Troop Property and Funds

[LongHaul]

On another discussion page there is a post concerning a group of leaders who took Troop equiptment and Funds and went to another Troop. The Chartering Organization of the original Troop tried to recover the gear and funds but the only way to do that is small claims court. This raises the question of who do you name as defendant? The Scoutmaster? The Committee Chair? The Treasurer? The entire Troop Committee? Every person on the Charter over the age of 21? The Chartering Organization in question has decided not to press charges but what if they were determined to. How do we, as leaders, protect ourselves? Yes 99% of us run an Honest Troop and could account for every penny and produce every tent peg but should we think in terms of protection in this day and age of law suits?

Let's even take this one step further what if your chartering organization under goes a leadership change and they decide that they cannot in good consience associate with BSA. They demand all the money and gear you have worked twenty years to collect. Perfectly leagal and we all know everything belongs to the Chartering Organization.

Finally I get to my real question. How do you feel about "dummy fronts" By this I mean an organization created to hold troop money and gear aside from the Chartering Organization. Let's say for the sake of discussion that the leaders in my Troop decide to form the "LongHaul Benevolent Group" This groups sole purpose is the perpetuation of my troop. When we sell popcorn the money goes into the Troop account run by Council. But when we hold a pancake Breakfast it is advertized as The "LongHaul Benevolent Group" pancake breakfast for the benifit of Troop XYZ. All the money from Troop fund raisers and the troop equiptment is held in the groups name. My Troop doesn't do this but I know of a group that does. Comments?

[KoreaScouter]

Even suggesting something like this presents several serious questions in my mind. First, are these fund-raising efforts accompanied by a completed unit money-earning application? If so, how would a unit indicate what type of unit is applying? There are only boxes for Pack, Troop, Team, and Crew, not for a "booster club" or some other shadow organization. How would a unit answer the question about the unit chartering organization having knowledge and approving the money earning project? If a unit money earning application isn't filled out, how do the unit leaders rationalize this? That it isn't a Boy Scout organization raising the funds? Then why are Boy Scouts participating?

 

Perhaps I've been spoiled by good COs, but any unit that has to launder their money and equipment to keep a CO from taking it has problems way beyond how to fill out the form...

[Bob White]

Gosh long haul that's a lot of questions to tackle. I'd like to take a hot at a few though.

 

1. How do we protect ourselves?

 

By following the rules of the BSA and the chartering organization. If you violated BSA rules by taking money or equipment and the Co pressed charges, you would be on your own. That behaviour violates BSA regs and the BSA might even assist in your prosecution, but they certainly won't defend you.

 

On the other hand, registered adults who follow the rules and act in good faith, would in the event of a law suit, receive legal defense from the BSA.

 

2. What if they demand the gear you worked 20 years to accumulate.

 

As you say that's their option. The District Executives however will ask that the money and equipment be used to serve another youth program of the charter organization or be returned to the BSA to give to youth units in the local district to use. The money cannot go into the the charter organizations general fund or the equipment sold, unless the money generated goes to a youth program.

 

3. The 3rd party organization would be improper and probably illegal. The scout unit is not a legal entity. it is an extension of the Charter Organization which is a legal partner with the BSA. The adult leaders are volunteers of the Charter Org. who agree by signature to follow the rules of the BSA. For an outside organization to raise funds using the Charter Organizations identity and the BSA name and image but not turning over all funds raised to either organization would, I believe, be committing fraud. The only purpose of such an organization would be to hide funds from the CO and the BSA, hardly proper behavior for people who are supposedly building moral character in its members.

 

 

Bob White

 

[LongHaul]

