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Moving away from ISA’s

fundraising scout accounts

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#81 Rick_in_CA

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Posted 11 October 2015 - 01:27 PM

I continue to suggest that your concerns are exaggerated.   Thousands of Scout units across the country have been managing Scout Accounts for decades,  and critics can't point to a single audit resulting from that.
 
Having read these concerns in detail for years,  the bottom line for me is that Scout units  reasonably should consider themselves free to conduct such activities in the furtherance of their Scouting goals.

My concern with the issue has less to do with the idea of "getting caught" (an IRS audit), than with doing the right thing. I know that my unit will probably get away with it, but it's still the wrong thing to do. What lesson do I want to teach the scouts?

 

A Scout is Obedient - A Scout follows the rules of his family, school, and troop. He obeys the laws of his community and country. If he thinks these rules and laws are unfair, he tries to have them changed in an orderly manner rather than disobeying them.


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#82 SeattlePioneer

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Posted 11 October 2015 - 04:00 PM

<<

  • Local time: 02:53 PM

 

277
Excellent

 

Posted Today, 02:27 PM

SeattlePioneer, on 10 Oct 2015 - 12:10 PM, said:snapback.png

I continue to suggest that your concerns are exaggerated.   Thousands of Scout units across the country have been managing Scout Accounts for decades,  and critics can't point to a single audit resulting from that.
 
Having read these concerns in detail for years,  the bottom line for me is that Scout units  reasonably should consider themselves free to conduct such activities in the furtherance of their Scouting goals.

My concern with the issue has less to do with the idea of "getting caught" (an IRS audit), than with doing the right thing. I know that my unit will probably get away with it, but it's still the wrong thing to do. What lesson do I want to teach the scouts?>>

 

 

My concern is that you guys know less about paying taxes than you think you do,  and loudly proclaim your self righteous ignorance.

 

I have a practical job of managing a Scout unit to do.  Scout Accounts make it possible for low income families to have Scouting without leaning on the family budget.

 

Your exaggerated and unproven claims would cost thousands of families a Scouting program across the country.  All for unproven and exaggerated claims which have no proven basis in reality. 

 

 

Your arguments are identical to the Uniform Police who like to think they up upholding Scouting virtues just as you claim while in fact they are undermining the program.

 

 

 

 


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#83 Hedgehog

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Posted 11 October 2015 - 04:17 PM

 

My concern is that you guys know less about paying taxes than you think you do,  and loudly proclaim your self righteous ignorance.

 

 

After 22 years of practicing as a tax litigation attorney, I've learned never to think I know everything.  :D


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#84 hicountry

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Posted 13 October 2015 - 01:49 PM

We had one account in our troop, all money deposited to it and we wrote checks from it to pay for any troop expenses.

 

Inputs were fundraisers, some annual company donations and money paid in by scouts and their parents.

 

Money out was general troop overhead costs and money to pay for campouts and summer camp also reg fees and the like

 

We kept a spreadsheet separate and part of the pot of money was earmarked as general troop funds and part was what the boys could use for campout purposes only, no gear but for troop campouts. Of that portion of funds deemed to the scouts, each scout had a separate tab and showed in detail all transactions, ie: money paid in by the scout or parents, credit from fundraiser participation and money used for scout costs.....annual dues, boys life, campout costs.

 

A scout local troop campout we would pay out x amount for food, propane, ice and the like. We debited each attending scout on his spreadsheet tally 15 bucks. If the scout didn't have the funds his parents were asked to write a check or their son couldn't go. We learned this from bad prior experience, basically resources will be consumed until exhausted, the lazy in the troop that never did any fundraising (Ussually the same people you had to badger for a check for 3-6 months) would just freeload on the work and money the others put in.

 

I look at this much akin to no score, everyone wins, no one wins youth feel good sports leagues. Every parent and kid on the field knows in their head or on a scratch pad exactly what the score is and who one-lost etc, we aren't fooling anyone.

 

If someone had the ability to absolutely enforce not keep track of who paid or raised what, who used up how many financial resources it would mean a complete and total end of unit fundraising. The general fund inputs would all go to troop overhead costs and everyone would write a check for each and every campout their kid did, razor clean and tidy. No more of the freeloaders riding along on the work and financial contributions of others.

 

My unfortunate experience was most of those who had to be reminded over and over for a check were also the ones who never bothered to fundraise (or provide any kind of volunteer hours what so ever) and were in general, financially well off.

