How much money in the Troop Treasury?

[bluecat]

I've not seen this problem addressed before. If anyone has some pointers to good policies on this matter, please forward that (in addition to your opinions, of course!)...

 

We're a well-established troop but in an area with declining scout enrollment. Our troop has dwindled down in size to about 10 boys and, with the current crop of boys about to age out, there is some danger of folding. (We are working on improving the numbers so this does not happen, but it is possible that it will.)

 

We have a substantial treasury that has been passed down to us today over the past decades. My question is: how much is too much? What guidelines do you use to understand how much money should be kept for capital expenditures (tents, etc.) and for annual expenses? Any "rules of thumb"?

 

If we decide that we have too much, what's the fairest way to spend this money down?

[Stosh]

Money in the bank is of no use to the boys.

 

Stosh

[KenDavis500]

What does the Troop budget say? You should have enough for equipment maintenance/replacement, awards, etc., plus some reserve. After that, subsidize the camp outs, give to local charities, or ask the Scouts what should be done with the "extra" money.

[bluecat]

We are loath to spend the "extra money" because, first off, we want to be good stewards of the money and, second, we don't have any clue about what should be the "reserve". (The amount of the reserve is what I'm looking for guidance on...)

[SeattlePioneer]

You can always donate leftover money to your chartered organization or council.

 

But in general my aim is to spend money on the boys who earned it. Sounds like that might not be easy top do with your legacy funding.

 

 

Sounds like your aim is to find new boys --- certainly the best option. Do you have a Cub Pack or two that you get boys from?

 

What other recruiting methods do you use, and why are you having this problem?

 

 

I targeted a Scout Troop I was interested in helping build more membership 7+ years ago. I've done that by rebuilding the Cub Pack that can feed boys to the troop. The pack was down to one boy, and today we have 23, and are sending boys to two troops.

 

Not easy though!

[bluecat]

Thanks, SeattlePioneer. Yes, we are trying to up our numbers but, frankly, our troop has done a minimal job on this for quite a few years now. And now we are at that point where our small size is an obvious issue for webelos as well.

 

The SM has his hands full already. Do you think the DE is (or should be) working on this issue with us? It's almost FOS season, so I imagine we will see him again in the near future. ;-)

[fred johnson]

... Do you think the DE is (or should be) working on this issue with us? ...

 

Yeah ... NO. I'd avoid getting too many people involved. Especially professional scouters. IMHO, if they did not care enough as this built up over the years or help build it up, then they should not be involved. If you want to make a substantial FOS donation, fine. Just make the decision as a troop.

 

If you want to involve anyone, involve the charter org rep or the charter org executive. "Officially", it's the charter organization's funds anyway. The money was collected under their non-profit umbrella and it should be argued if anyone has a right, they have the right.

 

For me though, I'd keep the decision within the troop. On the other hand, if you only have three adult leaders deciding how to spend $20,000, you want to involve the charter org. You did not say the amount, but I'm just asserting an example.

 

=========================

 

​How much money should you keep on-hand? After subtracting targeted funds (rechartering, "paid" camp fees, scout account balances, etc), have enough on-hand so that you don't have cash flow problems and so that you don't go broke in the next year or two.

 

Before you figure out how much you should have, figure out your annual budget. Income: Dues. Camp fees. Expenses: Rechartering scouts and leaders. Equipment replacement. Site reservations. Special events. Awards. etc. etc.

 

In our troop, we charge $75 a year dues and $30 on average per camp out. Some more. Some less. We figure our cost per camp out and add $2 to $4 for troop extra expenses. Goal is to not lose money on a camp out, but to not profit more than $1 or $2 per scout. The annual $75 dues are to cover rechartering scouts and adults, awards and any non-camping expenses.

 

So I'd be upset if we had more than $1000 to $2000 extra unallocated each year.

 

IMHO, troops don't need a large legacy fund. If anything that can cause trouble.

 

==========================

 

One great use ... cut all camp fees for EVERYONE in half until the extra is smaller. That's the best use. Reduce camp fees.

 

It's hard to help a pack because they do not necessarily join your troop. But it could be a great recruiting incentive too. "Oh, they helped our pack ..."

 

==========================

 

I've heard of troops with tens of thousands in their checking accounts as extra. That's just dangerous and asking for trouble. It's amazing how people get bent out of shape and infer the worse of each other when large amounts of money is involved.

 

Good luck.

[Stosh]

This issue leaves a lot of open ended questions.

 

Does the money belong to the troop or the CO and by what authority does the troop have to give away the CO's money.

 

If the organization is touting itself as non-profit, what's it doing raking in a profit every year?

