Individual Scout Accounts Part Trois

[Scouter99]

Sorry, Stosh, that's the silliest thing I've ever heard and until this discussion came up and multiple people in various forums/blogs have said they do this I never would have believed anyone does. Why in God's name would the troop act like a banker for its scouts?

 

Billy can and should "bob a job" to help pay his own way. That's not fundraising in the same sense that selling popcorn/camp cards/wreaths/etc is (as you said, it's a private transaction between two people). Then he takes the money and puts it in a jar. There's no good or sensible reason to bank it in his troop.

 

Your pants example wouldn't even work in my council (and I suspect most councils); only certain individuals can authorize troop acct transactions, we'd have to list every scout or scout parent as an authorized user.

It's an overly complicated Rube Goldberg way to go about buying a pair of pants, paying for camp, etc.

[qwazse]

S99, some scouts (troops) are in a situations where doing it this way is the most secure. Like you, I'm all for rugged individualism. But, I know a scouter who can help boys open student accounts at a local bank that is a safe walk/ bus ride for my boys or my parents understand the value of banking and will gladly pursue it for their kids. For other troops, a scout's position is more precarious.

 

Those of us who have only seen troop fundraising $$ go into a boy's account find it odd. Many of us are not entirely sure what the difference is between raking leaves, selling biofuel, or hawking entertainment coupons.

 

The question then becomes, (and this is how the issue was presented at our round table) can a troop allocate some fundraising $$ to boys' ISA's based on the scout spirit the showed during the fundraiser?

[Scouter99]

I am really confused. We now have some so committee members arguing over how to distribute proceedes for the camp card sales. Is that one paragraph all BSA is providing for guidance ? From what I am reading here it is not permissible to use ISAs. So scouts that do not participate must receive benefit ? But we can allocate based on financial hardship ? Who does not claim financial hardship ?

 

As far as I can tell, yes, that one paragraph in a document no one but no one reads (or knows exists) is the only thing addressing the issue right now.

 

This planning sheet was sent out at popcorn time, but it works for any fundraiser: https://drive.google.com/file/d/0BznDEjUskN5vdnVrWmZGR2FMNDQ/edit?usp=sharing

Click "file" in the top left corner, then download it. Enter all the yellow shaded fields at the top and bottom, fill in your activities cost, and it spits out how much of XYZ each scout needs to sell to fund the entire program. Some scouts will sell more, some scouts will sell less.

The point of a fundraiser is that each person benefits by working to fund the whole thing, not just his little part.

 

 

S99 . . . The question then becomes' date=' (and this is how the issue was presented at our round table) can a troop allocate some fundraising $$ to boys' ISA's based on the scout spirit the showed during the fundraiser?[/quote']

Until we get better guidance from National, what I'd say is that with some of these programs, either the council or the vendor kicks in extra commission if sales are over $X. You could maybe allocate that to boys who are outstanding sellers. But again, we can see that Johnny sold a ton, but the total sales resulting in extra commission were the result of everyone's sales added together.

 

You simply have to separate allocation from sales.

[Stosh]

It may be silly, but it's all-above-board legal.

 

As far as the pants, if the committee doesn't want to put $$'s into their troop account for the boy to draw on, they simply take it out of his account and cut him a check and deduct it out of his ISA when he turns in his receipt for the pants. Not a big deal.

 

It does however, cut down on the hassle of the scouts having to write out individual checks for every scout activity they wish to participate in and by checking with the treasurer they know how much money they have at any given time in their account.

 

The silly part comes in when it is explicitly stated that the money the individual boys raise and put into their accounts is THEIR money. If the troop does a fund raiser, the money all goes into the TROOP account. If the troop wishes to subsidize an activity, they can do that without identifying any particular individual in the process. $XXX goes to camp this year to cut the cost of the scouts going. Sure, that benefits scouts, but as part of the program, it is not "income" for the scouts and no 1099 is needed.

 

Basically if the scouts don't want to do fund raising and they don't fill up their accounts on their own, their parents are going to have to foot the bill anyway. A parent that pays $25 a month to their scout's ISA will in fact over the course of the year pay for their boy's camp fees. That way they don't get hit with a big payment every spring. This is why I believe that "dues" can and should go into ISA's. It accumulates for the boy and if he skips camp this summer, it will continue to accumulate until he draws it all out when he's done with scouting. It's all up to the scout on how he wishes to handle HIS money. A scout is THRIFTY and should know how the financial process of scouting is run.

 

I have seen too many SM's tell a scout he can't go on an activity because his dues aren't paid up. As long as he pays for the activity, who cares! If he doesn't pay and doesn't have funds in his ISA, then he doesn't go because he hasn't paid for the opportunity, but it's HIS decision, not the SM's. He didn't pay dues, and it's rechartering time? Take it out of his account or have him cut a check. This isn't Wall Street finance, but it does keep a scout aware of his financial obligations.

 

If younger brother to a scouter needs a few bucks for an event, older brother can finance it out of his account as well.

 

If there are extenuating circumstances that are unique to outside factors as mentioned by Scouter99, just explain how the process works and let the scouts work it out on their own. It's all part of the problem solving process of leadership development.

