by Rebecca Pace, HUUC Accounts Receivable Treasurer

Since the change in the tax law, increasing the standard deduction, Donor Advised Funds (DAF) have become more popular. Think of them as charitable savings accounts.

Tax-deductible contributions to a DAF allow a taxpayer to bunch their charitable contributions into one year, in order to itemize deductions, while taking the standard deduction in other years. You get the tax deduction when you make the contribution to the fund, but the actual grant to the church or other charity can be made later. This is particularly effective if you have unusually high income one year, with extra cash, but you want to be able to make contributions in later years when your cash flow is back to normal levels.

Donor Advised Funds have been around since 1931. The Greater Cincinnati Foundation sponsors DAFs as well as many brokerage houses. If you are considering this strategy, shop around to find one that fits your needs. Costs and support vary.

Your donation to the DAF is irrevocable. Technically, the donor advises the DAF custodian on when and what organizations should receive grants. There are a few restrictions on what type of organizations can receive grants from a DAF. You can make grants to the church or Heritage Acres or to the Endowment Fund.

Donor advised funds can accept cash, or stock or other property that can be sold. Most DAFs have a limited menu of investment choices you may use until you make the actual grant to the church or other charity.

Watch next month for the tax benefits of donations of appreciated property—and if you didn’t see it, check out last month’s article on donations from retirement accounts.

October 2019.

by Rebecca Pace, HUUC Accounts Receivable Treasurer

You may have noticed a change when you filed your 2018 tax return. The standard deduction increased so that many people no longer itemize their deductions. But, you can still get tax savings from your charitable donations without itemizing.

This month I want to highlight a popular method—Qualified Charitable Distributions (QCD). You must be over 70 ½ to use this strategy.

A person over 70 ½ can direct their retirement IRA Required Minimum Distribution (RMD), or a portion of it, to the church and avoid tax on the distribution. The charitable distribution counts toward your required minimum distribution.

Reducing the taxable income this way will reduce your adjusted gross income, which may reduce the tax burden on your social security benefit, possibly lower your Medicare premiums, and reduce your Ohio state income tax. A lower adjusted gross income may also provide other benefits, depending on your individual situation.

Even if you take more from your retirement account than your RMD, you can still reduce the taxable amount by directing some of it to the church.

In order to take advantage of this strategy you must follow these rules.

1. The check or transfer to the church must come directly from the retirement account. You cannot deposit the retirement money into your personal account and then write a check to the church.
2. An individual can make a QCD for more than their RMD, but they cannot exclude income of more than $100,000 per person. If you want to withdraw more than your RMD, use the first distribution in the year for the QCD.
3. Be sure your tax preparer knows you have made the QCD. You will receive a 1099 showing all of your retirement distributions from the account custodian. The QCD may not be identified on the 1099. It is also very helpful to let the church know that you are using this strategy, so it can be noted on your giving statement.
4. Full disclosure, I’m encouraging donations to the church, but QCDs can be made to most charities.  Gifts to can be made to Heritage Acres and to the Heritage Endowment Fund.
5. You can’t take a tax deduction for the amount given to the church if you don’t pay tax on the distribution, but when you’re using the standard deduction, that’s irrelevant.

There is no tax advantage to taking a QCD from a Roth IRA.

Stay tuned next month, for information on other gifting strategies with tax benefits.

September 2019.

You can use your Kroger Plus card and Amazon Smile to support Heritage Universalist Unitarian Church. Here’s what to do.

Kroger Community Rewards

Kroger is committed to helping our communities grow and prosper. Every year, Heritage Church earns hundreds of dollars through Kroger Community Rewards.

All you have to do is shop at Kroger and swipe your Plus Card! Go to kroger.com/communityrewards to get started!

Amazon Smile

Amazon donates 0.5% of the price of your eligible AmazonSmile purchases to the charitable organization of your choice. AmazonSmile is the same Amazon you know. Same products, same prices, same service.

Support Heritage Church by starting your shopping at smile.amazon.com.

---

If you have questions about either program, contact Bob Rush at:

September 2019.

by Reid Hester, Finance and Stewardship Chair

Many thanks to our Board President, Jaime Castle, who reminded me that at last year’s Annual Meeting, several questions were raised about how exactly we maintain our finances and close the books each year on our annual budget. I hope this article will provide some answers to those questions as well as a timely precursor to our spring pledge drive, which will formally kick off in March.

