finances and the chartering organization

[acco40]

FOG, I believe that, just like my taxes, some believe that because they got money in the past, it is "theirs." The CO gave some money to scouting in the past. They are under no obligation to do so in the future. They have the ability to "support" scouting as they see fit.

 

To me, the solution is simple. For camp, assign a committee member to pay for it. Have parents distribute funds (their own personal checks) for camp. The CO does not need to get involved. As for money raised via fundraisers, you have the option of turning in that money to the CO (preferably) or not. If you have received funds from you CO in the past, consider yourself lucky. Personally, I don't feel it is scout like to distrust the CO with no evidence to the contrary. Any yes, many consider my judgement to be naive.

[eisely]

I still smell a rat and the odor is getting stronger. I am less concerned about funds being used illegally than I am about funds being diverted to some non scouting purpose. However, non profits do get ripped off, including scout units. If sensible simple controls are in place this is much less likely to happen.

 

In my observation non-profits are much more cavalier in their handling of funds than are for-profit businesses, and for that matter, most government agencies. I can easily see a situation where someone in a position of authority in the CO simply diverts the funds raised by the scout unit for its scout program to a different program the person making the decision sees as more needy. There would be nothing wrong with a CO asking a scout unit to help out, but once control of the funds is surrendured you have, by definition, no control. Proceed cautiously.

 

In re reading an earlier post, I have never seen a federal taxpayer ID of any kind being required for making any kind of purchase. A "resale number" issued by a state taxing authority for sales tax collection purposes is a different kind of number all together.

[Fat Old Guy]

"I have never seen a federal taxpayer ID of any kind being required for making any kind of purchase."

 

We have a state tax-exempt certificate so we don't have to pay sales tax, the number on it is a Federal tax-id number. I'm guessing that the number is our CO's tax-id because they are a tax-exempt organization. I've asked about it a couple times and no one in the troop really knows anything except that we don't pay sales tax.

 

" The CO gave some money to scouting in the past. They are under no obligation to do so in the future."

 

True but if the money is in the budget and then you find out that it has been redirected, what does that say about what they'll do to your money if you give it to them.

 

" As for money raised via fundraisers, you have the option of turning in that money to the CO (preferably) or not."

 

If you don't turn it in to the CO (as they are now requesting) what can you do with it? The CO has nixed the idea of separate accounts for the troop and pack. Give it to the Scoutmaster?

[littlebillie]

Are the auditors just for the specific CO/church, or are they operating under some larger umbrella? ie, is it just, say, the First Generic Church's auditors, or is it some group that's auditing all Generic churches in the area, First through Tenth? If the latter, and any of the others are COs as well, are they ALL doing it that way? How does it work for THEM?

 

But if there's no pattern to it, or it's just the one church's own auditors, then you really need to find out why they want to commingle funds this way. How would long-term purchase goals be handled? If you're saving up to buy a trailer, say, and you'd planned to set aside a certain amount per year? Are they expecting you instead to make large purchases on time, thus needing the boys to sell even more popcorn, because they plan to use any annual overage?

 

The devil's in the details, and it's possible that the CO representatives who are asking for this are just knee-jerk responding to that auditor request. A 4-party meeting is required - the church, the auditors, the parents, AND some of the boys. (some of the boys need to be there just to have the faces of the intended victims right there, just in case there is anything questionable afoot).

 

And if there isn't, and strong assurances can be given that there won't be AND if the Scouts can withdraw their monies if it "doesn't work out", then keep peace.

 

Don't know how much exposure the boys have to the big financial picture, but I do know some Troops have more than others, and it really is good training.

 

just a few thoughts...

[Heacox]

This is one church, one set of auditors doing the annual church audit.

 

Does anyone know where I can find the orignal document from BSA National that would contain Suggested Unit Finance Procedures? I found something on a local council website that is really good; their Finance person says it came from a BSA National document but he doesn't remember which one.

