Question: What do you call a situation when an independent organization that is not tax-exempt wants a church to process gifts so donors get a tax-deductible receipt?
The MinistryCPA blog has a great post, Parachurch Ministries Under the Authority of a Church, which explains how a church should respond when an independent ministry asks the church to run their donations through the church so that donors to the separate ministry will get a tax-deductible receipt. The independent ministry is neither under the authority of the church nor tax-exempt itself. Read the post for an answer and great explanation.
One concept in tax exempt law that many people don’t understand is that for a tax-exempt organization to give a deductible receipt for a contribution, the funds must be used for the purpose of that tax-exempt organization and the funds are under their control. (It’s okay to not understand that idea. You have to work in the NPO world a while to get your arms around the practical application and understand just how far out of line such a practice is.)
This means it is not possible to lawfully “just pass my contribution along” to another organization. You can’t give money to your church, ask them to pass it to someone else, and take a charitable deduction.