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Churches play a significant role in many communities, and proper handling of finances is essential for their sustainability and success. However, managing church finances faces many challenges and requires a good understanding of best practices to ensure transparency and accountability. In this article, we will discuss the Guidelines for Handling Church Finances: Do's and Don'ts.

Do's of Handling Church Finances:

  1. Follow Generally Accepted Accounting Principles (GAAP): The basic principles of accounting under GAAP include maintaining accurate records, providing full disclosure of information, and reporting financial performance in a consistent manner. Church finance leaders should stay up-to-date on the latest GAAP guidelines and make sure they’re adhered to when preparing financial statements and other documents.

  2. Maintain Documentation/Records: Good record keeping is essential for properly managing church finances. Financial records should be kept up-to-date and easily accessible. This includes transactions like donations, investments, payrolls, payments, and more. The church should also have a system in place to track and store these records securely.

  3. Use Separate Bank Accounts for Church Funds: Keeping church funds separate from personal accounts is an important part of financial accountability. Church finance leaders should open separate bank accounts for church finances and designate specific people who have access to them. This will ensure that only authorized individuals can withdraw funds from the account and that the church’s money is not used for any other purpose.

  4. Monitor Cash Flow: Cash flow is one of the most important aspects of church finances. It is important for church finance leaders to monitor cash flow closely to ensure that the church always has enough money to cover its expenses. They should also create a budget and stick to it, so that the church does not overspend.

  5. Protect Donors’ Privacy: Churches should take steps to protect the privacy of their donors. This includes following the law and making sure that donor information is kept confidential. Donors should also be informed of how their funds are being used and given the opportunity to opt-out of receiving further communication if they choose.

  6. Invest in money counting machine: To ensure accuracy and efficiency in handling church finances, it is recommended that churches invest in money counting machines. These counting machines can help automate processes such as recording donations, sorting bills and tracking expenditures. This can save time and effort in managing church finances and reduce the chance of human errors or mismanagement.

  7. Set up a financial policy and procedures manual: It is essential to have a clear and well-defined financial policy to guide the handling of church finances. The manual should include detailed procedures for handling contributions, processing expenses, and financial reporting.

  8. Establish a system of checks and balances: A system of checks and balances ensures that no one person has too much control over the finances. This system should involve multiple people handling different financial tasks, such as receiving offerings and making deposits.

  9. Regularly review financial records and reports: Regularly reviewing financial records and reports helps to identify any irregularities or suspicious activities. It also ensures that the church stays within its budget and financial goals.

Don'ts of Handling Church Finances:

  1. Don’t Commingle Personal and Church Funds: Churches must not mix their personal funds with church funds. This could lead to IRS implications, including penalties and fines, as well as potential criminal charges if the practice is intentional. Churches should ensure that all donations are logged and tracked separately from any other income.

  2. Don’t Make Unauthorized Withdrawals: Churches should never make any withdrawals from their accounts without authorization from the board of directors or other authorized personnel. Churches should also have an internal system in place to track who has access to the bank accounts, what transactions they can make, and how much money can be withdrawn at any given time.

  3. Don’t Make Unacceptable Investments: Churches should avoid making investments that might put their financial assets at risk. This includes making risky investments, such as stocks or derivatives, and investing in companies whose values may be unstable. Churches should also research any investments they make to ensure that they are financially sound and have a good chance of yielding a profit.

  4. Don’t Make Payments Without Proper Documentation: Churches should always make sure that they have proper documentation for every payment they make. This includes receipts, invoices, contracts, agreements, and other forms of proof that a transaction took place. This will help protect the church against fraud and provide evidence of payments made in case of an audit.

  5. Don’t Neglect to File Required Tax Returns: Churches must file their annual tax returns on time. Failure to do so can result in hefty fines and penalties from the IRS. Churches should also keep accurate records of their finances to ensure that they are able to provide the necessary information when it comes time to file their taxes.

  6. Don’t Use Church Funds for Personal Use: Churches should never use their funds for personal gain. This includes using church funds for business expenses, vacations, or other non-church related activities. Doing so can result in serious legal and financial consequences.

  7. Don’t Ignore Internal Controls: Churches should have internal control systems in place to ensure that their finances are handled properly. This includes setting up separate bank accounts for church funds, monitoring cash flow, and creating policies and procedures to protect donors’ privacy.


In conclusion, handling church finances is a significant responsibility, and it is essential to follow the guidelines for dos and don'ts to ensure transparency and accountability. With the proper financial policies, procedures, and training in place, the church can focus on its mission and positively impact the community it serves.


  • Harry

    Regarding the chruch handling processing fees, here are some helpful infomation!

    1. Understanding Processing Fees:
    Processing fees are incurred with every online transaction, whether it’s a purchase or a donation. When someone donates money online via debit/credit card or bank account (ACH), a processing fee is charged. These fees are necessary for online transactions and are shared among four organizations involved: Credit Card Associations, Issuing Banks, Payment Gateways, and Online Giving Software​1​.
    2. Reporting Online Giving Fees:
    One approach to handling online giving fees is to record them accurately in the church’s accounting system. For instance, if a $2 fee is charged on a $100 donation, the church could record $100 as revenue, debit $98 for cash, and debit $2 for Online Tithe Expense​2​.
    3. Covering Processing Fees:
    Some churches offer the option for donors to cover the processing fee. For instance, if a donation is $100, and the processing fee is $3.20 (assuming a fee rate of 2.9% + $0.30), the donor can choose to cover this fee, making the total donation $103.20. This way, the church still receives the full $100​3​.
    4. Effective Giving Rate:
    The effective giving rate is the average amount paid to fees per transaction in the church after every fee and donation is tallied up. Understanding this rate can help the church in budgeting and financial planning​4​.
    5. Educational Resources:
    It might be helpful to consult educational resources or attend training sessions on handling online giving fees. For instance, Church Windows Software offers documents and videos on how to handle processing fees from online giving​5​.
    6. Choosing a Cost-Effective Payment Processor:
    Churches could research and compare different payment processors to find the most cost-effective option for their needs. Some payment processors might offer lower fees or better terms for non-profit organizations.
    7. Transparency with Donors:
    Being transparent with donors about processing fees and how they affect the total amount the church receives can also be a good practice. This transparency can also extend to how the church manages its finances, which can build trust with the congregation.

    Note: Each church might find a different approach that works best for its circumstances and its congregation. It’s advisable to consult with financial advisors familiar with non-profit or religious institution finances to develop a comprehensive strategy for managing processing fees and other financial matters.

  • Karen

    How should a church handle processing fees (website portal)… ??? 2.6 -3% plus per transaction fee of 42 cents adds up.
    People are giving their tithes and their “tithes” are turning out to be 7.5 percent and not 10….
    Your advise or protocol would be appreciated….

  • Siame Kafwimbi

    Thanks for the information which is helpful,l need more of these tips so l can learn more

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