Unit Funds/ISA Who controls it

[ScouterAdam]

Seeking info: Working off this old forum post:http://www.scouter.com/forums/viewThread.asp?threadID=169278

 

Does the CO "own" the funds within a Pack. Meaning, are funds raised by Cubscout are really the CO.

 

Looking for BSA policy/documentation.

[krier32]

While technically yes the CO does "own" the funds since the unit is "owned" by the CO, that doesn't mean that they can use those funds for any old purpose they please. The funds must be used for the CO's scouting program.

 

 

[ScouterAdam]

Guess I should be "clearer". The CO is not wanting to do anything with them. Terminology is being used within the Committee is "It's the CO's Money, not the Scouts". Also funds are primarily raised by Popcorn, so most is being raised by the boys. Yes, some parents are just paying the dues/fees via check.

[shortridge]

Which is why, if your unit has individual Scout accounts, the CO should endorse and approve that practice, including such thorny issues as what happens when a Cub moves up to Boy Scouts. Does the money go with him, or does it stay with the pack? Your CO should be giving guidance and be on board with your unit's practices.

[ScouterAdam]

That is my theory too.

However, let's skip the CO's involvement as ours really just signs the form so we can get a Den Leader/CM/CC/MC on the charter.

 

While the CO owns the unit, it's NOT really their money and it's owned by the Scout, themselves. Getting clearer? (That's my question...)

[Scoutfish]

It is owned by the CO, but it's "usually" not that the CO demands it, but more of a what you uise it for is under the control of the CO.

 

The biggest reasonm is accountability, and by that, I don't mean a bank ledger, but what you do with it. You can't raise funds throug scouting so all members of the pack can buy tvs or computers. You can't raise money just to increase your income. By the CO being the actuall owners of funds, there is a set of precaustions in place.

 

The also, if the pack raises a bunch of money, and then folds due to whatever problems, it keps the money with the CO and not split up between unit members ( seas the previous reason).

 

But I imagine it was more of a technical question and that you don't actually have an issue with the money.

 

Same with our pack, WE have never had an issue with our CO over this, but re-mention who the actual owner of funds, unit numbers, unit equipment, etc every time new adult leaders join up. And then,it's not a problem, but more of a preventative measure as in the past, we had members plan on standing up to the CO and threaten to take all money, all equipment and the unit number to another church.

 

It was actually funny since no other member agreed with the rogue member about the original issue, plus we knew who the real owner was.

 

In your case, sounds like a "Write it down just in case something happens one day".

[krier32]

My advice is to sit down with your COR and Committee Chairman to develop a unit Monetary policy. Even though the unit raises money through the Scouts, the money doesn't belong to the boys. It is wrong for the committee to say the money is the CO's, however the CO may have oversight in how the money is spent.

 

If you develop a monetary policy, you could split the profits with a certain portion to go into what is known as the Scout's Account. Normally this money can be used by the boys to pay for things such as dues, camping fees, or camp programs. I recommend that you have a clause that the money in a Scout's Account transfers to the units general fund if they should leave the unit. Many people may disagree with this, but this helps to prevent legal issues. For example, if you are chartered by a non-profit and the funds raised are being advertised as tax deductible and then the scout transfers to a unit that is sponsored to an organization that does not have non-profit status, if your transfer the money with the scout this could create tax implications (it could be ruled that some one is personally profiting from the activity and could even affect the CO's non-profit status). While every situation is different, I recommend you do what is necessary to protect the best interest of the unit.

 

[ScouterAdam]

Krier: Your on the right track. Let's say that within this ISA the popcorn money raised for the year gets generally used but there is some left over at the end of the Cubscout year. Would you roll that $$$ over for the next year into the general pack fund or leave it for the cubscout for next year. Where he would be able to apply it for dues/fees/ect?

 

FYI: This is part of me, the Cubmaster helping to hammer this all out.

[krier32]

In our unit, we allow the money to roll over from year-to-year. You just have to make sure that your treasurer is keeping good track of the ISA's. Since we are a Troop, its not very often that we get an account that rolls over, especially with the price of summer camp and the current economy.

 

[ScouterAdam]

Krier: Thanks for that info. Along with this thread and the numerous searches using this: "Individual Scout accounts" site: scouting.org and just google searches, I am finding that how you are doing it is about 90% of the time. I really have not found instances of ISA (Pack or Troop level) rolling $$ into a general fund at the end of the year.