 

I'm not doing anyone any favors in the building character department by letting them continually slide on the backs of others and I am not showing any decent leadership to those who pay and work into the system allow their results of those efforts sponged up by the lazy and clueless.

 

As far as a scout is obedient, I am not blindly obedient to every rule out there when it runs counter to my running the troop right. No way am I going to enable lazy, clueless behavior and no way am I demonstrating to those who work for things that they have to spread the results of those efforts to support those who won't lift a finger or write a check. That would be a dis-service to everyone. 

 


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#85 Jeff5521

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Posted 13 October 2015 - 08:59 PM

What I still stuggle with is popcorn sales.  The door to door sales part is an individual activity.   Would this scenario work:  Lets say summer camp is $200 per boy and you have 5 boys going.  Your summer camp fund need $1000 so you set a $200 sales goal.  Lets say three boys sell $200, $225 and $175 comissions, can you ask the remaining boys to write a check to the camp fund for $200 each?  Does this pass the test?

 

If so now lets say one boy sells $400 comission, you still require the $200 comission or check from the other boys and then have $200 left over, that goes into the general fund or stays for next years camp?


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#86 SeattlePioneer

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Posted 13 October 2015 - 09:14 PM

<<As far as a scout is obedient, I am not blindly obedient to every rule out there when it runs counter to my running the troop right.>>

 

 

I agree.

 

 

There is also ---- "A Scout is thrifty.  He pays his own way...."


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#87 SeattlePioneer

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Posted 13 October 2015 - 09:25 PM

<<

SeattlePioneer, on 11 Oct 2015 - 3:00 PM, said:snapback.png

 

My concern is that you guys know less about paying taxes than you think you do,  and loudly proclaim your self righteous ignorance.

 

 

After 22 years of practicing as a tax litigation attorney, I've learned never to think I know everything.  :D>>

 

 

Well,  that's the first time I've heard your claim to real expertise regarding taxes.   

 

I respect that,  but I don't respect the pieties you've handed out,  implying that those using Scout Accounts were being dishonest.  That line is like the Scouter who dons the mantle of the Uniform Police to badger other people over trivial issues.

 

The tax angle isn't trivial,  but it can be overdone as well. 

 

Personally,  Scout Account serve my unit's interests in a variety of ways.  They make it possible for low income families to participate in Scouting without leaning on the family budget.  They induce boys and families to support the unit and the council by selling popcorn.  They teach thrift by allowing boys to purchase their own Scouting adventures through their work.  Many boys learn self confidence in dealing with people through sales efforts.

 

In short,  selling popcorn and Scout Accounts are a useful part of the Scout program,  in my opinion. I'm not going to give all that up based on exaggerated worries that have never actually resulted in IRS audits of Scout units over Scout accounts.

 

So I find your warnings worth listening to,  and I've read the comments on Scout account published by BSA.  The bottom line for me is that there are good reasons for doing what we do,  and little reason to forego those benefits.

 

 

 


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#88 hicountry

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Posted 14 October 2015 - 02:25 PM

Jeff, let me try and answer how that would work in the unit I used to serve but need to maybe step back a bit.

 

Lets say there was $8500 in the troop account pot in May so we are clear of the recharter, dues paying, boys life stuff all that is water under the bridge. Lets say 1500 of that was earmarked as troop general funds that covers troop overhead items and equipment replacement and repairs. $7000 remains and is attributed to the scouts that the money is used to pay for local troop campouts and regular summer camps. Assume 35 scouts that comes to an AVERAGE of $200 a scout but we have to account to just how those funds are there. Some parents write the troop big checks at the beginning of the year to cover their kids camping, some are making deposits to help cover summer camp costs, some kick a check into the pot once and a while to keep a positive balance for their kid so he never has to worry about campouts and avoids the hassle of needing to write checks to cover low balance. Some of that money is commission profits from fund raisers, popcorn being just one of those type sources. We designate those funds by scout based on who actually did work and generated troop funds, those who don't help and don't contribute don't reap any of those benefits. So some scouts may have several hundred dollars of the troop money rightly usable by themselves to camp, others are close to the average, some a little above or below and then the folks who end up with a negative balance of 30-60 bucks that we let slide on a few campouts and had to cut them off until the parent finally coughed up a check.