 

 

[Advisor FB]

I had to deal with this as CM of a pack which lacked a proper committe to handle the checking account. It made getting reimbursed for items quite hard, 1 to 2 month delay on average. At first I would sned in receipts in groups, to be reimbursed, but as the delays continued, I proceeded to plan B. I put in a rush request for reimbursement for every item purchased as soon as purchased. I ended up getting a check a week for about a month, until the Church Treasurer contacted me to find a new treaserer for that account, as he did not have the time to deal with all the transactions. Got a yes from the third parent asked, (now the new CM of that pack), set up the new account and received a lump sum payment from the church treasurer. Only problem then was that the lump sum was for all scouts, Pack and Troop. Took alot of backtracking records to determine the correct distribution of the funds. All told the Church collected a nice 35% "tithe" for the troubles of handling our accounts for us.

 

While it is within the CO's ability to request this arrangement, I would still try to get everything in writing as to what the money can be used for and only those people that can use the money.

[NJCubScouter]

Advisor, you were getting reimbursed within 1 or 2 months? In some units that might be considered pretty good.

[eisely]

Never having been involved in church finances, I wonder how many churches really do full blown annual audits? Is this really an outside paid auditor or some kind of volunteer auditing committee? Couldn't the auditors' needs be met by simply having them audit the units' accounts? The idea that the auditors are demanding consolidation is one of the things that makes me suspicious.

 

There certainly is nothing wrong with auditing a unit's accounts. I would hope a unit committee would make this a regular event in the life of a unit, particularly when there is a change in leadership or treasurer. But a volunteer committee should be able to do this adequately, particularly if there is some volunteer expertise available.

 

Coming back to the issue at hand, maybe the first step is to invite the auditors to simply audit the units' accounts. This will certainly help gain focus on the real issue and any hidden agendas that may be there.

[Twocubdad]

The best advice given so far is to sit down with the church auditors and/or finance committee and see what they really want. It may be that all they need is a reasonable yearend statement they can attach to their report or your assurance that if it's ever needed, that the Pack is more than willing to cooperate with audit anyway you can.

 

Chances are the auditors are simply being auditors. They are looking for technical compliance and the easiest way to get there. To them, having everything centralized make their job easier. In the real world, you should point out to the church finance people that the pack takes in thousands of dollars a year, 25 cents at a time, and if the church's treasurer wants to essentially take over as pack treasurer, you'll be glad to have them. Remind them that fall registration is already on top of us and popcorn season quickly follows. Give them all the dates they will need to have someone available to collect money. Did we mention how we handle Scout accounts? I think they'll run in the other direction.

 

We have a CPA in our Pack who specializes in non-profits. According to him, because the pack uses the church's non-profit tax ID, we should technically be included on the church's tax return and our books could be part of an IRS audit, if it ever came to it. He adds, however, for the IRS to be looking so closely at the church's finances that they dig up a separate account held by the pack, that they're already in deep do-do. He says that level of audit if highly unlikely.

 

While we're approaching the subject, I'd like to say something about unit's relationships with their CO. Yes, technically, the CO pretty much has all the trump cards and the unit leaders serve at the pleasure of the CO. But a healthy relationship between the CO and the unit is a two-way street. While they provide us resources we need, we, the unit leaders, are volunteering hundreds of hours to run what the church leaders tell me is a very important part of their community ministry. If we have a problem to solve between the church and the pack, the IH, COR and I work it out on equal standing.

 

I'm not suggesting you make the meeting with the church folks confrontational -- just the opposite. You need to look for common ground. But my point is that there is a whole lot of negotiating room between where you are and handing over all your accounts just because some accountant asked for it.

[Heacox]

Our Pack checking account statement has always been mailed to the church, where it was addressed to our Pack. Statements were always given to us (unopened) by the children's ministry secretary; our COR is the children's minister). About 6-7 months ago, we called a new children's minister. He's done a great job of trying to learn how every program under his umbrella runs; he began opening the bank statements. I believe he mentioned to our church finance officer that their was a separate account with X dollars balance. The CFO was suprised and I believe that he asked the auditors what they thought about it. We met with the children's minister several months ago and thought things were ok to continue as is. Then this week we got the e-mail that the auditors were greatly distressed over these separate accounts and that the auditors will be writing a "letter of concern" to our church finance committee. Here's where we stand at the moment, trying to determine how best to proceed. We have requested a meeting; no response to our request that I know of.

