Endowment Funds - Good or bad?

[Eamonn]

Over the years I have supported the Council I'm in by donating to the Council endowment fund.

These gifts have benefited or I like to think have benefited both the Council and myself.

Me by reducing my tax burden.

I choose to donate to the Council endowment fund, because Scouting is something that I dearly love. But also because I felt that my donations were beyond the reach of Scout Executives who have little or no real training in managing money.

This isn't a put down!! It's just the way I see things.

Our Council for it's size has what I think is a fair amount in the fund. To be honest I used to know, but right now I'm unsure if it's 3 or 5 million dollars.

I really like the person who heads the committee and do trust him. He works for one of the big name investment companies and is a real nice person.

He is an Ex-Council President, Silver Beaver and Distinguished Eagle.

The idea of a fund that would grow and be there to serve and meet the needs of Kids in the years to come seemed like a good one.

My lack of faith in the abilities of Scout Executives would seem to be well founded.

Their ability to meet payroll and pay the bills, seems to have been based on an overly optimistic view of how much money would come in.

Budgets seem to have been made with the idea that unrealistic goals would be met.When it seemed that the money needed wasn't coming in or going to come in, necessary actions were not taken.

The end result of course was that at the end of the year there was a deficit.

In order to correct this money would be taken from the endowment fund.

I'm a very simple fellow, I'm happy to follow the advise of my accountant and financial planner.

I had every intention of attending the next World Jamboree, I really wanted to go! But spending $10,000 (I'd have to take OJ!!) with OJ starting college next year, just wasn't a wise move. Sure I have money set aside for his college expenses, I have investments and a retirement fund. With the stroke of a pen I could take ten grand!! But the bottom line is that is something that I just can't afford. The fault is all mine I should have saved and put funds aside for it.

Back to the endowment fund. When Councils use the fund as a cash cow to cover losses in the operating budget, the idea of endowment seems lost.

To make matters worse!! A couple of years back our local United Way announced that they would be cutting us off. The $90,000 they gave each year would be cut over three years to zero !! Their reasoning was why should they fund an organization with millions of dollars in the bank!! This would seem to me that our endowment fund is now hurting us.

I'm all for taking some of the interest from the fund and making it available for capital projects, such as unexpected emergencies.

But when the fund is used to cover or make up losses in the operating budget, something is very wrong and people need to be held accountable.

Eamonn.

[Beavah]

Yah, Eamonn. I hear you. There are ups and downs to endowments, eh? If a Council gets a big enough endowment, why, it can employ all its professionals and staff fully, and not have a single kid enrolled or single volunteer contribute.

 

Generally speaking, spendin' of endowmment funds is governed by each state's version of the Uniform Management of Institutional Funds Act. While it's not kosher to spend the original unappreciated gift amount, it often is allowable to spend the appreciated value. Depends on your state, and the terms of the endowment/terms specified by the donors, eh?

 

So it's probably legal, if inadvisable, to spend the investment gains to cover the operating deficit. Then again, its probably not legal for your council to spend down the endowment below the sum of all the original gifts. If yeh think they're goin' there, time to drop a dime (well, guess it's about 4 bits these days).

 

Moral is give only to endowments with clear and highly restrictive conditions. Even better if the endowment is controlled by a separate board, like the local community foundation.

[Jschlich]

Watch who takes charge of those endowment dollars! The dividend dollars that are generated is the yield that should be spent on the purpose of the fund, PERIOD!

 

The experience in the Chicago Council is that there is a disconnect from the "rank and file" and those who have the legal, accounting and BSA education degrees.

 

The Professionals (the three types cited above) seem to take a "due diligence" and "fudiciary must make every dollar possible" approach beyond all other considerations. They are misguided and believe that the obligations of a shareholder investment company is the same as a not-for-profit principle guided organization.

 

When overly agressive profit driven Directors run a Council they will sacrifice the endowment dollars of the organization for their misguided obsession with the almighty dollar as their scorecard.

 

What compounds the problem is that the Professionals will bully and attempt to use their "professional standing" to belittle and browbeat the rank-and-file.

 

 

 

 

 

 

 

 

[Jeffrey H]

Moral is give only to endowments with clear and highly restrictive conditions. Even better if the endowment is controlled by a separate board, like the local community foundation.

I agree.  Also, a donor can request that the endowment be returned to him/her if it is not used according to it's agreed-upon purpose. 

[jkhny]

Westchester-Putnam Council represents the suburbs just north of NYC. This is an affluent area and has a rich Scouting history. It USED to have a rich selection of facilities available to Scouts as well. No more. A succession of Scout Execs has pushed to sell off property - with each sale being the "last", the "solution" to Council funding problems.

 

Now why such an affluent area that is supposedly running such a "successful" Scouting program HAS funding problems is a question nobody seems ever to ask.