 

There is a difference of the % of $$ being taken from the Scout's fundrasing and put into the ISA. Which to me, is fine.

 

YIS

[5yearscouter]

Yeah you have to specify in your unit policies and procedures that the money from fundraisers belongs to the unit. depending on how the fundraiser does, a % of the profit will be "paid" to the scout to be used for scouting expenses (list say unform parts, dues, registration, boy's life, summer camps, etc) for the boy who did all the hard work. That the money cannot be cashed out in some way, does or does not transfer with the boy to another unit, and what happens if the boy stops coming. We had a boy with a lot of money in his scout account from many years of popcorn sales, want to use his funds as a down payment on a car. sort of related to scouting, he might use it to get to a campout or the meetings, but not really the intent of the scout account, eh? We also want to be careful about paying for the parent's leader expenses (training, uniform, cost of summer camp, gas) and then the parent also counts those expenses off on their taxes.

[CalicoPenn]

The BSA does a poor job of outlining any policy on how units are to handle funds and while some may think it's because the BSA is thinking of unit flexibility, I believe it's because they don't want to give guidance that could run afoul of federal and state laws and would just as well have the units and CO's muddle through the issues so they can claim ignorance if something happens.

 

The federal government, and most states, have laws that detail what can and can't be done with charitable contributions - and if you're raising funds through a popcorn sale, the proceeds will fall into the realm of charitable contribution.

 

To make matters more complicated, when you're raising funds for your unit, whether it's a pancake breakfast, a car wash, or popcorn sales, you aren't doing it under the aegis of the BSA's (or your Council's) Tax ID, you're doing it under the aegis of your chartering organization's Tax ID. The Council may be running popcorn sales, but they're only providing you with the opportunity to participate in a fundraising venture - it's still done by the unit, under the chartering organization's Tax ID number. Why is that important? Because the chartering organization has to file taxes every year (even if they're non-profit) and they have to include any revenue and expenses of the units they charter in their tax filings. That should be a clue as to who ultimately controls the funds you raise for your unit.

 

I've never been a proponent of Scout Accounts, and the reason is because the BSA doesn't provide any guidance on how to make sure they're done correctly which leads to opportunities to do it very wrong.

 

The US Government, and most states, do not allow for charitable contributions to financially benefit an individual. In other words, you can't run a car wash under the Tax ID to pay your mortgage. Where it get's tricky is what qualifies as an individual benefit. Scout accounts tend to skate right on that line and you need to be cautious on how you handle them.

 

So far it appears that the IRS and the states aren't paying much attention to scout accounts though it's likely that a technical argument could be made that a Scout is getting an individual benefit if fundraised money is being used to offset his costs to attend camp, particularly if the funds are divided up in an uneven way (such as based on participation or sales made). In general, it doesn't matter if Scout A brought in $1,000 and Scout B brought in $500 - the funds are raised for the entire unit and are intended to be spent equally to benefit all of the Scouts. So far, this has been overlooked - and will likely to remain so as long as it isn't taken too far.

 

So what will take it too far? The example of a Scout wanting to use his "scout account" money to make a down payment on a car is taking it too far. There is no legitimate scouting purpose for such an expense. If a Scout drops out of the unit and you write him a check for the balance of his Scout Account (and he or his family has not put any of their own money in), that would be taking it to far and would be illegal. It's not the Scout's money - its the Unit's money (and by extension the CO's money - though I believe the charter signed between the Council and the CO specifies that money raised by the Unit is to be spent on the Unit).

 

The only exception is if the Scout/Family has put in their own money. There are still a few units out there that will take payments every month to be applied to summer camp (for some families, it's easier to pay $30 per month than $300 at one shot) - those are true Scout Accounts - very similar to a Christmas Club account at a bank. If a Scout drops out, it's incumbent on the unit to return those funds immediately - however, if a Scout has a credit of $160 in his Scout Account but only paid in $120 (with the remaining money coming from fundraising credits) the Scout only gets the $120. That $40 must go to the Unit's general fund. Remember, the key is that a Scout (or family) can't be personally enriched by a fundraiser.

 

Transfering funds from a Cub Scout Pack to a Boy Scout Troop is also problematic in many instances. Transferring funds between units of different CO's? You better make sure your CO is on board with that if you're the one writing that check. That money is for the CO's scouting program, no matter how much you couch it in "individual scout accounts".

