Financial Management: The Church and the Support of Missions

There are various ways for a church to financially support its missionaries. Follow these essential guidelines for responsible financial management

For many churches, supporting missions is an important part of the work they are called to do. And for such churches, an important issue is the proper handling of funds expended from the mission budget. The questions that can plague a church’s board and staff wrestling with this topic include the following:

• oversight of funds expended for mission purposes
• which mission workers may be supported
• what reporting is necessary
• what legal restrictions apply

The answer for each church will depend on its mission program characteristics. A church’s board should start with its doctrinal approach to carrying out mission work. This will cover a gamut of different considerations including theological, structural, financial, operational and other areas.

This article focuses specifically on the structural, financial and operational considerations for different models of mission support. Knowing which model a church falls under is fundamental to directing how the church must exercise its fiduciary obligations.


Most mission endeavors are funded through one of the following five models:

• a denomination
• a mission organization
• a foreign organization
• a conglomerate of churches or supporters
• the local church alone

Funding of Mission Endeavors Through a Denomination

Many denominational churches provide all or most of their mission funding to their denominations. The denomination in turn carries out mission endeavors in a systematic approach.

An additional effort may be necessary in these situations to keep a local congregation engaged in the mission work so it doesn’t begin to feel distanced from the front lines of the mission field.

Funding of Mission Work Through a Mission Organization

This is a common model for nondenominational churches to support mission work. These organizations will have a worldwide vision and support staff for carrying out mission work systematically.

As with giving to a denomination, funding missions through a mission organization alleviates a local church from many of the administrative burdens, again realizing economies of scale in administration.

The church should still be receiving reports from the mission organization to ensure accountability and that the church’s goals remain in alignment with those of the mission organization.

Similar to supporting missions through a denomination, a local congregation may suffer some of the same effects of being distanced from the mission work; however, an additional concern is the compatibility of mission and vision between the church and the organization. This concern can usually be mitigated by finding one of a number of sending organizations that aligns its vision closely with that of the local church.

Funding of Mission Endeavors Through Foreign Organizations

Directly supporting mission work via a foreign organization can be a more difficult arrangement for a local church in the United States. A primary concern is how the church will exercise oversight over the mission work of a foreign organization.

Not only is it expensive to oversee program endeavors of a foreign organization, the legality and logistics of supporting a foreign organization are also complex. These legal issues primarily relate to the preservation of the charitable contribution deduction for donors. Generally, gifts to foreign organizations are ineligible for the charitable contribution deduction for income tax. Thus, foreign organizations may look to a U.S. charity to facilitate tax-deductible contributions. Nevertheless, it is improper to use a U.S. charity to simply pass funds through to a third party as a conduit transaction, which is strictly prohibited by the IRS.

Therefore, churches must be sure that they do not enter into pass-through or conduit transactions; it not only makes contributions ineligible, but can also threaten the tax- exempt status of the church.

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A church has two options to consider. First, the church could establish a controlled subsidiary foreign organization that carries out the exempt function of the church in that country (this really becomes the fifth model—the local church alone). Second, the church may make grants to a foreign organization for purposes the church has reviewed and approved. Accordingly, fundraising should be to support mission work or specific projects rather than a foreign organization. The key here is to emphasize the work that is being done, not the vehicle or entity conducting the work.

A church that is sending funds to another country should also review currency disclosure and OFAC (Office of Foreign Assets Control) requirements of the U.S. Treasury, as well as those of any other countries that may be involved.

Funding of Mission Endeavors Through a Conglomerate of Churches or Supporters

Many times missionaries may be sent by a group of churches or supporters. This type of arrangement can pose several different complications.

No missionary is an island. A missionary cannot function on his or her own, unaccountable to anyone. A missionary needs biblical accountability and support to continue on a mission field.