 

From three summer camps we are now down to one - four hours distant - TOO far for younger boys and frankly, too Primitive for many. We sold off closer camps that were perfect for young Scouts AND weekend activities. And somehow those sales always occurred over the objections of the volunteers in the Council, sold for less money than expected with NO explanation why.

 

The last sale went to a neighbor of our then Scout Exec for half the originally expected price...... the usual routine preceeded the sale ..... limited "availability," then "it's not used enough", no money spent on upkeep then the place is run down and "has" to be sold because it's "too expensive" to fix. So it's sold.

 

New cabins - costing 3x the budgeted amount (and more than we got for the camp sale) are built on our one remaining "local" reservation. THAT place is a pile of rocks around a stagnant lake operating under a conservation easement for swampland. A far better nearby place was sold to a hunter's consortium that DOUBLED their money in reselling a year after purchase.

 

A dozen properties sold since I was a kid - the funds going into "Endowment funds".

 

Every year the SE's incompetence and failure to meet fundraising goals gets rewarded with further withdrawls from the endowment. Hell, the Exec Board even approved a select Executive Committee that could approve withdrawls without approval of the full Board. Chicago played the same games to disenfranchise volunteers trying to rein in finances.

 

If you want to give money to support Scouting give it DIRECTLY to successful local units.

 

BSA is now a money machine with absurd national salaries (Williams is getting close to a million a year with "defereed compensation" - a fact that has raised numerous questions in non-prifit oversight circles). National has hundreds of millions in "endowment funds" - for what? Ever try to book a trip to Philmont or Sea Base? ANY National facility? The demand outstrips the supply but is BSA expanding these facilities? NO.

 

Last time the IRS complained that BSA had TOO much money retained from year to year - a no-no with non-profits - how did BSA spend the money? The offerred nice bonus packages to paid staff - with boosted retirement packages (already better than those from comparable orgs).

 

BSA spend money to benefit Scouts?

 

"Endowment Funds" are a scam where volunteers and donors give up real control over funds to paid staff and hand-picked Boards.

 

Our endowment has tanked under our last SE - with donations dropping by 40% and FOS tanking. He made up budget shortfalls out of the endowment funds.

 

He also tried to sell one of the 3 remaining facilities we own and has been fought tooth and nail. Local zoning may yet make it so the municipality buys it and allows Scouts use of it. Ironic since we were MAKING money leasing out time to the municipality and other orgs. The Council wants to "grow" the endowment fund (and take the endowment fund provided with that facility for maintenance and upkeep). I bet the donor is rolling over in her grave.

[MollieDuke]

I would double check the rules for withdrawl of money from this endowment fund if you feel it's being overused. My personal donations are submitted DIRECTLY to Troop XXXX or Crew XXXX. I also submit a camporship in my father's name each year to a first year scout in a local troop "just because".

 

Our local area has not sold it's camps, but they've tried. I think there has been a lot of financial trouble with many partnerships including the United Way. I never donate to the United Way either for the reason that I want my money used as I want it used, not the way corporate America feels it should be used.

 

As for endowments specifically, I think they are fine as a whole, but I do feel that unless they are extremely specific, the potential exists for misuse, so I personally avoid donating to them. My few measly dollars do much more good in specific ways and I see a definate return for my dollar (especially the camporship).

 

[MollieDuke]

I would double check the rules for withdrawl of money from this endowment fund if you feel it's being overused. My personal donations are submitted DIRECTLY to Troop XXXX or Crew XXXX. I also submit a camporship in my father's name each year to a first year scout in a local troop "just because".

 

Our local area has not sold it's camps, but they've tried. I think there has been a lot of financial trouble with many partnerships including the United Way. I never donate to the United Way either for the reason that I want my money used as I want it used, not the way corporate America feels it should be used.

 

As for endowments specifically, I think they are fine as a whole, but I do feel that unless they are extremely specific, the potential exists for misuse, so I personally avoid donating to them. My few measly dollars do much more good in specific ways and I see a definate return for my dollar (especially the camporship).

 

[de4bsa]

If someone wants to donate directly to a unit that is their right. However, it is my understanding that you can't write these donations off on your taxes. An individual unit isn't a 501©3 entity. Only the local council or national meets the qualifications to be a 501©3. Again, it's your right to make a contribution to Troop X but just don't count it as a charitable contribution come tax time. It's like trying to write off a $50 gift to your grandson on his birthday. Of course, unless you're audited I guess it doesn't make much difference. This is what I've been told by my SE. Is he wrong or right?

 

 

[Beavah]

This is what I've been told by my SE. Is he wrong or right?

 

Kudos to you, DE, for thinkin' for yourself. You must be new .

 

Whether your SE is right or wrong just depends, eh?