 

So lets get to the 5 scouts you mention specifically within that theoretical 35 boy unit with $8500 total pot of money in the troop account.

 

5 boys going to summer camp at 200 a piece. Assume all of them have a zero balance going into this scenario. Scout A does 225 commission, he covers his summer camp cost and leaves 25 surplus in his spreadsheet tab account that he can apply to local troop campouts. Scout b does 200 commission, pays his summer camp and leaves no balance. Scout C sells 175 commission, he has to come up with the 25 balance by whatever means more fundraising, he pays in, parents write a check). Scout D does 400 in commission, he pays summer camp and has a 200 balance to apply to campout costs as the year rolls along. Scout E doesn't sell anything, if he wants to go to camp he has to come up with the funds (ussually his parents write a check).

 

It doesn't matter how much money total is in the pot, that money arrived by others writing checks for their kids or the efforts of those who actually participated in fundraising. (Or the business donation that is earmarked to cover troop expense overhead)

 

If the scout in question is one where a family has extreme finanacial or other problems we might discuss it but the failure to sell anything at all and then hope others will decide to forgo some or all their expense is a longshot.


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#89 Hedgehog

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Posted 14 October 2015 - 06:00 PM

... and part was what the boys could use for campout purposes only.... If the scout didn't have the funds his parents were asked to write a check or their son couldn't go. 

 

***

 

As far as a scout is obedient, I am not blindly obedient to every rule out there when it runs counter to my running the troop right. No way am I going to enable lazy, clueless behavior and no way am I demonstrating to those who work for things that they have to spread the results of those efforts to support those who won't lift a finger or write a check. That would be a dis-service to everyone. 

 

Under IRS rules, the structure you had would be a private benefit because the ISA offsets personal expenses of the scout that otherwise would be paid by the parent.  The question then becomes whether the benefit is "iinsubstantial"  I can' give an opinion on that because I don't have enough facts about your troop.  Look at my prior posts to see my thoughts on what my troop is doing and why I think that is not substantial.

 

The obedience issue is related to federal laws... not just some random rule.  I"m not saying what you are doing will cause your charted organization to lose its tax exempt status.  What I"m saying is that you need to make that determination based on the facts and the law... not what you think the right answer should be.  Unfortunately, the tax laws don't always come up with what is the right answer -- but that doesn't mean we can ignore them.

 

Well,  that's the first time I've heard your claim to real expertise regarding taxes.   

 

I respect that,  but I don't respect the pieties you've handed out,  implying that those using Scout Accounts were being dishonest.  That line is like the Scouter who dons the mantle of the Uniform Police to badger other people over trivial issues.

 

The tax angle isn't trivial,  but it can be overdone as well. 

 

Personally,  Scout Account serve my unit's interests in a variety of ways.  They make it possible for low income families to participate in Scouting without leaning on the family budget.  They induce boys and families to support the unit and the council by selling popcorn.  They teach thrift by allowing boys to purchase their own Scouting adventures through their work.  Many boys learn self confidence in dealing with people through sales efforts.

 

In short,  selling popcorn and Scout Accounts are a useful part of the Scout program,  in my opinion. I'm not going to give all that up based on exaggerated worries that have never actually resulted in IRS audits of Scout units over Scout accounts.

 

So I find your warnings worth listening to,  and I've read the comments on Scout account published by BSA.  The bottom line for me is that there are good reasons for doing what we do,  and little reason to forego those benefits. 

 

Seattle:

 

I apologize if I came across as saying you were dishonest.  I don't know you and can't make that judgment.  I was reacting to what I sensed was an "I'll ignore the law if I don't agree with it" attitude.  I realize that you were ignoring my advice which you didn't think had much weight coming from an anonomous Hedgehog on the internet.  That's understandable.

 

My point is that we have to be aware that these rules are out there and can affect our chartered organizations.  If you read my posts, I'm not saying that Scout Accounts can NEVER be used.  What I"m saying is that if any funds are set aside for a particular scout, then you have a private benefit.  If there is a private benefit you then need to detrmine whether it is "substantial."  I indicated that I concluded that our unit's use of Scout Accounts did not result in a substantial private benefit based solely on a comparision of the amounts raised for National / Council and the unit to the amounts raised for an individual scout and a larger comparison of those amounts to the overall budget of our chartered organization.  I also mentioned that some benefit could be considered the cost of fundraising.