First off, a little background. We’re a “program size” congregation that has only recently grown from what’s known as “pastoral size.” For many years HUUC stayed within the pastoral size membership range of 50-150 members before we finally made it over the hump to the 150-350 program size level of membership in 2014. Members who have been around for a little while (like more than 25 years) might remember when most of our church budget was funded by the earnings of a large endowment. In those days, which were before my time, we didn’t always have to put much of an emphasis on soliciting pledges from our members. Breaking free from that endowment (i.e., cashing it in to make a big bet on the future) is what allowed us to pay off the mortgage on our beautiful facility that we’ve inhabited for almost 35 years now.

Fast forward to January 2019, and we’re a congregation of more than 170 members. We set our budget each year at our Annual Meeting, typically in late May or early June. Every year for roughly the last 8-10 years we have passed a balanced budget at our Annual Meeting, meaning that we go into a new church year intending to spend only what we will bring in. A budget is a projection, on both sides of the ledger. We never spend exactly what we say we will, and we never receive exactly the income that we expect to receive. We have plenty of buffer within our church accounts to cover those fluctuations (see below for more on the health and structure of our church balance sheet).

The church budget is the roadmap for the day-to-day financial functions of the church. When we need to do something big, we take on a capital campaign. But for our day-in and day-out expenses we rely on pledges, rental income, and fund-raising efforts. Here’s a little more detail on those income categories:

Pledges are now our biggest source of income by far, and, thanks to the dedication of our members, pledges are a predictable and reliable income stream. This is especially true as we move to more pledges coming in via Electronic Fund Transfer (EFT), an automatic way to have your pledge deposited into Heritage’s checking account each month. Members sometimes move away halfway during the pledge year, or maybe they can’t keep up with the pledge that they thought made sense for them financially when they first made it. But overall, we routinely receive at least 95% of the pledge income that we’re expecting each year, and pledges make up about 85% of our budgeted income.

Rental income has been quite reliable, and in fact it’s been an area of growth (notwithstanding deliberate changes that reduce rental income, like when we decided that it no longer made sense for the church to serve as a polling location). Overall, rentals make up about 7.5% of our budgeted income.

Fund-raising is a substantial part of our budgeted income each year, but a less reliable one. We’ve fallen short of our projected fundraising goal by double digits in some years and exceeded it in others, so it’s a challenging projection for the Board and Finance Committee to make. Like rental income, fund-raising income currently makes up about 7.5% of our budgeted income.

We’re in a very healthy place with steady, reliable, and generous pledges serving as a strong part of membership at HUUC. We are all stewards of this church, financially and through our volunteer efforts. The church isn’t something other than us. It is us.

How about the other side of the ledger? Expenses consist primarily of our people costs: the salaries and benefits of our two Ministers, our Church Administrator, and our Music and Childcare staff members. Our next single biggest expense is utilities, then office & technology costs, then denominational dues. The amounts drop off very quickly from there with the top line items for church programming going to Religious Education and the Music Program, which I think nicely reflect the priorities and values of our church community.

In most of our fiscal years we come in right at or just under our budgeted expenses. We are a frugal congregation. The variances occur on the income side of the ledger, and as I suggested earlier, those variances tend to be associated with our fund-raising income. While our budgeted pledges might come in at 95% of our projection, we always have an unbudgeted line for new pledges that come in throughout the year, and those usually more than make up the difference. We don’t have a back-up for our fund-raising or our rental income, so if either or both of those numbers is off, then we can end the year at a deficit of a few thousand dollars; or if either or both of those numbers is high, then we’ll end the year with a surplus.

How do we figure out whether we’ve ended the year “in the red” or “in the black”? First, Denise Martinez, our Church Administrator, balances the church checking account through the end of the fiscal year to make sure that all income and expenses have been accounted for. Next, I check in with the Church Treasurer, Rebecca Pace, to make sure that pledges in QuickBooks have been assigned to the right pledge year (some pledgers pay the following year’s pledge all at once before the end of the current fiscal year, and some pledgers catch up on a deficit in pledging for the prior year after that fiscal year has ended). I print the final Income & Expense report for the fiscal year and present it to the Board, and they vote to officially close the books for the prior year. This tends to occur somewhere between August and October after the prior fiscal year has ended on June 30.