 

There are some troops and crews, and many Sea Scout Ships, that are separately incorporated with their own IRS 501©(3) status. You can give to them and deduct the donation to your heart's content.

 

Most troops and crews are sponsored by churches, schools, or not-for-profit charitable organizations. You can donate to them, earmarked for their scouting program, and deduct the donation.

 

Only those units that are chartered to "parents of..." or to ©(7) social clubs would put your donation in the technically not deductible column.

 

Of course, not everybody itemizes, so for those that don't, it doesn't matter, eh? For the small amounts typical of troop donations, I expect it's fairly likely to sail by without a close examination, even during an audit. Any IRS auditors out there? Aw, they probably can't say.

 

Da problem I have with donations to the BSA is the overhead. How much of your day is really spent providin' program/program support for the kids (vs. doing FOS/popcorn/internal management)? The BSA claims it's more than 85%. Certainly not honest for many, if not most councils. And while you don't make a lot, the CSE's salary is simply unconscionable, eh? The BSA generally has such a high administrative and fundraising overhead that giving to them isn't usually a prudent or Thrifty thing to do. Leastways, unless you're treatin' it like lobbying $ and are payin' for access.

 

 

[Eamonn]

When we started the Ship I went ahead and incorporated the Ship as a 501©(3).

Mainly because the Council refused to accept donations of boats.

Our Charter partner, the local Elks really does want them either.

At the time I was really upset at our Scout Exec.

But un-scout-like as it might be! I got the last laugh.

After the UW started to de-fund the Council, I met them and applied for a grant. I got $1,500 for the Ship. This year we are asking for $25,000. We need to transport the Scouts. Talking with some of their board members they seem to think we stand a very good chance of getting it. As not only did they de-fund the Council, they did the same to 38 other organizations and now have lots of money.

As a Sea Scout Ship we of course follow all the fund raising BSA guidelines, but as the Friends of we are not bound by these guidelines.

While we in no way try and hide that we are Sea Scouts, we make no mention of the Scout Oath or the Venturing Oath, we do in the by-laws have the Sea Scout Promise. One foundation that gave us some money has in their guidelines that they will not donate to ant organization that discriminates. They were happy to go with the Sea Scout promise. I feel sure they knew who we were and what we were but with no mention of anything that might cause a stir they let it go!!

Sadly becoming a 501(3)© is expensive. It cost almost $900.00 here in PA.

Ea.

[de4bsa]

Nah, I'm not new I've just never really took the time to research it. I'm a little out of my element when I start talking about tax designations. However, this is the company line I've always passed along to businesses who give to local units and local units that are more than willing to accept these donations. You're right about the chartered partner. If these units wanted to "beat the system" they could tell the donor to give to the C.O. (provided it's a 501c3) and have the C.O. earmark the money for the unit. Of course, I'm not going to put that idea in their head.

 

I guess my question in regards to salaries is, how much should professionals make? It seems the majority of volunteers agree that upper level pros (SE or above) are overpaid. I'm pretty sure I have some volunteers who feel I'm overpaid. I asked a grumbling SM one time if he wanted a 23 year old kid making $24,000/year to be our SE. Depending on the size of the Council you could be talking about someone who manages 35-50 employees, a multi-million dollar budget, several properties, endowments, and answers to a board usually made up CEO's and business leaders. Do you really want the person in that position with "Lifeguard, YMCA" as the most important position on his/her resume? Yeah, I know there are some bumbling SE's out there who don't deserve the six figure salaries they are getting but that's true in the corporate world as well. There are also people making $6.50/hour who don't perform well enough to deserve that wage. We can all find individual examples of incompetence.

 

I totally understand people wanting to give a unit rather than the Council, I really do understand that. It gives you a much more warm, fuzzy feeling. A SM can go to a business and guarantee that the $100 the business gives will go toward sending Johnny to camp. I can't do that. I talk about camp scholarships but can't guarantee that the local kid in the troop down the street will get (or even need) that scholarship. I talk about how our Council provides accident insurance free of charge to our members but that doesn't quite give people the warm and fuzzies. One thing is for sure, I sure as heck don't mention that their $100 might go toward my paying my dental coverage or be put toward the SE's expense check. The BSA tries to pay competitive salaries to attract quality employees. This is high pressure and challenging job with a ton of turnover even though the wages aren't that bad. The turnover would be much worse w/ salaries being cut.

 

At the end of the day I preach to my units if everybody gave to units that the Council would eventually die. Without the Council you don't the Boy Scout program. I'm not sure what all those kids in uniforms would be, but they wouldn't be Scouts. Kids could meet all of the requirements for being an Eagle but they wouldn't be recognized as Eagle Scouts.