 

If the funds are accumulating more than needed, quit the fundraising.

 

A bank account does the program no good unless spent on maintaining and improving the program.

 

The money was a designated gift and assumed that when the donation was made it would be used in accordance to the wishes of the donor. "Hi, I'm Johnny and I'm selling popcorn so I can go to camp next summer." and then spend the popcorn money on adult training at Philmont? or gives it away to another program? That constitutes fraud.

 

If an organization has an EIN with tens of thousands of dollars in the bank, it will show up on the radar that taxes haven't been paid under that EIN and a check for tax-exempt status doesn't show on the system.... That should show up on IRS radar.

 

Saving up a bit for a rainy day doesn't mean one has to be prepared for a hurricane of the century.

 

Stosh

[meschen]

My take:

 

Assume the Troop will not fold. Continue being thrifty with the money so when you grow you won't feel a pinch. Curtail, but don't completely stop fundraising efforts so it won't be as painful to restart. Have a discussion with your CO to decide if it is appropriate to plan a Philmont type trek, but don't go out of completely out of proportion with what you've done in the past.

 

If you do fold, unless things are set up in a way that goes against BSA policy, the funds go back to the CO. They should probably look to giving it to another Scout unit, but are not obligated to do so.

 

[meschen]

If an organization has an EIN with tens of thousands of dollars in the bank' date=' it will show up on the radar that taxes haven't been paid under that EIN and a check for tax-exempt status doesn't show on the system.... That should show up on IRS radar.[/quote']

 

Banks don't report holdings (balances) only interest income and large dollar cash transactions.

 

[Stosh]

 

Banks don't report holdings (balances) only interest income and large dollar cash transactions.

 

This must be why one of our members who happens to be our city's tax lawyer told our group to keep the amount of funds in the bank low because of our tax-exempt status.

 

One always hears dialog both ways on these kinds of issues, and I just like to err on the side that will result in the least amount of damage.

 

Stosh

[Sidney Porter]

Not legal advice but this article seems to explain it.

http://www.nolo.com/legal-encyclopedia/taxes-nonprofit-corporation-earnings-30284.html

 

I have heard that non profits must spend all the money they bring in. That doesn't make sense, I assume that NFP hospitals and churches routinely save money for future expenses. In theory a a scout unit would be the same.

 

In order to jepordize the tax status the group would need to start having excessive unrelated business activities. Say a scout group decides to have a car wash for a fund raiser it would not be a problem. But it was successful, so they have another one the next weekend and the next. Then they decide that because of demand they need to be open on the weekdays. They they need to start hiring people to work at the car wash. It has gone from a fund raiser to a business.

[JoeBob]

Since a portion of your funds is credited to your legacy members, how should you spend it to honor them? I'd recommend keeping the troop alive.

Host some outrageous recruiting events. Take the Weebs go-carting, miniature golf, rock-walling, bouncey house, etc. Whatever works for your area.

Get a snake or animal expert to visit the Packs, and have your scouts go.

 

Money puts you in position to recruit in unusual ways.

[Stosh]

Not legal advice but this article seems to explain it.

http://www.nolo.com/legal-encyclopedia/taxes-nonprofit-corporation-earnings-30284.html

 

I have heard that non profits must spend all the money they bring in. That doesn't make sense, I assume that NFP hospitals and churches routinely save money for future expenses. In theory a a scout unit would be the same.

 

In order to jepordize the tax status the group would need to start having excessive unrelated business activities. Say a scout group decides to have a car wash for a fund raiser it would not be a problem. But it was successful, so they have another one the next weekend and the next. Then they decide that because of demand they need to be open on the weekdays. They they need to start hiring people to work at the car wash. It has gone from a fund raiser to a business.

 

There's nothing wrong with a tax-exempt organization running a business. It's not the activity one does, it's the way the organization is structured with the government that makes it a tax-exempt organization. In our case we are chartered by a church, so we can run any kind of fundraiser as many times as we wish because a church can do that. If our boys want to do a car wash every Sunday morning in the church parking lot after church, so be it, not a problem and not a business because the church is structured as a not for-profit business for tax purposes.

 

If a unit is using it's own tax-exempt structure and EIN number, they fall into the rules pertaining to a not for-profit business for tax purposes as well.

 

It all boils down to the combination of EIN and tax-exemption status the unit holds.

 

Stosh

[qwazse]

Get the boys and the COR around the same campfire and talk about the best way to handle this. Generally you want a one-year cushion. But, you may want to plan for some whiz-bang recruiting opportunities. Even letting it be known that you have $200 camper-ships for any boy who joins your troop this year may help bring in some families who were feeling scouting's "sticker shock."