Tax Status for Church Choir - 501(c)7?

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Tax Status for Church Choir - 501(c)7?

Postby archbish99 » Fri Mar 22, 2013 5:37 pm

In addition to the accounts maintained by the church for expenses directly part of the choir's operation (music, staff salaries, etc.), our church choir has non-deductible finances outside the church budget, used for two main purposes:
  • An annual collection of voluntary gifts from members which is divided amongst the church staff members who support the choir in the form of an end-of-year gift
  • An annual/semi-annual request for contributions toward a fund used to get flowers/cards for members who are sick, have lost family, or otherwise in situations where we'd like to do something nice for them.
The account used to manage these funds has traditionally been maintained in the name of whoever is the choir treasurer. However, that means that the account has to be moved any time a new treasurer is elected, and that any contributions by check have to be made out to the treasurer personally, which understandably makes some people uncomfortable, including the treasurer. It also mean's the choir's interest is taxable to the treasurer, though it's modest enough that's more a paperwork hassle than a real financial burden.

I'm wondering if we qualify as a social club under 501(c)7, and could get an EIN and be declared tax-exempt on that basis? (Obviously, contributions to a 501(c)7 aren't tax-deductible, I know.) However, we don't charge membership dues, so that's potentially a little questionable. Anyone know more about whether this is an option for us? If not, is there a different way we might approach this?
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Re: Tax Status for Church Choir - 501(c)7?

Postby tom0153 » Sun Mar 24, 2013 2:31 am

Why can't the church establish the account?

They sound like the usual expenses of a choir, but you are making donations to the church to cover them.

This ensures that the donations which are earmarked for the choir are also donations to the church, and thus deductible.

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Re: Tax Status for Church Choir - 501(c)7?

Postby archbish99 » Sun Mar 24, 2013 11:18 am

The usual expenses of the choir, which the church does fund out of its budget through the donations of church members, are things like music, staff salaries, etc. The choir doesn't need to maintain a separate account for those, since the church office handles those.

Things like flowers, cards, and gifts are strictly for members' mutual assistance and funded strictly by the choir members. They're not part of the church's programs, strictly speaking, but something that the choir members are doing for each other.
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Re: Tax Status for Church Choir - 501(c)7?

Postby tom0153 » Sun Mar 24, 2013 11:42 am

archbish99 wrote:The usual expenses of the choir, which the church does fund out of its budget through the donations of church members, are things like music, staff salaries, etc. The choir doesn't need to maintain a separate account for those, since the church office handles those.

Things like flowers, cards, and gifts are strictly for members' mutual assistance and funded strictly by the choir members. They're not part of the church's programs, strictly speaking, but something that the choir members are doing for each other.


Well, I don't want to buck the system (smile), but it still sounds like the usual expenses of a choir; without these, you wouldn't not have the cohesive group that you have. Would the pastor also send a card to a sick member or the family of a deceased member? I'd bet that cost would come out of ministerial funds. Are there similar groups in the church? Do they also have their own fellowship funds?

Mutual assistance, well, that sounds a little like an individual benefit, if it is something major (like helping with the rent). This is still something that I see coming from ministerial funds from time to time.

Couldn't hurt to ask ... just don't let the fund grow too big so it becomes attractive for a hostile takeover!

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Re: Tax Status for Church Choir - 501(c)7?

Postby CABob » Sun Mar 24, 2013 2:28 pm

How many people are involved and what is the dollar amount of the fund?
It doesn't seem as if there is a neat way to accomplish what you want. How about keeping the money as cash in a coffee can? How about passing the hat or assessing a fee or asking for donations when the occasion to need money is identified?
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Re: Tax Status for Church Choir - 501(c)7?

Postby archbish99 » Sun Mar 24, 2013 3:01 pm

CABob wrote:How many people are involved and what is the dollar amount of the fund?
It doesn't seem as if there is a neat way to accomplish what you want. How about keeping the money as cash in a coffee can? How about passing the hat or assessing a fee or asking for donations when the occasion to need money is identified?

That's precisely what we do when money is needed -- pass envelopes around. Generally 1-2 times/year, but more often if needed. Cash is pretty simple to collect, but we'd rather not have it sitting around waiting to be used. Checks aren't nearly so easy without a bank account.

I'd say collections aren't over a few hundred at any given time, so neither would the balance be.
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