Re-classifying Designating Church Gifts

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Question:

Can a church that received funds designated for one ministry/purpose use those funds for another ministry/purpose, or must it use all designated funds for their designated purpose even if the funds would be useful elsewhere?

Answer:

It is our belief that this is not a matter of IRS regulatoryconcern. It is more a matter of legal and ethical concern. Obviously, donorswho give, for example, to a fund to acquire musical instruments will be greatlydiscouraged to see those funds spent for something other than theirintentions.
When a church receivesfunds from its congregation, those funds are no longer under the individual'scontrol, but under the church's control, meaning that the church has theauthority to use these funds as it sees fit.
It is our understanding and experience that it is theSecretary of State’s offices in most states that address donor complaints. Donors have sought resolution of their complaints but going to outside agencies such as this when they believe their contributions have been mishandled. Of course, nochurch wants to mess with this.

This is not to say that formal and public church actioncould not address a proposal to reclassify designated gifts for other purposes. Obviously, churches shouldtread very carefully and are well advised to consult the original donors. In some cases, church officials have opted to counsel donors about their gift designations, if deemed inappropriate, or to even return the contributions to them.