 

I would also add to the analysis the role that earning money to pay your own way plays in Scouting.  My son fulfilled one of the T-1st requirements through selling popcorn and applying what he earned to summer camp.  I also would consider that the funds are being spent in a way that is within the goals of scouting (i.e. helping scouts go on outdoor trips).

 

Ultimately, we are not so far off in our views -- I just want people to understand that there are better and worse ways of doing Scout Accounts.  If people don't want any hassle, then don't do it.  If you are going to do it, here are some of my suggestions:

 

1.  All funds are in kept the unit's name.

2.  Funds can only be transferred between units within the same chartered organization

3.  Only a portion of the proceeds should be set aside for the scout engaging in the fundraising activity if the fundraisesr is for general purposes.  The rest should go to the unit (or if it is popcorn, a portion also goes to national/council)

4.  If the fundraiser is for a specific trip (Philmont) have the activity be something that everyone can (and is encouraged if not required to participate) in and apply the proceeds equally to reduce everone's cost.

5.  If a scout's family is financially challenged, it is ok to provide them with additional assistance

6.  Scout Accounts can't be used to for personal purchases such as backpacks or hiking boots or ever given to scouts when they leave.

7.  Scout Accounts can be used to fund Eagle projects

8.  Incentives are permissible as a cost of sales -- be them at the National, Council or unit level.  

 

Those suggestions should get the unit close to the Scout Accounts being "insubstantial" but it really depends on a lot of other factors.  Our unit has around $1,500 in Scout Accounts and around $8,000 in other funds.  There might be a different result in terms of substanitality if the amounts were switched.


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#90 Hedgehog

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Posted 14 October 2015 - 06:07 PM

What I still stuggle with is popcorn sales.  The door to door sales part is an individual activity.   Would this scenario work:  Lets say summer camp is $200 per boy and you have 5 boys going.  Your summer camp fund need $1000 so you set a $200 sales goal.  Lets say three boys sell $200, $225 and $175 comissions, can you ask the remaining boys to write a check to the camp fund for $200 each?  Does this pass the test?

 

If so now lets say one boy sells $400 comission, you still require the $200 comission or check from the other boys and then have $200 left over, that goes into the general fund or stays for next years camp?

 

For an individual activity, I would have a portion (we do 15%) of the receipts (which is around 25% of the profit) go to Scout Accounts.  By my estimate 25% of the profit goes to the unit and the remaining 50% goes to National/Council.  One of the problems in the Capital Gymnastics Tax Court case was that the benefit was dollar for dollar and no money whet to the general organization.  We also have a threshold that you have to sell a certain amount ($100) before you get a percentage.  If you do that, I think (for what my opinion is worth) you can apply the amount credited to the scout (the 15% of proceeds) toward camp and charge the parents for the rest.  Here there is a private benefit that arguable is insubstantial based on the unit and chartered organization's operations.

 

If you do a fundraiser like a pretzel or doughtnut sale to fund a specific activity -- like a high adventure trip -- I would require everyone going on the trip to participate (e.g. everyone has to spend an hour either setting up, running the sale or cleaning up) and split it among those going on the trip.  Under this scenario, all of the profits go to the troop to offset everyone's cost of the trip (resulting in no private benefit).


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#91 Jeff5521

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Posted 15 October 2015 - 09:07 AM

For an individual activity, I would have a portion (we do 15%) of the receipts (which is around 25% of the profit) go to Scout Accounts.  By my estimate 25% of the profit goes to the unit and the remaining 50% goes to National/Council.  One of the problems in the Capital Gymnastics Tax Court case was that the benefit was dollar for dollar and no money whet to the general organization.  We also have a threshold that you have to sell a certain amount ($100) before you get a percentage.  If you do that, I think (for what my opinion is worth) you can apply the amount credited to the scout (the 15% of proceeds) toward camp and charge the parents for the rest.  Here there is a private benefit that arguable is insubstantial based on the unit and chartered organization's operations.

 

If you do a fundraiser like a pretzel or doughtnut sale to fund a specific activity -- like a high adventure trip -- I would require everyone going on the trip to participate (e.g. everyone has to spend an hour either setting up, running the sale or cleaning up) and split it among those going on the trip.  Under this scenario, all of the profits go to the troop to offset everyone's cost of the trip (resulting in no private benefit).

