Swampscott Town Administrator Thomas Younger said the flag, which was taken in the early morning on July 5, was found Monday morning on the front steps of the First Church in Swampscott Congregational, which is across the street from the monument, The (Lynn, Mass.) Daily Item reported Tuesday.
"From my understanding (church workers) were opening the doors and there it was," Younger said.
Police said the flag appeared to be in good condition. They said they do not currently have any suspects in the theft.
Agnes Raymond, who donated the flag along with her daughter, Jaclyn, and son, James, said she was relieved to hear of the flag's return. The family donated the flag after Jaclyn's son, Army Spc. Jared Raymond, was killed in Iraq in 2006.