Troop bank accounts, scout accounts

[cubdadinnj]

Becoming more involved with our troop, a couple of things concern me about the way money is handled. And yet, I can't really find anything at the national/council/district sites that clearly address any of this.

 

First, our CO is a a school PTO. We have virtually no interaction with them, they don't acknowledge us on their web site. They are a 501 c3 organization.

 

Our troop has, sitting in 2 bank accounts, well over $30k. While some of this is deposits for Scouts going to summer camp, and other trips, and some of it is earmarked for Scout accounts, it seems like a heck of a lot of money.

 

And yet the committee is very reluctant to spend any of it -- the troop is well equipped, but nothing extravagent or too new. But we could surely use a few new tents...

 

Moreover, the committee seems not to get/understand the relationship we have to the CO. I've suggested that not earmarking this money could prove a problem. And while I have no reason to believe that the PTO might be antagonistic towards our troop -- who knows what might happen. My concern is that if the PTO decided to drop us -- and they found out about the troop's riches -- as I read here, theyd be well within their rights to ask for the $$.

 

So -- either we need to self-charter, or quickly get aligned with the PTO.

 

Second point, our troop does pretty well with fund raisers -- and the boys generally get 30% for their scout accounts. Lets for a moment not get to the point that this money is used to pay for their summer camp, their personal equipment, and uniforms, or their Dad's leaders uniforms/equipment/trips.... We have Scouts turning 18, leaving the troop, who are given a check for $600, $1000, $1200, etc. for the remaining balance in their account.

 

(boy, I hope no one at the PTO reads this....)

 

I need some hard evidence to show the chair, treasurer, etc. about why these things are *really* concerning. They've been done this way for decades... literally, and no one's too worried.

 

Thanks -- and btw, a forum specifically for banking/ treasurers, etc could be really useful!

 

TroopDad

 

 

[Gold Winger]

Some say that the CO can lay claim to the funds, others say they can't. I'd be willing to be that it depends on state law and how good of a lawyer you can hire.

 

If the CO could claim the funds, they could do that if you recharter as a self-charter unit. When you do that, the old unit ceases to exist and the new unit arises from the ashes.

 

Spend the money on the boys. Don't collect recharter money for a year. Don't charge for the annual banquet. Send everyone to camp for free.

 

You might want to talk to a tax guy about giving those Scouts a check. I'm not a lawyer but I believe that Scout accounts are common enough that there isn't a problem with designating money for the use of a Scout. However, it strikes me that giving a Scout money that was raised for Scouting might be outside of the rules.

[Beavah]

Second point, our troop does pretty well with fund raisers.... We have Scouts turning 18, leaving the troop, who are given a check for $600, $1000, $1200, etc. for the remaining balance in their account.

 

Yah, I'm da guy who is usually pretty understandin' of different units/CO's ways of operatin', eh? So you'll appreciate how strongly I feel about this in respondin' directly and only to this part of your post, cubdad.

 

ABSOLUTELY NOT! At least if I'm reading this right. You're tellin' people you're raising money for Scouting. And then, after some period of time, you're takin' the money you raised and giving cash payments to individuals who participated in the fundraising, to use as they please?

 

If yeh are collecting dollars as a fundraiser for Scouting and then dolling it out as cash payments to the participants, you're committin' a criminal offense in all states I know of. That's fundraisin' fraud, eh? And tax evasion and some other stuff. There is a lot of enforcement interest in this, eh? Fundraising fraud is a big deal. It's an area where folks who prosecute offenses are really interested in prosecutin'. It can cost da PTO its NFP status. Your treasurer and leaders can serve time in jail. Restitution orders are common. It can ruin da image of Scouting in your area and hurt your council.

 

Most important, it's just dumb! There's so many great things within Scoutin' that yeh can use the money for! If you aren't usin' it, give a big FOS check to your council to support camperships for kids in need!

 

Yeh absolutely, positively must stop this practice.

 

Beavah

 

[scottteng]

That much money sitting around is a problem it looks like someone is running the troop as a for profit business. An accurate treasurers report should contain the amount that is held in the personal accounts. That money should be used for scouting let the boys take their trip fees, summer camp fees, even new uniforms out of it whatever is left when they quit or age out should return to the troop not be issued to them in check form. The troops share of the money should be used to update equipment as needed and to provide program. Give scholarships even to new boys for summer camp or maybe even find another troop that is not so well off and lend them a hand.

[Lisabob]

Very interesting situation. I would advise you NOT to go the self-charter route. First, if the PTO is a decades-long sponsor of your troop they may be quite shocked and upset to hear you decided to dump them. Yes I know, they're not *doing* anything to support you. But neither do you have a problematic relationship with them and switching COs is generally reserved for when there's an insurmountable problem - something which I'd like to think they would at least be aware of. Also, most DEs have small cows when you start talking about dumping an otherwise-acceptable CO and will, in all likelihood, apply pressure in the opposite direction.