OK Let me try to resond to some of the questions. No a unit money- earning app is not filled because the unit isn't the one raising the funds that is the whole point. The unit supports the (for the sake of space I'll refer to the benevolent association as LBA) The unit supporst the LBA the same as it would the PTA when we act as ushers or the rotory when we help with their pasta dinner. The troop supports the community by helping a number of the social groups. The LBA isn't a laundaring device it is an alternate means of handleing troop assets. As to protection Bob, I'd like to think that National would support me in a suit brought by my CO but given the way it handles most other legal matters I doubt it. National generally tries to distance it self from anything which they didn't have a legal responsibility for. The policy is that BSA is not a franchise and National has no legal responsibilty for a troop. Bob you say that the DE will ask that the equiptment be used for another youth group or be RETURNED to BSA. You are right on the money 99.9% of the things you've posted IMHO but this is the 0.01% The CO owns the equiptment lock stock and barrel and BSA has no claim to anything. If you CO decides to fold your unit and take your trailer it is their property. The money can go anywhere the CO wants it to go and the equiptment is theirs to do with as they like. National can't have it both ways if they are not responsiblr for the actions of a leader or the troop, then they can't claim the property. There is no partnership. As long as you state that the fund raisers are for LBA it's not fraud. Our CO is the Knights of Columbus and the local chapter has a building which is called the K of C Hall. It's owned by "The Chris Club" a not for profit organization composed of K of C members and serves exactly the purpose I'm talking about. When I was a scout our troop was sponsored by our Catholic Church which was owned by the Arch Diocess but the equiptment and funds were held by the Holly Name Assoc. The HNA was run by local people and had no obligation to the Arch Diocess. This is not an attempt to hide anything. If the CO isn't comfortable with this they dissovle the troop, fire the leaders whatever they choose. The CO and COR still have the final word over how the troop runs. It's a matter of ownership of funds and materials. As I said my troop doesn't do this my COR is an Eagle with plams, Vigil honors and Silver Beaver recognition. Also several of the K of C members are also Scoutmasters so they understand BSA policy and politics. They also have no contact with the troop. They are a means of obtaining a Charter. We meet at our church and receive and expect nothing from the K of C.

[NJCubScouter]

I read this thread thinking maybe I could help, being a lawyer and all, but you've really got me lost. In the first post it was a "dummy front" set up solely to hold troop assets and cash. Now in your next post it is a benevolent association that your troop is performing service for, like it was a PTO or a Rotary Club. But the troop is basically handing over its money and equipment to this association, right? You don't pay the PTO or the Rotary, do you?

 

Also, have you considered the tax implications? I am not a tax lawyer and this is not tax or legal advice, but I have been a trustee of a non-profit organization, and when I think back to when we discussed the requirements to be a non-profit non-private-foundation (that is, non-taxpaying) organization, it seems to me that your association may not qualify. And if you do not, you would not like the results.

[Bob White]

"The LBA isn't a laundaring device it is an alternate means of handleing troop assets."

 

Sorry Long Haul but that's doubl-speak. I agree with NJscouter that the "LBA" is on very thin legal ice.

 

The Troop belongs to the Charter Org. and all funds and materials are to be under the stewardship of the charter org and troop committee. Ownership is shared by the the CO and the BSA. All money and assets of the unit were raised using the name and image of the BSA, elements which are wholey owned by the BSA. Because of that, they do have a say in how the money and equipment are used. The BSA will, if at all possible, leave the assets in the possession of the CO, providing it continues to be used for the benefit of youth. Otherwise it will be redirected by the local district or council to benefit youth. I have been involved in this process on several occassions and know this to be true.

 

For a third party to exist for the sole pupose of holding assets for the troop or pack is improper and probably illegal. The management of assets and the selection and approval of adult leaders are two primary responsibilities of the unit committee and they cannot be shared or handed off to another body. Regardless of how many Eagle Scouts or former Scoutmasters are involved, wrong is wrong.

 

Bob White

[OldGreyEagle]

I agree with KoreaScouter, if you are or were or could be so afraid of what your CO would/could do with assets and funds you want to start a "dummy" front, you have problems that need to be addessed immediately.

 

 

[k9gold-scout]

First off, I am not an attorney and I am not giving tax advice. - I am in a large councel and some units do have a seperate 501c non profit corp. as their CO; usually Friends of Troop oo7 or Scouting Dads Club. They raize the money and own everything. This can include a bus a truck or even real properity. I know of one private camp actually owned by a troop. These non profit corps. can take donations, get grants, and issue tax receitps. Sometimes scout alumni would rather give big money to their local troop if they kenw they could receive the full tax advantage.

[NJCubScouter]

Hey, the forum has learned to read html again, wtg forum dudes!

 

K9gold-scout, I am familiar with what you are saying about a separate 501c corporation that is created to be a CO for a Scout unit, in fact in my township we have a troop that has that. The CO is Friends of Troop xx. There are several differences between that and what LongHaul is talking about. First, Friends of Troop xx, in both your example and mine, actually goes through the IRS paperwork and gets approval as a non-profit corporation, and then continues to submit whatever is necessary to maintain that status. I doubt the same can be same of LongHaul's example.

