Most churches currently receive their tithes and offerings online. As a result, many have begun adopting peer-to-peer (P2P) payment platforms like Cash App, Zelle, and Venmo for nonprofit donations to provide more giving options. These peer-to-peer (P2P) networks enable direct payments between individuals. They have gained popularity because they are simple to set up, are well-known to end users and have low processing fees.

Nevertheless, employing P2P services like Venmo for churches can cause problems with the pastors' finances. So, let's examine the dangers associated with your church using peer-to-peer payment programs.

Potential problems with the IRS

Many pastors have individual peer-to-peer payment accounts for purchases and other personal transactions. Donations sent to an individual's account, however, are typically not tax deductible. For instance, a church planter cannot provide donors with charitable tax forms if they collect gifts through Zelle, Venmo, or Cash App using their accounts.

Additionally, the IRS modified the 1099-K regulations in 2022, requiring Venmo, Cash App, and Zelle to report any users who make more than $600 in annual transactions (as opposed to a $20,000 cap the year prior). While churches with 501(c)(3) status are unaffected by this move, pastors who receive donations through their P2P accounts may run into issues because such payments will now be treated as personal income rather than charity. If you have any concerns about using peer-to-peer payment networks to receive donations, it's crucial to speak with a tax expert or get in touch with the IRS immediately.

Can churches utilize Venmo?

According to Venmo's terms of service, "Venmo's peer-to-peer experience cannot be used to solicit or collect charitable contributions" is forbidden. As a result, Venmo does not presently support user-created donation campaigns or NGOs, they explain.

In other words, Venmo is not intended to be used for collecting donations of any type for your church. Your account may be terminated or suspended if Venmo learns that your church has broken one or more of the conditions of its user agreement.

Cons of accepting donations using the Cash App

Churches are using Cash App to collect donations for charity. However, cash App makes it abundantly clear that these donations are not tax-deductible, saying, "Amounts given to the organization do not qualify as a tax-deductible donation, and transferees will not receive a receipt for the amount transferred other than standard Cash App records of transfers."

Additionally, its parent firm Block, Inc. (formerly Square, Inc.) charges nonprofits 2.6% + 10 on each credit card transaction. The transaction fee rises to 3.5% + 15 if the credit card details are manually supplied. Thankfully, other donating platforms are simpler, provide tax-deductible statements, and have more capabilities for NGOs than Cash App.

Risks of giving to churches through Zelle

Fraud is thriving on Zelle. The New York Times says donations made through Zelle for organizations may not be protected from fraud because "The Banks Say It's Not Their Problem." Banks also refuse to issue Zelle clients refunds in a rising number of fraud cases. Even worse, several users have claimed that Zelle was used to breaching their accounts and stealing all their money!

An improved gifting approach

Why not utilize a contribution platform designed for churches that will save your organization money and time? Features from Cristo+ giving that cater to churches include:

• Tax-deductible contribution statements—instantly create and email year-end tax statements!
• Recurring giving—let your contributors schedule their donations so that you can more precisely arrange your church's budget.
• Donor-Covered Fees — Allow your donors to pay any transaction fees to ensure that all of their donations reach your church as a whole.
• ChMS integration: Link your financial support to robust church management software (ChMS) and online community-building resources like mobile applications, church websites, and live streaming.

Click here to fill out a form for your church to see how simple it is to use this secure platform for church giving.