility section rather than deciding case by case, so the file shows a standard was applied.

How often should we revisit it?

Annually, alongside the budget, is the natural rhythm. Limits drift out of date faster than anything else in the document. A quick read at the same meeting where the fund is budgeted takes minutes.

What if we've been doing this without a policy for years?

Then write one now and start the file going forward. You can't re-create documentation for decisions already made, and you shouldn't try. What you can do is make the next decision the first one with a record behind it.

Should the fund be a separate bank account?

It doesn't have to be. What it does need is separate tracking in your accounting records, so the balance, the receipts and the disbursements can be reported to the board without anyone reconstructing them by hand.

When to slow down and get advice

Most requests are exactly what they appear to be. A few aren't, and they're worth naming: assistance tied to an active legal matter or a settlement, help to a staff member that's starting to look like a salary supplement, a large gift arriving with strings attached to one household, or pressure from a person with authority to approve something outside the policy. Those aren't form problems. Talk to a lawyer or your CPA before the check goes out, not after.

Write the policy for the ordinary week. Route the extraordinary one to someone qualified. Then keep the paper trail the policy promises, which is covered in documenting benevolence decisions for the auditor. All of that is governance done properly.

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Get the policy and the paperwork in one place. The Benevolence Fund Policy is the written policy, the application, and the approval record, built around the documentation this area calls for. Adopt the policy at your next meeting, put the form in the office, and keep the file. $49, instant download.

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