 

Not to mention that GW is correct, when you change COs, you open up a potential for the prior CO to lay claim to the goodies. More so if you offend them by blindsiding them with this change.

 

So the better solution to that part of the problem is to quietly start developing a real relationship with the PTO. Find out what you can do to support their mission. Whether it is an annual school clean up (service hours!) or help staffing the start-of-school ice cream social or setting up tables at the school book fair or whatever, it shouldn't be too hard to find some small ways to help.

 

--------------------

Now about the money - I'm not a tax lawyer or accountant. But FWIW, my understanding of "the rules" is very similar to Beavah's when it comes to paying money out to former scouts. In NJ it appears that the relevant law is the "Charitable Registration and Investigation Act," and it may be found online here: http://www.njconsumeraffairs.gov/laws/charitylaws.pdf

 

Please note in particular, the sections toward the end (starting on pg 20 in the online version linked above) about truthful statements and outlining what constitutes a violation, from which I've excerpted this segment:

 

"45:17A-32 Statements required to be truthful; coercion prohibited;

unlawful acts; practices. [...]

 

c. The following acts and practices are declared unlawful as applied to the planning, conduct, or execution of any solicitation or charitable sales promotion:

(1) To misrepresent the purpose or nature of the charitable institution or the purpose or beneficiary of a solicitation; to solicit contributions for a purpose other than the charitable purpose expressed in the statement of the charitable organization or expend contributions in a manner inconsistent with that purpose, or to fail to disclose any material fact. A misrepresentation may be accomplished by words or conduct;"

 

Again I am not a lawyer and there's a reason tax law is a lucrative business. But it does appear on the surface that, if you solicit donations to support scouting and then from those donations you turn around and write Jimmy a $1000 check with no strings attached, this could be construed as a violation of your state's fundraising law.

 

On the other hand, if you are talking about returning money that the scout/his parents personally put into his account (for convenience' sake, so they don't have to write a check for every little thing) that might be different. But if you plan to segregate "personal" money from "fundraising" money so as to refund any leftover personal cash, then you need to do two further things. First, the troop needs to have a clear book-keeping method of identifying how much of each sort of money each boy has (sort of a double account system) at a given time, and second, the troop needs to find a way to specify in writing how it is decided which sort of money is being used when paying for an outing or gear or whatever. I know a couple of troops who do that, and from what I gather it is a serious pain in the neck, especially if it is a larger troop.

 

I hope this is helpful.

[allangr1024]

Our troop has scout accounts, and boys do leave the troop, either by aging out or by not rechartering with the troop. In those cases if we can contact the scout, we ask him to donate his scout account to another scout, or to donate it to the troop. If we cannot contact him, we hold it and put it into the troop budget after a period of time, probobly next recharter time. But cash is not given to a boy leaving.

 

30k in a troop account is huge. I could take all my boys to jamboree or to philmont and still not charge dues or do fundraisers for a few years. I would find some worthy activities and pay for the boys to do them with this money. This is beyond being thrifty, it is hording.

 

 

[Lisabob]

Allangr, while I tend to agree that 30k is an awful lot of money, it also depends a bit on the size of the troop and the success of their fundraisers. Say you have a troop of 50-60 boys, each with $300-400 in their accounts from recent fundraisers. That's 15-24k right there. And before anyone says "$300-400 is far beyond what most boys have in accounts" I agree, most of the time - but time is approaching for those last summer camp payments to be made and so indeed, it is possible that accounts are at a high point right now, prior to making those payments.

 

A few years back our large-ish troop went to Yellowstone, which is very far away from us and was quite expensive. In the run-up to that trip our troop banked a huge sum of money, which on the surface might have looked crazy, but boys worked for two years to fund raise for the trip. (My understanding is that that money was set up in specific "Yellowstone" accounts though and not floating around in a general troop fund.)

 

Without knowing more about the troop in question here, it is hard to judge whether having $30k in the bank is excessive to the point of hording.

[cubdadinnj]

Thanks all --

 

First, to be clear, the treasurer has a clear record of what is in each Scout's "account." (offhand, though, I don't know the number) That said, the annual troop budget, for events, camping, fees, etc. is about $7k. We have way more than what is needed for a reserve.

 

And I might add, though we have a few Scouts where there are money issues in the family, we're by and large middle to upper middle class, so don't have a huge need for providing camp scholarships, say.

 

I'm not a proponent of divorcing from the CO -- unless it is to protect the troop's funds OR protect the PTO. But as much as the troop leadership is pretty stable, the PTO, I don't think is the case at all. Given the practice of returning excess scout money -- I would think that that practice could jeopardize the PTO's 501c3 status.