Good communication is vital when there are several different entities independently supporting a certain mission field, since either overbearing or inadequate accountability is easily possible. For example, one group may assume that they are receiving certain reports as a courtesy and thus believe that someone else oversees the mission work more directly. Conversely, several groups may believe no other groups are exercising oversight and thus require burdensome amounts of mission resources in duplicated oversight. Therefore, it is best to have good communication and one entity that understands it holds this primary role of overseeing the missionary’s work. This does not remove each church’s stewardship responsibility to ensure that appropriate accountability continues.

Example: Let’s say Donna Jones wants to give money to support the mission work of Mike Phillips in Uganda. Donna’s local church has never supported this missionary before and does not provide oversight for Mike. Can Donna give her church a check for Mike’s support and receive a charitable receipt from the church? Generally, no. As mentioned under the foreign organization model, there is a legal prohibition of conduit transactions. All charities, including churches, must exercise discretion and control over funds received in order to issue a charitable contribution receipt. Accordingly, a church should not merely pass funds on to a missionary or a program that it has not reviewed and made a decision to support, as it could endanger the church’s tax-exempt status.

So, what should Donna do? It would be appropriate for Donna to approach her church board to see if Mike is a missionary that the church might decide to support. If so, Donna could give a gift to the church preferenced for the support of the named missionary or just give generally to the mission fund. If the church decides not to support Mike, then Donna could give a gift to another charity or church that is supporting Mike.

Regardless of who Donna gives the contribution to, it is not appropriate for her to restrict her contribution for Mike’s support since this demonstrates the charity’s inability to use the funds and still exercise proper discretion and control. Furthermore, the funds would become earmarked funds for a specified individual, which poses a series of additional tax compliance issues. Rather, when supporting a missionary, a donor should preference the funds for a particular person’s support, but must realize that this is a gift to the charity, which must maintain discretion and control over the funds. This is different, however, than restricted gifts for a program or project, which is proper since it restricts the type of work to be done as opposed to who carries out the mission work.

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Generally speaking, most mission work is supported by several churches and supporters. Many times, a missionary will send a regular report to all of the supporters to show financial accountability and mission work progress. It is critical that there be good communication to reach a proper balance of accountability.

Funding of Mission Endeavors Through the Local Church Alone

In the fifth and final model, a local church may decide to independently send, sponsor and oversee a missionary or project. While this will simplify certain accountability oversight questions, the local church must also bear the sole administrative responsibility of the missionary’s support and ensure that it is exercising the proper oversight of its mission work.


It is a good practice for church members to visit mission fields they support, not only to energize and revitalize a passion for missions, but also to exercise stewardship. Alternately, a church could arrange for its representative to visit the field and report to the church. This is not to cause panic or fear for a missionary but rather to hold one another accountable in addition to seeing that the missionary’s needs are being met.

A missionary should have regular reporting that includes:

• program approval and review
• approval of expenditures in a timely manner
• an approved budget
• periodic financial and mission progress reports


How financially transparent are missionaries or missions organizations? What is the operational oversight structure like? When a missionary operates under the oversight of an independent body that can focus on the missionary, there is likely more transparency in financial reporting.

Many missions organizations are exempt from filing the IRS Form 990, so a supporter should be able to ask the ministry for a copy of its recent financial statements instead to determine how the ministry is operating financially. If there are no financial statements or copies are denied for review, this should be a red flag to potential supporters.


Are you holding missionaries accountable to demonstrate impact and effectiveness of their activities? While reporting is important for financial oversight, it is also important to ensure impact and effective mission work. While impact and effectiveness can be difficult to quantify for a mission field, there are a few primary steps that can be taken to demonstrate a program’s effectiveness.

• Identify key indicators that demonstrate items you are interested in measuring (for example, number of those accepting Christ, increases in health, certain changes in social dynamics, etc.).
• Measure the specific mission work against the mission and vision of the program.
• Measure progress in the mission field based on goals from before the activity to the present.
• Give adequate time to measure results.

Used with permission from the ECFA Knowledge Center.