Benevolence Fund

Benevolence Fund Meaning

Benevolence Fund is the fund which is used to help the people who need funds and are facing family hardships due to various reasons like natural calamities, health issues, any accident or any other natural cause and which is generally maintained by the church with the sole purpose of distribution to help instead of concentrating on who is donating, to support needy people is called as the Benevolence fund.

Benevolence-Fund

You are free to use this image on your website, templates etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Benevolence Fund (wallstreetmojo.com)

Benevolence Fund Process

  1. Firstly the benevolence committee is to be created, but if the committee is not created, then the board of directors is responsible for creating a benevolence policy and looking after it.
  2. The benevolence committee is accountable to the board of directors, ultimately for drafting and creating the benevolence policy.

The individuals or the families who want to seek assistance from the benevolence fund are required to follow the below steps:

  1. Firstly the individual or family members are required to obtain and submit the application form for getting assistance from the church.
  2. The form should be supported by the required documentation.
  3. Then the interview or the appropriate counselling must be completed with the concerned authorities.
  4. Lastly, all the additional information and documents asked by the concerned authority must be provided.
  5. Then the authorities will review the application and approve and communicate the amount of assistance to the one seeking assistance as early as possible.

Qualifying for Benevolence Fund

  • The purpose of the need should be well defined, i.e. for what kind of needs fund will be provided, for example, food, shelter, and utilities, etc.
  • Define the financial criteria under which a recipient can get the payment of funds such as unemployment or income below the specified limits.
  • It should be pre-decided who is responsible for approving the expenditures from funds like the designated minister or committee.
  • Further, it is advisable to make payments directly to the vendors to whom the person seeking assistance owes rather than transferring the amount to the designated person directly so that it can be ensured that the funds are not misappropriated.
  • The records should be maintained related to the spending of funds and the person to whom the funds are given.

How is it Distributed?

The benevolence fund is the lender in last resort, i.e. when all the possibilities of getting fund are ruled out like savings, investment, the family then it is intended as a source of finance at the time of hardships. The disbursement of the benevolence fund shall not be in the form of any loan. The persons who are seeking financial assistance should be ready to take the appropriate counselling as before approving, the Deacons will make sure that the person seeking assistance will not have any negative or irresponsible behaviour and is not intended to misspend the funds.

The disbursements of this fund shall be made directly to the party to whom the designated person owes the amount and not to be payable as cash so that the misappropriation of funds can be avoided.

Taxability

The benevolence payment that is made to an employee is taxable as employees’ wages. Therefore, the payroll taxes are to be withheld from them, and the same rule is applied to any other expense, which is paid on behalf of the employee.

Also for donors, pass-through donations are not tax-deductible, but if the donations are routed through the benevolence fund, then the church has control over the donation that makes the donation tax-deductible.

The benevolence fund is needed to help the members of the church or the nearby community in their difficult times as the benevolence fund is used to pay high medical bills and other expenditures important for the survival of the member or other individual.

Guidelines of Benevolence Fund

The benevolence expenditures are required to meet a minimum of two requirements – Need and Recipient resources.

The need is important to survive. Still, the need is defined in the church policy, and it is upon them what they include in the definition of need, i.e. policy should include what type of needs are eligible for getting benevolent payments and who is responsible to decide what kind of need the church may assist.

Recommended Articles

This has been a guide to Benevolence Fund and its meaning. Here we discuss taxability, need, applications, and how it is distributed along with guidelines. You may learn more about financing from the following articles –