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Be forthcoming about funds

11 January 2013

Your column "Ask what the giver intended" (28 September) is pertinent to our church. Our fund-raising took our building funds above what we needed to complete roof repairs and associated works, however, to the sum of £21,000, once all the VAT was reclaimed. What can we do with this restricted money, as donations were definitely made for repairing the roof?

MANY churches face issues of this kind over restricted funds, to a greater or lesser degree. I understand that your fund-raising plan was correct in needing the total sum, as you had little idea of how much, if any, would be refunded from the VAT. But it is not a good argument that because this was VAT the surplus can be reallocated, because the money was from your restricted roof-fund in the first place.

If your repair project represented the most urgent or essential of the repairs that were identified in your Quinquennial Inspection report, you will shortly have the more minor ones to cope with.

So the ideal route would be to tell the specific donors - especially those at the later stages of your fund-raising - that you have a surplus on the roof fund (and why), and to ask if they would mind if you held it over for further repairs, in a restricted fund, or would rather that their money was returned. You could even explain to them the next phase of repair work that you foresee addressing. How can you do this?

For trusts and foundations, bearing in mind that the "restriction" is in the intention of the donors, you can send a letter, or even phone them.

If the last stages of fund-raising were primarily through local events, you could put an article in your church or parish newsletter, thanking people for all the generous help that exceeded the current project, and saying that it is your intention to use the surplus on future roof and structural repairs. This allows anyone who so wishes to request the return of identifiable contributions to the fund, and helps to avoid bad feeling.

For the rest of us, it is worth considering this issue carefully as we prepare our fund-raising messages. "We face major challenges in repairing and maintaining the church, and would appreciate your help. The immediate need is for £XXX for the roof, and this will be followed by further essential repair." The essence is to find a phrase that does not totally restrict the funds to the roof works, but uses roof works as the main target.

The pitfall to avoid is trying to hang on to money that is not yours; it is the donor's money until it is spent on the specified project, and, in this case, as it was not spent, it is still the donor's. The best you can do is to ask if you can reallocate it.

If you try to squirrel the funds away, keeping as quiet as possible, do not forget that you are a charity, your accounts are a public record, and you may wish to use copies of the said accounts for applying to the same trusts and organisations in the future, when your contrivance will become immediately apparent. Being tricky is not the way to go.

Issues and questions to maggie durran@virginmedia.com.

Use the same email address to obtain information on village seminars, covering aspects of building works and fund-raising.

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