 

 

I understand all of the general fundraising and agree I just get hung up on popcorn.  Some of our scouts go out and sell, some of our scouts do not the the extra time to sell.   The parents of scouts that do not sell are happy to just write a check for camp fees.  However the parents of the kids selling popcorn are expecting the commission to pay down their scouting expenses.   Perhaps we need to reset that expectation, however I can guarantee this will end popcorn sales for us. 

 

Perhaps we could say all popcorn sells go into a campership fund and the any parent can apply for a scholarship from the fund? 

 

Also if this makes a difference for Scout accounts we are talking about an entry on a spreadsheet not an actual bank account.


Edited by Jeff5521, 15 October 2015 - 09:08 AM.

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#92 Krampus

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Posted 15 October 2015 - 10:57 AM

I would encourage us to stop this tread because there is tons of wrong information being spewed about here and the average parent or scouter is going to read this stuff like it is the Gospel. The law is vague at best. At worst it is down right contradictory.

 

Let's just drop this issue and leave a big sticky note that tells people to get with their COR and CO to determine how to handle any unit finances. There's clearly no one here who should be giving tax advice because everyone commenting thinks they know the "right" answer. No offense folks, but we've been around the horn on this a few times and we've seen no definitive answer to the question.

 

I know folks are well-meaning but we will never agree until either BSA or the IRS step in and show us the EXACT wording that says we can or cannot do (x).


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#93 hicountry

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Posted 15 October 2015 - 04:27 PM

I'm more about doing the right thing than doing things the right way. Lord knows there are enough rules/laws guidelines and some simply run contrary to what we are trying to do or make it 10 times more difficult to get from point a to point b. If a scout is active fundraising and it saves his parents from writing a few checks I don't see that as a personal benefit, it is not like he is allowed to go buy camping equipment or even uniforms, it covers his cost for a troop 2 night weekend campout, not enough for anyone to break a sweat.

 

Jeff, the problem really kicks in with the families that not only don't help with fundraising at all but also don't write checks and have to be chased around for a check to at least pay their debit back up to zero.

 

All anyone doing an audit is going to see is one account with funds inputting from donations, checks from parents, fundraisers etc. On the back side there are debits for badges, summer camp, local campout associated costs, troop gear repairs or replacement and such. Nice and tidy and clean.

 

What cannot be seen is the scouts that had to be told you can't go on a given campout as your "account" is zero or below, pay up, or the checks that parents wrote to boost their scouts "account" to provide enough so that scout could camp as his "account" was getting in bad shape. All the spreadsheet we kept on the side was, is a "scorecard" of who has use of what portion of the funds that resided in the pot. The individual tabs in the spreadsheet per scout allowed me or the treasurer to show we were good stewards of the funds and precisely how we got to where we were, honesty through transparency. If Sam parent writes the troop a hundred dollar check to cover his scouts troop campout costs in advance for a good portion of the year, is it fair to see his son get 60 bucks of benefit and give 40 bucks of that to some other scout who doesn't fundraise and who's parents has to be badgered to cough up an occasional check ? Then if Sam parents scout son raises $100 in commission from some fund raiser as his portion of what he helped contribute, why should he only get $60 of that benefit and some other scout who couldn't be bothered receive $40 of benefit from that ?

 

As I noted, when I took over the troop there was a problem regarding all this and we set up this accounting to fix it and it did. There was the one account with funds coming in and expenses going out but the account amount began to decrease alarmingly about 9 months in. We were asking parents in general to kick in funds and some got a little hot when revealed they had written decent checks already or had fundraised a boatload to cover their kids campouts already and why were we short so we looked into it.

 

Same old problem, had a significant number of scouts that were attending campout after campout (Troop weekend deals) and didn't raise one lick of funds and parents never bothered to write a check, the net expenditures were outstripping the incoming funds so we came up with the spreadsheet scorecard and put and end to that nonsense. The freelaoders were sucking up the resources put in by others.

 

Year two I had many private conversations with parents, many were good friends and got in their face and to the point at times. Told them your son isn't doing anymore campouts till you pony up a check, which of the other parents in the room do you wish to go up to and ask them if they will help fund your kids expense. Still took up to 6 months sometimes to get some of these folks to cough up money and I am talking abut parents who could very well afford to stroke a check for 60 or a hundred bucks.