 

Due to financial problems the last couple of years my Council has had to cut a couple of professional positions. It has been disastrous for the districts who have had either no professional or a professional who has other obligations (like a Field Director or Program Director trying to fill in here and there). I've seen the impact that professionals can have on scouting. Are there plenty of bums out there? Sure, but there are plenty of bum volunteers out there, too. I'm not sure which hurt the program more. I've viewed a couple of posts on here that mention that there aren't any professional scouters in the UK and the program works fine. I can't speak about that at all b/c I have no idea how the system is set up over there. In my admittedly limited experience with the program having a competent professional in place is vital to the success of the program. People need to remember that when pulling out the checkbooks.

[Beavah]

Yah, good thoughts, DE. Thanks for sharin'. Here's some thoughts back to continue the dialog.

 

this is the company line I've always passed along to businesses ... I'm not going to put that idea in their head.

 

You feel OK with that? Me, I'm more a fan of being completely honest with people. Supporters of the program are supporters of the program, eh? If someone gives to a unit, you have better unit program, more kids, more parents, and more donations to both units and to council. If they're happiest givin' to a unit, they usually give more. Our goal is to grow the program, not the company . This is a symptom of one big issue within the BSA... a problematic corporate culture.

 

Do you really want the person in that position with "Lifeguard, YMCA" as the most important position on his/her resume?

 

Yah, of course not. What I really want is the person in that position havin' a real MBA in NFP management and some genuine experience in NFP work in several different organizations. I don't mind payin' market rate for that. Problem is, I know very few SE's with those qualifications, and as a board member I'm not allowed to go out and find someone with that experience set. I'm stuck with National's short-list of guys with fairly limited real-world training and management experience in only one organization. The don't deserve market rate (often at the high end of market rate). I'd love to pay a full SE's salary for a full NFP executive.

 

At the Chief Scout Executive level, the compensation rate is just not justifiable.

 

I talk about camp scholarships but can't guarantee that the local kid in the troop down the street will get (or even need) that scholarship. I talk about how our Council provides accident insurance free of charge to our members but that doesn't quite give people the warm and fuzzies.

 

Out of our council's 2.6M budget, I think $16K goes to camp scholarships. Accident insurance at an average of $2 per member also isn't the best justification for $2.6M.

 

I agree yeh have a hard job makin' that sale that way

 

I've seen the impact that professionals can have on scouting... I've viewed a couple of posts on here that mention that there aren't any professional scouters in the UK and the program works fine.

 

Not just Britain but the rest of the world, eh? Our extensive system of professionals is quite an anomaly in scouting.

 

But I have to take your word on the impact of losing professionals, and on the potential positives. I think that's true, too. It might be even more important in our current era of both parents workin', long work hours and such. The social systems in other countries provide more time and encouragement to volunteers.

 

This is high pressure and challenging job with a ton of turnover even though the wages aren't that bad.

 

Ah! Da crux of the matter! I agree with you completely. I think the structure of the DE's job is a miserable one. Very hard for anyone to do successfully. And the "corporate culture" of the institutional BSA often isn't the best. I hate losing fine young DE's to a high turnover created by the poorly conceived position.

 

That's one of the consequences of havin' SE's who really don't have any professional NFP management experience. They can't conceive that there are different, better ways of operatin', that put people in positions where they can have fun and truly excel. If the BSA is committed to the Scouting-as-corporation model, then they should commit to doing that well, beginning by looking at the management structure of other successful NFP membership & service organizations, and hirin' SE's with real-world experience.

 

Your job would be a lot more rewarding. And the volunteers and CO's who "own" the corporation would be happier, too.

 

 

 

[de4bsa]

A couple of years ago I asked someone from national if there was ever any thought given to bringing in people with corporate management experience and plugging them into SE positions. His response was that the BSA prefers that employees work their way up the ladder within the organization. However, I'm in agreement with you. I don't see how my current experiences as a DE are in any way paving the way to being a competent SE.

 

I think part of the thinking is if you can successfully manage and encourage volunteers to do the work of scouting, then you can manage employees who have a paycheck on the line to do the work. That still doesn't address the fiscal responsibilities of being a SE.

 

Your comment about businesses giving to local units is actually well thought out. The goal SHOULD be to grow the program and not the structure. That said, right now I'm part of the structure. When a unit "beats" me for money all I can think about are my FOS CA's and heat from my boss. I never consider that a kid is getting chance to go to camp when he otherwise wouldn't. It's a shame really. Early in my tenure I came to the conclusion that the BSA has some structual problems. The structure is set up so that Councils and units are really in competition for the same dollar. So, entities that should be allies often find themselves as enemies (so to speak). I wish I were smart enough to present a solution but I'm not.

 

Well, I better get off of here. I'm wasting time. I have FOS calls to make. LOL.

[Beavah]

Yah, Scout Salute to yeh, DE, for doin' a hard job. And for keepin' your heart in the right place.

 

Bein' honest about where we're at helps us all get to where we should be goin'.

 

Beavah