I developed this article after hearing from several local church leaders who reported that they had members designating their tithes and offerings for specific ministry areas within the local church. The implication was that people found “giving to the budget” too boring, and they would rather see their giving go where it would have a “greater impact”: to the food pantry, the backpack program, the music ministry, or the youth ministry, for example.
As I researched the topic, I found that people use the terms “restricted” and “designated” in various ways. In places, writers flipped the terms completely.
Janet Jamieson, CPA and recently retired CFO of Discipleship Ministries, in her excellent book Ministry and Money (co-written with her clergy spouse Phil Jamieson), makes it clear what the terms mean in relation to funds the church manages:
Occasionally, the church board will choose to designate, or set aside, funds for a specific purpose. The example offered is surplus operating funds, which could be designated by the board for building needs. Unlike restricted funds, which can only be changed by the donor, designated funds are part of unrestricted contributions and can be undesignated at any time by the church board.
I’ve listed below areas where caution should be exercised when someone wants to convert their regular “tithes and offerings” to a restricted gift.
1. Restricting gifts can undermine the unified budget.
When donors bypass the general budget, the whole-church approach to stewardship suffers. It becomes harder to plan or fund essential areas that aren’t "popular" but are vital to the church’s health.
2. Restricting gifts could create ministry inequities.
When giving flows only to visible ministries, such as music or missions, less-visible but essential areas, such as pastoral care, utilities, or administration, may be neglected. Over time, this imbalance can cause friction or burnout.
3. Restricting gifts could shift power dynamics in the church.
When someone gives a significant gift with strings attached, they may expect special influence in decision-making. Even subtle shifts in power can disrupt the church’s spiritual and organizational health.
4. Restricting gifts limits flexibility in times of crisis.
Restricted funds are locked in, even in the event of emergencies. A congregation might find itself with ample funds for choir robes but without a means to repair a leaking roof or replace a failing HVAC system.
5. Restricting gifts could violate IRS rules.
Gifts that benefit individuals or that are too narrowly defined may not be tax-deductible. Churches must tread carefully to avoid risking their tax-exempt status.
6. Restricting gifts encourages a consumer approach to giving.
When giving is driven by personal preference rather than communal purpose, stewardship becomes transactional. The church shifts from being a shared mission to a marketplace of competing causes.
7. Restricting gifts can lead to donor disappointment.
If the designated project is delayed, altered, or canceled, the donor may feel betrayed. Miscommunication around designated gifts often leads to hurt feelings and long-term distrust.
8. Restricting gifts may pull the church off-mission.
Well-intentioned gifts sometimes fund projects that don’t align with the church’s mission or strategic priorities. Accepting such gifts can quietly but significantly shift a church’s direction.
9. Saying “yes” to restricted gifts makes it harder to say “no” the next time.
Once a church says “yes” to one designated gift, other donors may expect the same freedom. It can be difficult to draw a line later without appearing unfair or inconsistent.
10. Restricting gifts can distort the church’s financial picture.
When a portion of income is restricted and unusable for everyday expenses, financial statements may appear healthier than they actually are. This can confuse leaders and mislead the congregation.
This resource was created by with the support of AI tools.
United Methodist Church Giving is about people working together to accomplish something bigger than themselves. In so doing, we effect change around the world, all in the name of Jesus Christ.