 

Until you show you can account clearly for things, people will continue to take advantage of you. The fundraising for the general troop doesn't work in the real world, the 10-15% of the kids in the troop who work at a fundraiser see the lazy kids who never help getting the same benefits they are, doesn't take long for the worker bees to decide to do nothing and get benefits just like their lazy scout friends and thus fundraising falls off to zero.

 

No one is getting arrested at no score, no one loses feel good youth league for keeping track of the score on a scrap of paper and no one is going to get in trouble for keeping score of what portion of a pot of money is attributed to certain people. I know from experience, NOT keeping track of who is responsible for exactly what portion of that pot of money causes troop financial problems and gets you a lot of grief from some scout families who earned a whole lot better.d 


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#94 SeattlePioneer

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Posted 15 October 2015 - 06:04 PM

<<I apologize if I came across as saying you were dishonest.  I don't know you and can't make that judgment.  I was reacting to what I sensed was an "I'll ignore the law if I don't agree with it" attitude.  I realize that you were ignoring my advice which you didn't think had much weight coming from an anonomous Hedgehog on the internet.  That's understandable.

>> 

 

 

One of the reasons for lengthy threads is that people may actually start understanding one another.  It's pretty common to wind up talking past one another repeatedly!

 

<<1.  All funds are in kept the unit's name.

2.  Funds can only be transferred between units within the same chartered organization

3.  Only a portion of the proceeds should be set aside for the scout engaging in the fundraising activity if the fundraisesr is for general purposes.  The rest should go to the unit (or if it is popcorn, a portion also goes to national/council)

4.  If the fundraiser is for a specific trip (Philmont) have the activity be something that everyone can (and is encouraged if not required to participate) in and apply the proceeds equally to reduce everone's cost.

5.  If a scout's family is financially challenged, it is ok to provide them with additional assistance

6.  Scout Accounts can't be used to for personal purchases such as backpacks or hiking boots or ever given to scouts when they leave.

7.  Scout Accounts can be used to fund Eagle projects

8.  Incentives are permissible as a cost of sales -- be them at the National, Council or unit level.  >> 

 

 

 

Interesting set of suggestions.

 

2)  When Cub Scouts graduate into Boy Scouts,  I will pay out money from accumulated ISA for  troop membership,  activities, outings, camp and such.   The family just needs to provide me with receipts for their payment,  or something like a bill from the Scout Troop if we're going to pay for summer camp or whatever.

 

Does that sound like a reasonable practice?

 

 

The rest of the rules we either comply with or they don;t really apply to the popcorn sale.


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#95 Jeff5521

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Posted 16 October 2015 - 06:03 AM

I'd like to say this thread has been very useful to me.  I just took over as treasury for a troop that had very little record keeping.  Between rechartering, banking issues, re establishing dues, budgeting, etc it is like "drinking from a fire hose" as we like to say at work.

 

Great discussion, thanks!


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#96 Hedgehog

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Posted 16 October 2015 - 06:52 PM

I understand all of the general fundraising and agree I just get hung up on popcorn.  Some of our scouts go out and sell, some of our scouts do not the the extra time to sell.   The parents of scouts that do not sell are happy to just write a check for camp fees.  However the parents of the kids selling popcorn are expecting the commission to pay down their scouting expenses.   Perhaps we need to reset that expectation, however I can guarantee this will end popcorn sales for us. 

 

Perhaps we could say all popcorn sells go into a campership fund and the any parent can apply for a scholarship from the fund? 

 

Also if this makes a difference for Scout accounts we are talking about an entry on a spreadsheet not an actual bank account.

 

Jeff:

 

As long as popcorn is in line with the guidelines I posted above (only a portion to the scout -- some to the unit and some to council/national) , it should be OK because the benefit is arguably insubstantial. I think you idea of a campership fund is good... unless the only people who get camperships are those that did the fundraising -- then it just looks like a subterfuge (or as the IRS sas, form over substance).  The private benefit is still there is the "account" is a spreadsheet divying up the amounts in the Troop's account (see above posts for secondary analysis on substantiality)

 

I'm more about doing the right thing than doing things the right way. Lord knows there are enough rules/laws guidelines and some simply run contrary to what we are trying to do or make it 10 times more difficult to get from point a to point b. If a scout is active fundraising and it saves his parents from writing a few checks I don't see that as a personal benefit, it is not like he is allowed to go buy camping equipment or even uniforms, it covers his cost for a troop 2 night weekend campout, not enough for anyone to break a sweat.