 

Second, I am not sure that LongHaul's association could successfully complete the IRS process. I suspect that when Friends of Troop xx, Inc. fills out its application to the IRS for non-profit status, and gets to the line, "Describe the charitable, educational, social (or whatever) purpose of the organization," Friends etc. puts down something like: "To provide the youth of the community with the Boy Scouting program under a charter to be granted by the Boy Scouts of America." I am not sure whether the words "Boy Scouts" would be enough for the IRS or whether you need to add in that the program is an educational, social and community service program that includes training in citizenship, physical fitness, character and leadership, using the methods and under the rules and regulations of the BSA pursuant to its Congressional charter granted in 1916, but somewhere in that mass of words the IRS analyst will stop reading and get out the Approved stamp. What does the "association" put down when it gets to that line? That it is a holding company? I don't think that gets approved. And is it really seeking donations in its own name, or do people who give money think they are giving directly to the troop? And it can't really put down that it is providing the Scouting program, because that isn't true -- the CO is doing that, even if the actual assistance and funding that they provide is negligible.

 

Again, LongHaul, I think you gave away the game in the first post when you called it a "dummy front." If it looks like a duck, and walks like a duck, and quacks like a duck, and has a sign around it's neck that says "I'm A Duck," it's difficult to claim that it's a cow.

[Bob White]

K9gold,

what you describe is a legitimate Charter Organization. Long Haul is refering to a third party seperate from the CO which is holding money or property. They are totally different entities. All Scout Councils and some Chartering organizations qualify as a 501c Charitable organization. I'm fairly confident, as NJscouter points out, that "LBA" does not qualify as one. As such the funds they raise they owe taxes on. In addition they are not raising money on behalf of the Charter Organization or the BSA. They are raising funds for "their" Troop, but it is not their troop, it is the CO's, and that money belongs in total possesion and control of the troop committee and CO.

 

Bob

 

 

[LongHaul]

Responding to NJCubScouter post of 4/2. The troop doesn't "Turn over" anything to the "LBA" the troop never acquires anything to begin with. Funds are raised by the "LBA" for the troop needs. Equiptment is purchased by the "LBA" and used by the troop at no cost. The "LBA" does carry a not for profit status (exactly how forms are worded I don't know as I've said my troop doesn't do this) I know that the "LBA" isn't the CO. It doesn't "hold the money and equiptment it owns them". Responding to Bob White, Bob you should really check this out with lawyers familiar with suits brought against National because of something Troop Leaders have done. DE's will tell you how they would like things to be. Having been around in the early 70's when 90% of the troops in our District folded within a three year period, I am familiar with whether Council can demand money or equiptment. Again this is why you are NOT authorized to use the BSA uniform, Logo, or Name to promote troop fund raisers. Pop Corn yes because Council gets a share.

[Bob White]

Long Haul,

Your original question "Finally I get to my real question. How do you feel about "dummy fronts" By this I mean an organization created to hold troop money and gear aside from the Chartering Organization."

I agree with you it is a dummy front. It is not a legitimate organization or a legitimate scouting procedure. How do I feel? I feel it is a way that someone is using to hide money and equipment that should be in the ownership of the troop and charter organization. If you need to bring in lawyers to determine if its proper than you doing something wrong.

 

Bob

[LongHaul]

Bob White, Sorry I didn't make myself clear Bob. When I suggested you check with lawyers I was refering to the question of whether National , Council or for that matter anyone other than the CO has any claim what so ever to troop funds or equiptment.

[NJCubScouter]

No offense, LongHaul, but this thread has become pointless. The facts keep changing.

[Bob White]

LongHaul,

Over the years, in my role in Commissioning, I have had to to talk to a number of COs (mostly Schools and PTOs) about unit finances and equipment after a charter ended. After explaining that the equipment was bought largely through the use of scouting's identity and for the use of scouts, every one of the former CO's gave the equipment to another scout unit to use and put the money in a fund to benefit youth.

 

The few times I had to contact former or current leaders who improperly handled money or left with equipment it was an ugly mess, on a few occasions ended up being turned over to the legal system.

 

Seldom is the problem the CO. It is usually with fellow volunteers who do not know the importance of playing nice together.

 

Just my experience.

 

Bob

(This message has been edited by Bob White)