We have a very healthy balance sheet with a checking account and CDs that tend to carry an extra $10,000 to $15,000 (this fluctuates depending on the proximity in the year to the church auction, our biggest fundraiser of the year). We also have investments of roughly $95,000, only about $25,000 of which is committed to certain funds, like the Barbara Howe Fund or the Social Justice Fund. These investments are the legacy of a larger endowment that continues to be a source of great financial security for our congregation.

Please contact me directly at the email address below if you have any questions or suggestions about the financial operations of Heritage Church. Going forward, I’ll try to keep up at least a quarterly column in the Heirloom. I’d love to go into our next Annual Meeting with everyone a little bit more informed about the latest in the state of our current year’s income and expenses. You can contact me at:

Heritage Church is now giving its Sunday morning collections every Sunday to a worthy outside charity. This has given rise to questions about donations and tax deductions.

If you donate by check, Bob Booth, who records donations coming in, will keep a record of that associated with your name. If you are giving a check as part of your annual pledge payment, write “Pledge” in the memo line. All checks not marked as “Pledge” will go to that week’s charity. All checks should be made out to the church, which can be written simply as “HUUC” on the Pay To line.

What about cash donations?

Bob wants you to know that if people itemize deductions for their income tax return and donate to charities by cash, the donations are deductible if the recipient(s) acknowledge the donation. That means that the cash has to be identified as to who is the donor. You can do this by putting the cash in an envelope and writing your name on the outside, or by paper-clipping a note with your name to the cash.

At the end of each tax year, Bob generates a statement regarding your donations, which you can use if you itemize deductions. If you have questions, email our Accounts Receivable Treasurer at:

February 2017.

Beginning this month, our Board of Trustees has authorized making every Sunday’s plate collection an outreach offering. With the beginning of a new calendar (and tax) year, Heritage Church is proud to join the growing ranks of Unitarian Universalist congregations who have committed themselves to creating a better, more peaceful, more just world by turning an outmoded ecclesiastical practice into a modern tool for effective social change.

In December, your generosity helped us surpass the budgeted amount for offering plate income for our current fiscal year (ending June 30). In future years, we plan to do away with the modest “offering plate” line in our budget, and rely solely on your annual pledges, outside rentals, fundraising, and so on to meet our operating costs.

What this means for us is the ability to give away the offering plate each week. What this means for the world around us is more help and support from the loving hearts and hands of the Heritage Church family for worthy non-profit organizations and projects that are consistent with our Unitarian Universalist principles and values.

Here’s how it will work on Sunday mornings: If you are writing a check to put in the offering plate, make it payable to “HUUC.” It will go toward our outreach offering recipient organization or project for that week, unless you specifically write “Pledge Payment” on the memo line. Doing so would indicate to our Treasurer that you prefer that money be counted as a payment toward your annual pledge. Otherwise, all checks, and all cash contributions, will go toward the outreach offering. (Remember, cash contributions are not considered tax deductible by the IRS.)

January 2017.

Contribute to our beloved community’s financial well-being by selling unneeded items and donating the proceeds to the church.

It’s easy through consignment, online sales, yard sales, and the Kroger Community Awards program.

Sell your unwanted, gently used high quality clothing, household items, and furniture through your local consignment store (such as Snooty Fox, Clothes Mentor and others) and donate the proceeds to Heritage Church.

Sell unwanted furniture and other items on Craig’s List or e-Bay. Donate the proceeds to the church. Unfamiliar with these online sale sites? Contact Peg Fay-Feder who will list your items for you on Craig’s List. eBay is another option for you to use.

Have a yard sale on behalf of the church. Invite members who live nearby to work with you. Invite neighboring members to bring their own items to the sale.

And don’t forget …

Not signing up for the Kroger Community Awards program is like throwing a Sunday’s collection plate away. Sign up today and name Heritage Church for your community award dollars. You can get step-by-step instructions for signing up.

2016.