The following page contains questions about school finance that are among the most frequently asked by pastors and administrators.

Money Control

Who controls the money in a church-operated Christian School?

With most evangelical churches, the church board or governing committee are responsible for overseeing all financial matters. However, the sheer volume of financial transactions required by a school or child care ministry makes micro-management by the church board impractical. Most schools and child care ministries have a school or daycare board that oversees the operations of the school. The school board makes monthly reports to the church board.

Should church and school money be kept in the church account?

Most churches and schools find it necessary to keep school funds in a separate account.

Benefits

How can the school or day care benefit the church financially?

Although this is a frequently asked question, it reflects a misperception. Schools and child care centers are ministries of local churches. They should not be expected to contribute financially to the church. The Bible makes it clear that the church is to be supported by the tithes and offerings of those who attend.

There are, however, some potential indirect financial benefits. Once schools and child care ministries are firmly established, they may be able to share some of the additional expenses a church incurs as a result of the ministry. Help with utilities, maintenance, and capital improvements directly benefiting the students and their families are appropriate.

How long does it take for a school or center to begin sharing expenses with the church?

When a church begins a school or child care ministry it should plan to invest in the new ministry for at least five years. The expenses of starting such a ministry generally take all the school’s income, plus seed money from the church. Note: Catholics, Lutherans, Seventh Day Adventists, and Jewish ministries do not expect schools to be self-supporting or share expenses. The churches invest in the school as part of their total ministry.

Taxes

How can I make tuition tax-deductible for our school parents?

Daycare and Preschool tuition may qualify for a child care tax credit, but is not deductible. There is no legal way to make school tuition tax-deductible. Calling tuition a contribution does not change the fact that it is tuition. Tuition discounts in exchange for tithe or other offerings place families at risk. Some schools claim to be free to church members. 

Many evangelical churches members are expected to pay tithes and give offerings. They should reduce any tax deduction by an amount eq1uivalent to the tuition or tuition discount if they receive free tuition or a discount because they tithe. The IRS aggressively investigates and prosecutes schemes to deduct tuition.

Is asking the school or child care center to tithe appropriate?

Asking a ministry to tithe to another is inappropriate. It is especially inappropriate for schools. Such a tithe deprives parents of a tax deduction for funds that are genuinely gifts to the church.

How can charging the school rent cause problems?

Renting your facilities to any group may place your church on the property tax rolls. Often the tax assessed is more than the amount of rental income. Income derived from renting church facilities may be unrelated business income, and subject to income tax as well. A more fundamental problem is that rent almost always divides the church and school.

Ministry Failure

What is the leading cause of school or child care ministry failure?

Financial problems. Many close because the income does not cover their expenses. Others close because the church is divided over how to properly use funds. Remember, “For the love of money is a root of all kids of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many grieves” (Timothy 6:10)

Extra Money

What do we do with extra money?

This question is not frequently asked. However, after reading the recommendations in this publication, you may realize that some funds are being used inappropriately. If that is the case, use the funds to build the savings account, improve salaries, provide scholarships, or upgrade facilities or equipment.