 

If the Pack and the Troop are sponsored by the same CO, it may be less problematic as the money was still raised under the auspices of the CO's tax id number - though even then there is an ethical consideration of the donor to consider - donors aren't supporting individual Scouts, they supporting the program - but since we don't ask if they're supporting the BSA in general when they buy popcorn, or a chartering organization's Scout program, it's safest, and most ethical, to assume that that they are supporting the Cub Scout Pack that sold the popcorn. Sure, most of the time they probably don't care as long as it goes to Scouting, but unless they specifically state that, you're best not to assume it. There will be some folks that will donate to Cub Scouts but not to Boy Scouts for whatever reason.

 

If you insist on having ISU's, decide right now what that money can be used for. Dues, Boy's Life Subscriptions, Chartering Fees, Campout fees (including summer camp fees) are probably safe - for now - and you're still skating on the edge. Spending it on handbooks and uniform parts is probably just over the edge but will likely be overlooked since those are only used in the program. Using it to buy personal tents, sleeping bads, sleeping pads - that's pretty much crossed the line on personal enrichment since these items can be used outside the Scouting program as well.

 

I'm sure someone is going to respond that Scout Accounts have been used for years with no problems so why worry about it - and the answer is because the IRS is starting to take a closer look at the non-profit world, and don't believe for a second that the BSA is going to be exempt from that closer look. Over the past few years, the IRS has been notifying non-profits that have not filed their tax returns that they will lose their non-profit status. This year, they eliminated hundreds of thousands of organizations from the non-profit rolls. Their working assumption has been that these organizations have just ceased operations and no longer exist - but they were all given a grace period to file past returns and keep their status up. This was done as a prelude to cracking down on non-profits - both to crack down on those operating without a Tax ID # and to make sure those that are operating are doing so within the laws.

[ScouterAdam]

Thanks for that info. It's a lot. What I am really after is general documentation that shows how a CO "owns" the equipment/money of a BSA Unit. I know that Is there a site within scouting.org that has all this information.

[Beavah]

What I am really after is general documentation that shows how a CO "owns" the equipment/money of a BSA Unit. I know that Is there a site within scouting.org that has all this information.

 

Yah, really? Good luck with that!

 

Da BSA licenses program materials to community groups, eh? They really don't tell community groups how to run things or handle money. That's left to the community groups.

 

If your boy did fundraising, did you report it as income? Did your son pay FICA? Did he have a valid work permit?

 

If not, then it's not yours/his. He was donating his time to raise money for his troop, and the intent of the donors was that the money be used for the troop's scouting activity. It was never the boys' money, and giving it to the boys without paying the appropriate taxes and obtaining donors' permission would be illegal and unethical. The money is the troop's, and since da troop is just a youth program run by the Chartering Organization, the money is the CO's.

 

In some scout units, fundraised money is never put in individual scout accounts. It's only used for general troop expenses. That to my mind is the most sane and sensible from an ethical and legal perspective. However, the troop can make the case that part of the mission of scouting is to teach children to budget and be responsible for money, to "pay their own way", etc. So they use individual scout accounts only as a mechanism for teaching. In other words, as part of their tax-exempt mission. That can be OK, eh? However, it's over the line if the boys can buy personal property with their scout account, and way over the line if they or their family ever get cash to keep. That's called "fundraising fraud".

 

Hope that helps.

 

Beavah

 

[shortridge]

What I am really after is general documentation that shows how a CO "owns" the equipment/money of a BSA Unit. I know that Is there a site within scouting.org that has all this information.

 

This may be the closest you'll get:

 

>> "The chartered organization owns the unit, and all funds used by the unit remain the responsibility of the chartered organization as long as the charter issued by the BSA remains in place."

 

and

 

>> "In the event of the dissolution of a unit or the revocation or lapse of its charter, the unit committee shall apply unit funds and property to the payment of unit obligations and shall turn over the surplus, if any, to the local council. In the case of a chartered organization, any funds or equipment which may have been secured as property of the unit shall be held in trust by the chartering organization or the council, as may be agreed upon, pending reorganization of the unit or for the promotion of the program of the Boy Scouts of America."

 

http://www.scouting.org/filestore/financeimpact/pdf/Unit_Fiscal_Policies_052009.pdf(This message has been edited by shortridge)