 

***

 

No one is getting arrested at no score, no one loses feel good youth league for keeping track of the score on a scrap of paper and no one is going to get in trouble for keeping score of what portion of a pot of money is attributed to certain people. I know from experience, NOT keeping track of who is responsible for exactly what portion of that pot of money causes troop financial problems and gets you a lot of grief from some scout families who earned a whole lot better.

It really doesn't matter if you think there is a private benefit. Rather it only matters if the IRS thinks so.  Any scout account is a private benefit based on my interpretation of the statute, regulations and case law.  As discussed above, even if there is a private benefit it is permissible if it is insubstantial.

 

Tax exempt organization have lost their tax exempt status for having individual fundraising accounts.  So you won't be arrested, but your chartered organization's tax exempt status could be in jeopardy.

 

One of the reasons for lengthy threads is that people may actually start understanding one another.  It's pretty common to wind up talking past one another repeatedly!

 

***

 

2)  When Cub Scouts graduate into Boy Scouts,  I will pay out money from accumulated ISA for  troop membership,  activities, outings, camp and such.   The family just needs to provide me with receipts for their payment,  or something like a bill from the Scout Troop if we're going to pay for summer camp or whatever.

 

Does that sound like a reasonable practice?

So, in my view, there is a private benefit (which would be the same as if it reduced fees for a Cub Scout campout).  It is much better that the pack is paying an expense rather than giving it to the scouts and saying "I hope you use it for something scout related."  If the troop is part of the same CO, there is no problem in transferring funds (the Pack's funds belong to the CO and the Troops funds belong to the CO because the CO "owns" both of them).  If it is not part of the CO, I think that the expenditure is consistent with the pack's mission to develop youth though scouting -- after all, most packs are viewed as sources of boy scouts.  But this is a grey area.  In the Bryan on Scouting post, http://blog.scouting...scout-accounts/it said:

 

“If the unit is part of the same chartered organization, I certainly see no problem with that,” McGowan says. “The chartered organization owning both units, no problem. If we now talk about changing chartered partners, the IRS has not issued any guidance.”

 
Sorry I couldn't be more definitive.

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#97 5yearscouter

5yearscouter

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Posted 16 October 2015 - 09:18 PM

We were going to change from scout accounts to a scout bucks prizes for fundraisers program.

Sell within a certain range of popcorn and get a coupon for a campout,

a higher sells numbers get a coupon for x% off summer camp.

a certain range of sales, pays for your recharter for the year.

 

 

so like sell $100-$200 in popcorn and get a campout coupon

post flags for our flag program fundraiser and get two free campout coupons

sell $250-400 get recharter paid

sell $500 and get $100 off of summer camp.

It was also going to include  advancing in rank, get a free campout coupon,

Getting chosen for a por and going to tlt get a free campout coupon.

Highest attendance at meetings, get a free campout coupon.

and maybe a couple other things.

With off the top of profit at least x% going into the troop account general fund

and x% going into a campership fund that would award things like free campout coupons.

of course one of the questions will be have you participated in the fundraisers, but also advancing, pors, and family need levels.

And that the troop would toss in a few of the coupons for door prizes for attendance at court of honors and service projects just for fun.

 

The idea is that the reward/benefit would not be determined only by how much popcorn you sell,

and that a reward/benefit can be earned without participation in the fundraiser itself.

But that if you do participate extra in the fundraisers, you could "earn" more and help pay your way to camping.

It would be more work for someone to track at least at first, but once the certificates were passed out it would be up to the boy/family to keep track of

 

Then our CO said they didn't think it was a problem and to continue what we are currently doing. Our CO is a small non-profit with express purpose of keeping up our local scout lodge and supporting local packs/troops.

 

We sell over $20k in popcorn and scouts "earn" 35% profit.,

but we also get about $9 k a year from our troop flag fundraiser and only about 10% of that goes out to the youth as reward for working the program.

Right now all profit from popcorn goes to the scout, he can use it on campouts, summer camp, recharter, food for campouts, uniforms, hiking boots, etc etc.  And if we go skiing, he can use the $ to pay for his family's costs if it's designated a family outing.....

And when he changes troops he can take the money with him even if it's a different CO.  It sure looks like a bad case of private benefit and not enough other funds in the CO so that it's insubstantial amount.  But I'm not a tax lawyer.


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