Contributions are solicited with the understanding that Living Water International has complete discretion and control over the use of all donated funds.  Donors may reference a particular individual for consideration of a Short Term (mission) Trip (STT) but contributions received are only tax deductible when made for the program, not an individual.  Gifts will not be refunded to donors if the preferenced participant does not go on a trip.

The Evangelical Council for Financial Accountability (ECFA) states the following, “a donor may give funds restricted for short-term mission trips without any preference or reference as to particular mission trip participants – the donor simply wishes to support the program of sending short-term missionaries.

An earmarked gift is a transfer that is intended to benefit an individual, not the charity.  It is a transfer over which the charity does not have sufficient discretion and control and therefore is NOT A TAX DEDUCTIBLE DONATION. 

Funding based on gifts preferenced for particular trip participants:  Short Term (mission) Trip participants generally are responsible for soliciting gifts to cover part or all of the expenses necessary for the particular trip. 

When Short Term Trip participants raise part or all of the funds required for a trip, the sponsoring organization generally records the amounts raised in separate accounts for each participant as a way of monitoring whether sufficient funds have been raised to cover the expenses of the participant’s trip.  Charges are then made against the particular account for expenses incurred for the trip.  

Gifts preferenced for particular trip participants will not be refunded to donors if the preferenced individual does not go on the trip.  Refunding gifts is a strong indication that the sponsoring charity does not have adequate discretion and control over the gifts and the issue of earmarked gifts is raised meaning the gift is not a tax-deductible donation.

The control test:  The IRS uses the phrase “discretion and control” to indicate a charity’s obligation regarding deputized funds (or participant funds).  The IRS stated that charities receiving revenues from fundraising for the support of short term mission endeavors can demonstrate control and discretion with the following directives:

  • Reimbursement of legitimate ministry expenses are approved by the organization, pursuant to the governing body’s guidelines.  Reimbursement must be set by considerations other than the amount of money collected by the individuals who raises funds.
  • Potential trip participants are screened according to qualifications established by the organization.
  • Trip participants are given meaningful training, development and supervision.
  • The organization assigns trip members to programs and project locations based upon its assessment of each individual’s skills and training and the specific needs of the organization.
  • Donor receipts inform donors of the organization’s full control and discretion over its programs and funds.
  • Since the organization should not commit contributions to a particular person, potential trip participants should never imply the opposite, verbally or in writingA donor may individuate a preference that the charity use a gift to support the trip of a certain individual, and the charity may track the dollars based on that preference.  However, the organization and the potential trip participant should refrain from any inference that the contributions will be paid as expenses to or for a particular workerThis is a fine line, but one that should be carefully observed.