 

[scoutldr]

Being a former Church Council President and Finance Committee chair, I don't think it's as ominous as it sounds. Church Treasurers are usually bonded and insured against fraud, embezzlement and other errors and ommissions. In order to maintain this protection, all funds must be maintained under the control of the bonded individual(s) and are auditable along with all other church accounts. As BW and others have pointed out, the Troop is owned by the CO and they can specify how they want things run. The only downside is that the Troop may need to now get all checks issued by the Church Treasurer and the Troop Treasurer keeps the books, but not the money.

[rlculver415]

I am disturbed by what I've been reading. I understand and accept that the CO owns the pack/troop. No question - cut and dried. But be very sure to get procedures and policies outlined in writing before combining funds. A legal document.

 

What bothers me is really an ethics question due to an unpleasant experience. My parents headed up an outside organization that their church sponsored. Not a scout one, but bear with me. The church sponsor asked them to become part of their budget, which they agreed to do. Now the church had a line item in their budget already for this organization, and said funds would be drawn from the budget line item first. When the organization became financially "joined" to the church budget, their own finances became a "designated account". Anyone was welcome to contribute to that designated account. No, no written agreement was ever drawn up. After a while, line item funds (church's money) were diverted to more pressing needs. Eventually, the pressing needs became the norm and the line item in the church budget disappeared. After all, church reasoned, the organization has plenty of money of their own, all of it private donations and not nearly enough to run a quality ministry. Lately, the church has been trying to access the designated funds for their pressing needs. (Please read "poor financial planning" here.)

 

This is the "rat" that I smell. My parents' church looks like it is supporting an outside ministry, and gets the praise for their hard work, but it's only on paper and worth not even that. The membership really supports itself, and has to fight to keep that. This is deception, and I hate deception.

 

I hope this doesn't happen with your CO, and I think that with clear communication and documentation it is easily avoided.

[rlculver415]

BTW, I am not accusing your church of unethical behavior. In re-reading the above, I can see where some might take it as that. What I mean is to be sure there is no latitude for such to occur. Written agreements/policies can prevent a world of misunderstandings. Also, do review them annually, to include any additional clauses to cover unexpected circumstances.

 

I hope I'm being clear. (?)

[NWScouter]

I have over 20 years of siting on church councils. Our council has never asked even a report from our troop but and a big but as the organization that owns the troop we would be responsible for a financial errors. That why we have bonds for our officers. So it maybe that there may a real reason that particular church needs the control (i.e. insurance, bonds). Most congregations I know are very careful in keeping account of funds, be it the roof fund, scholarship fund, youth fund for the national gathering . These fund are usually off the budget, which means they are held in trust for the purpose that they were given and moneys issued without a reference to line item in the budget. This is where if we were to take over our troops finances the money would go. Since our congregation treasurer is a volunteer, we most likely be looking for a new one. He has enough with keeping up with the churchs checks.

My suggestion is document to the church how much activity there is in troops account and the time it takes to keep them up. Offer to submit a report as often as they want and allow them to audit the books. This may be all they need to keep them happy.

 

By the way, all you who are assigning ulterior motives to the church. Most churches are run by volunteers, sure there are paid ministers but the governing body has people who are there because they love work of the church and wish to see it succeed. Sounds like another group I belong to.

 

[Heacox]

I just confirmed that the Pack is definitely operating under a Federal Employer Identification Number (FEI) issued directly to our unit. We are NOT operating under the CO's FEI. We think the same is true of the Troop, but haven't confirmed that.

 

How does this affect the church's liability for us as it regards finances/IRS audit/etc.?