 

Basically put, a Scout is "theoretically" supposed to be honest. However, when a troop takes in money under certain precepts and then does something else with it, then it is nothing more than money-laundering. Take that to the next level, Mom and Dad make a donation to the troop to "cover" the scout's Philmont trek, take a tax-deduction on it because of the CO and then the boy's expenses are paid out of his pseudo ISA, is flat out dishonest. Unfortunately this goes on all the time when fundraising moneys meant for the troop are divvied up amongst the participants.

 

One is going to have a difficult time justifying such actions to the IRS and any honest scouter.

 

Stosh

 

Oh, by the way, I have never heard of Tom, Dick and Harry selling popcorn, wreaths, or doing a fundraiser. But I have often hear that Troop XXX or Pack YYY is selling popcorn. It is not an individual transaction, it is a transaction between a unit and a donor facilitated by scouts, scouters and probably a few parents as well. BUT, they are all sending the message that they are raising money for the unit.

[boomerscout]

The IRS website has a discussion on de minimis. I inferred (I am not an attorney) that if it is under $100, and happens infrequently -- such as annual dues -- then you are OK. The IRS went on to say that incentive awards - I'm thinking local Council camp fees or parts thereof - are OK if they are not spoken of as earnings, and are presented in some kind of ceremony.

 

As for the one paragraph from the BSA, the publication also said: "“There may be older official BSA documents that exist on the internet that reference the use of Individual Scout Accounts, this statement supersedes all other references. We are making every effort to replace older documents as they are discovered.†The BSA publication "Product Sales Guide" is well worth a read.

 

What I gather from all this is that the accrual type of ISA where it is equivalent to a savings account is something to stay well away from.

[boomerscout]

Let the Scouts save their odd jobs money in their own piggybanks. That will give them a leg up on the Personal Mgmnt mb. By having them put their odd jobs moola into a troop ISA type savings account you may be acccused of commingling funds -- something you never ever want to be accused of.

[boomerscout]

[quote=Scouter99;n40798

 

 

Until we get better guidance from National, what I'd say is that with some of these programs, either the council or the vendor kicks in extra commission if sales are over $X. You could maybe allocate that to boys who are outstanding sellers. But again, we can see that Johnny sold a ton, but the total sales resulting in extra commission were the result of everyone's sales added together.

 

You simply have to separate allocation from sales.

While you can't allocate any money to specific boys for oputstanding sales - that would be wages - you can award incentive awards that you've announced/shown/displayed ahead of time at an awards ceremony. One such award could be a year's registration fee

 

[boomerscout]

It may be silly, but it's all-above-board legal.

 

As far as the pants, if the committee doesn't want to put $$'s into their troop account for the boy to draw on, they simply take it out of his account and cut him a check and deduct it out of his ISA when he turns in his receipt for the pants. .

 

no, no ISA, no Christmas Club approach, no personal expense account. Now, if the troop is going to buy everyone pants, you could say the pants will cost each forty Scout spirit points. Fundraiser A is worth 4 spirit points, paperdrive B is worth 6.. you keep a running balance until the pants are "paid off", but at no time can there be a personal kitty to draw from -- I believe

 

[Scouter99]

Stosh, it may be legal, but nothing you're accomplishing by this lick-your-own-elbow approach cannot be accomplished simply by the scouts holding onto his own money. There is no reason to involve the troop in the ways you're describing, it's cumbersome and counter-intuitive--it makes no sense.

What you're engaged in is "saving the phenomena [paradigm]"--there's no reason to use an ISA to do these things, but you love ISAs so you're creating reasons regardless of whether they make any sense.

 

In either event, I'm not saying that using an ISA in the way you're describing--as a savings account, not a way to facilitate individual benefit from a troop fundraiser--is illegal; I'm saying it doesn't make any sense. It doesn't have anything to do with the IRS/BSA prohibition on individual benefits, so it's not really germane to the discussion.

 

It may be silly, but it's all-above-board legal.

Oh, by the way, I have never heard of Tom, Dick and Harry selling popcorn, wreaths, or doing a fundraiser. But I have often hear that Troop XXX or Pack YYY is selling popcorn. It is not an individual transaction, it is a transaction between a unit and a donor facilitated by scouts, scouters and probably a few parents as well. BUT, they are all sending the message that they are raising money for the unit.

Yes, and when the unit turns around and puts the amount of commission generated by Tom's sales into Tom's individual account, and Dick's to Dick's rather than using the whole amount to offset the cost of the program to everyone, that is an individual benefit (wages), and that is why the IRS/BSA says we can't do it.

[fred johnson]

The awards / incentives need to be less than significant. I remember reading about IRS and incentives before. The key was that incentives are okay if they are structured to increase the overall fundraising benefit to the non-profit. Much like hiring a company that are experts in fundraising and they take 20% of the raised funds.

 

So if you want the incentive to $50 off dues, then the raised funds would need to be at least $500 in sales resulting $250 in cash for the non-profit. From what I've read, that's by the rules and honest.

 

If you want to say the scout can sell $100 resulting in $50 cash for the troop and then the troop will cover $50 in dues, that's not by the rules and not honest.