 

And, like several of you -- I am most uncomfortable, never the mind think its wrong, for the troop to fundraise, then (eventually, in a number of cases), pass the funds back to the boys.

 

Even this year we have a couple of Scouts who are graduating high school, have made Eagle, and are expecting their checks...

 

I *know* no one in the troop has any bad intentions here -- but I also don't think that any one in the troop has given it much thought, since its "always" been done this way.

 

Thanks

 

 

 

 

[Gold Winger]

" It can cost da PTO its NFP status."

 

Not likely. It might impact their 501©(3) status but not all non-profits are 501c3 organizations.

 

 

[Beavah]

Not likely. It might impact their 501©(3) status but not all non-profits are 501c3 organizations.

 

Just what category other than a ©(3) do yeh reckon a PTO would be, GW?

 

Yah, termination of ©(3) status is a fairly rare thing, though not unheard of by any means, especially in cases of criminal wrongdoing like fundraisin' fraud. Whether a DA chooses to pursue a criminal matter depends on a bunch of factors which hopefully include intent and common sense. But there's a lot of dollars involved here, eh? It ain't chump change. And odds are current and former SM, CC, and treasurers benefited directly from this little scheme, eh? I'd expect at least an agreement for all of 'em to reimburse the unit in order to avoid prosecution.

 

NLDScout is around somewhere, I expect. I wonder what he'd say as a judge faced with a bunch of folks who appropriated thousands of dollars of Scoutin' money for themselves as unreported income?

 

The law is important here, because this is serious stuff and da consequences are pretty severe. But really, da reason a unit shouldn't do this has nothing to do with the law. It should never come to legal falderal in a Scoutin' unit. This is an Oath and Law issue. Scout units should not commit fraud on their friends and donors. If I were involved in da unit, I'd be lookin' for a way to make restitution to donors for monies that have been misappropiated in this way up to this point. If I was a beneficiary, I would be returning the money to the troop. It's just a matter of good ethics.

 

One of the hard things here is that cubdad's unit has been doin' this for long enough that there's an expectation that people are owed other people's donated/fundraised dollars. Tellin' them they aren't gonna get checks anymore is going to be a bit of a PR challenge, eh? I'd recommend havin' an outsider (accountant, attorney, school district or BSA official) deliver da bad news.

 

No matter how they do it, though, they need to get this under control.

 

Guess this is why units are encouraged to file da "Unit Money-Earning Application" form, eh?

 

B(This message has been edited by Beavah)

[Lisabob]

Did you guys look at the penalties section of the NJ law in question?

For a first violation, civil penalties of up to $10,000 plus court costs & legal fees plus potential restitution. Up to $20,000 for each subsequent offense. Revocation of the non-profit group's state registration status (means no more fund raising at all, at least not legally in the state of NJ). And possibly more.

 

Would a judge throw the book at a boy scout troop and PTO charter org? I certainly hope not. But could it happen? Sure looks like it to me. And incidentally it seems that since about 2003 NJ, along with many other states, has launched a crackdown on fraudulent fundraising.

 

 

[Gold Winger]

"Just what category other than a ©(3) do yeh reckon a PTO would be, GW?"

 

That's irrelevant, isn't it?

[FScouter]

The purpose of fundrasing is to provide the income necessary to fund the program for the current year. First develop the annual program. Then budget the costs required to implement the program. Then budget the income needed to pay the costs. Then plan the money-earning events to earn the income. By the end of the year the earnings should be mostly depleted.

 

Boys don't join Scouting to help build up a war chest. Time spent fundraising when no funds are needed is a waste of program time.

 

My advice to cubdadinnj would be to strenuously question the purpose of holding the next money-earning event.

 

Here's some info on the unit budget plan for a pack:

http://www.scouting.org/cubscouts/resources/packbudget.aspx

[Aquila calva]

Hello cubdadinnj,

 

When it comes to writing checks to scouts and parents from the troop account, without any receipts for legitimate scouting expenses, you need to just STOP IT NOW! This can spell big trouble! It doesnt matter that this has been the practice for years. It is plainly wrong, and clearly untrustworthy. Your committee needs a WAKE UP CALL! None of this money BELONGS to any individual scout. If the head of the chartering organization learns about this, and has two ounces of financial sense about them, the troop could be history in no short order and rightly so.

 

When a scout earns credit in their scout account, it needs to be used for clear scouting purposes such as camping events, uniform, and some needed equipment.

 

Writing a check to a scout or parent without a clear scouting purpose is just plain WRONG!

 

Have fun scouting.

 

 

[evmori]

If this was the NCAA, penalties would have been doled out! Ya can't collect money from people under the guise of Scouting then pass out checks to Scouts aging out of the unit! That can be viewed as money laundering! And you have $30K in your bank account? Something is seriously wrong with this unit!

 

Ed Mori

1 Peter 4:10