a) Definitions

Total Commitment Allocation Clarification Form Income, Expense, and Allowable Deduction Definitions

General Comments

1. In order to be deductible, an expense must be included in the “Total Parish Expenditures” on Line B of the Allocation Form. For example, if you show a fundraiser as a net in your “Total Parish Income” on Line A you cannot deduct the expenses. You would have to show the gross income on Line A and the gross expenses on Line B and then deduct the expenses.
2. Forms MUST be accompanied by proper financial statements. This includes the balance sheets and income statements for each church account for both reported years. If your Financial Statements have been prepared on a GAAP basis and allocated any expenses for items 4 and 5, you MUST provide internal financial statements and cross reference your responses to those internal financial statements.
3. Figures on financial statements must correspond to total expenses and deductions on the Allocation Form. If the expenses and deductions on the Allocation Form are not readily apparent, there should be a supplemental schedule that traces the expenses and deductions to the financial statements. Refer to Appendix A for an example.

Total Parish Income

1. Stewardship, candles, all parish fundraising events, trays, holiday offerings, special trays, restricted and unrestricted funds.
2. Rental Income, interest income, income from parish endowment.
3. School income.
4. Any other income not listed above.

Total Parish Expenditures

1. All expenses paid by the parish or on behalf of the parish for any purpose. Refer to Appendix B for guidance regarding parish expenses paid by a related foundation or endowment fund.
2. Asset depreciation should not be included.

Allowable Deductions

Expenses in the following expense categories are deductible to the extent they are included in the Total Parish Expense on Line B of the Allocation Form and are fully supported by the attached parish financial statements.

1. Archdiocese Total Commitment
   a) Payments made in the current year toward the parish’s Archdiocese Total Commitment assessment are deductible expenses.
2. Archdiocese Benefits Funding
   Payments made to the Archdiocese Benefits Plan are deductible expenses. This is only for priest pension and benefits paid directly to the Archdiocese. This does not include health insurance payments, or any other benefit payment made by the Parish. The only deductible amount is that assigned by the Metropolis to your parish for the payment of Pension and Ancillary benefits
3. Capital Expenditures – Funds paid for facility construction, renovation, purchases of any fixed assets, and major repairs
   All claimed deductions must be supported by itemized lists. Payments for work by church employees are not deductible expenses. Deductible expenditures include the following:
   a) Land purchase
   b) Building construction
   c) Iconography, interior décor (pews, iconostasion, proskinitaria, etc.)
   d) Capital improvements – improvements made to extend the useful life of a property or add to its value, such as roof replacement, kitchen equipment replacement, HVAC unit replacement, parking lot resurfacing, and window replacement.
   e) Professional fees related to the acquisition or construction such as architect fees, legal fees, engineering costs, feasibility studies, etc.
   f) Purchases or lease-purchase of fixed assets such as automobiles, copiers, computers, furniture, carpeting, and other assets that could have been capitalized under GAAP (Generally Accepted Accounting Principles.)
   g) Major repairs – Repairs exceeding $2,500 for each repair or event, such as repairs of roof, plumbing, HVAC, and damage from fires and storms. h) Depreciation (if included in line B Total Expenses)
4. Principal and/or interest paid on loans including mortgages
   a) Only the portion of the payments included in Line B – Total Expenses may be deducted. Many parishes do not report the principal portion of mortgage payments as an expense, in which case that portion must be excluded from this deduction.
   b) In lieu of mortgage, funds paid to rent the sanctuary may also be deducted.
5. Fundraising Expenses
   a) Funds paid exclusively to hold fundraising events and directly caused by the fundraising event such as festivals, raffles, dinners, golf tournaments, etc.
   b) Bookstore expenses are deductible (Cost of items purchased for sale, but not overhead.)
   c) Note that Customary Stewardship program expenses and any funds paid to parish clergy are not deductible fundraising expenses. In addition, candle purchases are not considered a fundraising expense since candles are not “sold” to be taken home. Service attendees make a donation and light a candle as part of the worship service.
   d) Allocated Church expenses such as utilities, security, and insurance which are not separately invoiced to the event are not allowable deductions. However, allocations of certain expenses may be allowed if they comply with the Guidelines to Allocating Expenses below.
   e) When Costs associated with Church activities and ministries are recorded within a “fundraising activity,” such as within a parish banquet hall, these costs must be reasonably estimated and allocated back to the Church operations and included in Line B – Total Expenses. The method and rationale of the allocation method must be clearly substantiated, documented, quantified by the parish, and approved by the local Metropolis Finance Committee. Examples include a single utility meter for all activities, a single insurance policy, or shared janitorial services.
6. Day/Parochial School and Greek and Catechetical (Sunday School)
   a) Deductible expenses include teachers’ salaries and associated payroll taxes, insurance, supplies, books, and any expense that is invoiced separately and is directly attributable to the operation of the school.
   b) For Parochial/Day schools and afternoon Greek Schools, allocated Church overhead expenses such as utilities, security, and insurance which are not separately measured are deductible only if they comply with the Guidelines to Allocating Expenses below.
   c) Allocation of general overhead expenses (utilities, telephone, insurance, repairs, etc) to Sunday School is not allowed.
   c) GOYA, HOPE, JOY, Dance groups, etc., expenses are not allowable deductions.
   e) Priest, Pastoral Assistant and Youth Director salaries and related expenses may not be allocated and are not allowable deductions.
7. Charitable Giving
   Charitable giving made by the parish to a non-profit organization or charity are deductible expenses and include:
   a) Charitable giving to the Metropolis(es), Archdiocese or Patriarchate or any of their related ministries.
   b) Charitable giving to Organizations under the Assembly of Canonical Orthodox Bishops in the United States.
   c) Charitable giving to other non-profit organizations.
   d) Charitable giving for individual assistance and Scholarships
   To be deductible, charitable giving expenses must be individually listed by recipient, must be included in Line B-Total Expenses, and must be referenced to where the expenses are posted in the parish’s income statement.