 

................................

 

The simple fact is raising kids is expensive. AND ... Scouting is not cheap. So people want to use a non-profit fundraiser to benefit their own kids and not equally the rest of the population of the troop. That's not honest and not worthy of scouting.

[King Ding Dong]

Scouter99, All the fundraising and allocating issues aside, I don't find the idea of ISAs silly at all. They can make the job of the treasurer much easier. Take for example the treasurer functions of Troop Web Host. I bought charcoal and propane for the troop, turn in a receipt, treasurer writes me a check, now I have to go to to the bank and deposit the dang thing and hope I don't lose it. Several other leaders have similar expenses, rinse repeat. OR with a few clicks the treasurer can reimburse my account and I can pay my food bill out of my account or even transfer some funds to my son's account to pay his fees. The treasures job can be a nightmare with all the sheets of paper she has to deal with and tracking everyone down for this or that. For the few deadbeats that don't pay up, you can even take a Paypal payment from a crediting/debit card right in the parking lot from you smartphone so Johnny can go on the outing. I rarely carry a checkbook anymore and the same with cash. Modern times in the digital age. I wouldn't be a bit surprised if the scouts don't want to start paying with Bitcoin they earned from the using their graphics cards to mine. Never heard of Bitcoin mining ? Google it, fascinating.

[boomerscout]

Scouter99' date=' Take for example the treasurer functions of Troop Web Host. I bought charcoal and propane for the troop, turn in a receipt, treasurer writes me a check, now I have to go to to the bank and deposit the dang thing and hope I don't lose it. Several other leaders have similar expenses, rinse repeat. [/quote']

 

Why not just use one of the troop's debit cards in the first place? I suppose the treasurer could transfer reimbursements to your Paypal account with a few clicks, but wouldn't that involve a service fee? Instead of writing you a check, a good treasurer could just debit cash, credit supplies, and then credit cash, debit the receivable of your food bill -- no paper involved.

 

[Stosh]

While money put into an ISA by the scout is not a problem, putting troop funds into the account is unless one is willing to issue 1099's. KDD has the right idea. A lot of financial transactions can be simplified without having to write checks and go to the bank, etc.

 

Co-mingling accounts is something the committee treasure keeps books from happening.

 

Yes, the SM can have an account as well to handle such things as KDD says.

 

The use of a debit card/pay pal, etc. can be a bit tricky in that the transaction can be done by one person. With a check and two signatures, there is a level of security involved that protects the treasurer and anyone else handling money within the troop.

 

If one wishes to recognize the top earners in the troop, nice prizes less than $100 can be used as incentive for the scouts. There is no financial paper trail for the boy and it is written off as the troop's expense for awards.

 

Just remember, the aggregate amount of money put into the scouts' ISA is taxable income for the scout. If he is declared a dependent on the parent's return, that aggregate amount needs to be shown as income. I believe I read somewhere until the minor is 14 years of age, the money he/she receives as earned or unearned income is legally the parents'.

 

Stosh

[boomerscout]

If an ISA represents cash that be drawn upon, especially if it can be transferred to other units, then it doesn't matter how good the treasurer is. These funds need to be kept in a separate bank account separate from the unit's bank account. The principle of commingling is as follows:

 

"Trustees, guardians or lawyers holding client funds have a duty not to commingle those funds with their own, since commingling is generally prohibited as a conflict of interest. Use of commingled funds for an investment, even though it might benefit both the trustee and the beneficiary, is still improper. To avoid commingling, trustees, lawyers, guardians and those responsible for another's funds set up trust accounts for funds of another."

 

The troop, as fiduciary, has possession of the money belonging to minors. It then needs to be above board, and free of all suspicion. It may even need to have each ISA in its own separate bank account. However, all this is moot as Scouting.org says NO ISAs.

 

While many large non-profits go the two signatures route, issuing troop debit cards to the SM and ASMs need not mean that any one of them is going to suddenly run off to Brazil. The treasurer can maintain two accounts - the main checkbook account and a separate, secondary account he/she keeps topped up with $500 (?). We trust our kids lives to these Scouters; we can't trust them with some of our money?

 

While I can't imagine it happening, doesn't all monies held in the troop's name legally belong to the chartering organization?

 

[Pack18Alex]

An Individual Scout Account is not a drawable stack of funds like a bank account, it's an account in the accounting term. If you use a GL program like quickbooks, every Customer (the scouts), has a Scout Account, every Vendor (Council, places you camp, Wal-mart, etc) has a vendor account. You have income accounts (dues, fundraising, donations), you have expense accounts (camping, registration, food, etc), everything that money is tagged with in accounting is called an account.

 

When we experimented with ISAs, we put them as credits on the Scout's Customer Account. When they had a bill come up, we applied the credit and billed them for the balance. Since we don't refund off the accounts (unless special circumstances), there is no fiduciary issue, we're NOT a guardian of their funds.

 

You can treat the sales incentives as an expense (basically a Cost of Sales), or you can split the income between the Scout and Unit with splitting the revenue. But in no circumstances is a trust account needed for money that is held by the troop to be uses at the direction of the scout subject to Troop policies.