Moving away from ISA’s

[Jeff5521]

For an individual activity, I would have a portion (we do 15%) of the receipts (which is around 25% of the profit) go to Scout Accounts.  By my estimate 25% of the profit goes to the unit and the remaining 50% goes to National/Council.  One of the problems in the Capital Gymnastics Tax Court case was that the benefit was dollar for dollar and no money whet to the general organization.  We also have a threshold that you have to sell a certain amount ($100) before you get a percentage.  If you do that, I think (for what my opinion is worth) you can apply the amount credited to the scout (the 15% of proceeds) toward camp and charge the parents for the rest.  Here there is a private benefit that arguable is insubstantial based on the unit and chartered organization's operations.

 

If you do a fundraiser like a pretzel or doughtnut sale to fund a specific activity -- like a high adventure trip -- I would require everyone going on the trip to participate (e.g. everyone has to spend an hour either setting up, running the sale or cleaning up) and split it among those going on the trip.  Under this scenario, all of the profits go to the troop to offset everyone's cost of the trip (resulting in no private benefit).

 

 

I understand all of the general fundraising and agree I just get hung up on popcorn.  Some of our scouts go out and sell, some of our scouts do not the the extra time to sell.   The parents of scouts that do not sell are happy to just write a check for camp fees.  However the parents of the kids selling popcorn are expecting the commission to pay down their scouting expenses.   Perhaps we need to reset that expectation, however I can guarantee this will end popcorn sales for us. 

 

Perhaps we could say all popcorn sells go into a campership fund and the any parent can apply for a scholarship from the fund? 

 

Also if this makes a difference for Scout accounts we are talking about an entry on a spreadsheet not an actual bank account.

Edited October 15, 2015 by Jeff5521

[Krampus]

I would encourage us to stop this tread because there is tons of wrong information being spewed about here and the average parent or scouter is going to read this stuff like it is the Gospel. The law is vague at best. At worst it is down right contradictory.

 

Let's just drop this issue and leave a big sticky note that tells people to get with their COR and CO to determine how to handle any unit finances. There's clearly no one here who should be giving tax advice because everyone commenting thinks they know the "right" answer. No offense folks, but we've been around the horn on this a few times and we've seen no definitive answer to the question.

 

I know folks are well-meaning but we will never agree until either BSA or the IRS step in and show us the EXACT wording that says we can or cannot do (x).

[hicountry]

I'm more about doing the right thing than doing things the right way. Lord knows there are enough rules/laws guidelines and some simply run contrary to what we are trying to do or make it 10 times more difficult to get from point a to point b. If a scout is active fundraising and it saves his parents from writing a few checks I don't see that as a personal benefit, it is not like he is allowed to go buy camping equipment or even uniforms, it covers his cost for a troop 2 night weekend campout, not enough for anyone to break a sweat.

 

Jeff, the problem really kicks in with the families that not only don't help with fundraising at all but also don't write checks and have to be chased around for a check to at least pay their debit back up to zero.

 

All anyone doing an audit is going to see is one account with funds inputting from donations, checks from parents, fundraisers etc. On the back side there are debits for badges, summer camp, local campout associated costs, troop gear repairs or replacement and such. Nice and tidy and clean.

 

What cannot be seen is the scouts that had to be told you can't go on a given campout as your "account" is zero or below, pay up, or the checks that parents wrote to boost their scouts "account" to provide enough so that scout could camp as his "account" was getting in bad shape. All the spreadsheet we kept on the side was, is a "scorecard" of who has use of what portion of the funds that resided in the pot. The individual tabs in the spreadsheet per scout allowed me or the treasurer to show we were good stewards of the funds and precisely how we got to where we were, honesty through transparency. If Sam parent writes the troop a hundred dollar check to cover his scouts troop campout costs in advance for a good portion of the year, is it fair to see his son get 60 bucks of benefit and give 40 bucks of that to some other scout who doesn't fundraise and who's parents has to be badgered to cough up an occasional check ? Then if Sam parents scout son raises $100 in commission from some fund raiser as his portion of what he helped contribute, why should he only get $60 of that benefit and some other scout who couldn't be bothered receive $40 of benefit from that ?

 

As I noted, when I took over the troop there was a problem regarding all this and we set up this accounting to fix it and it did. There was the one account with funds coming in and expenses going out but the account amount began to decrease alarmingly about 9 months in. We were asking parents in general to kick in funds and some got a little hot when revealed they had written decent checks already or had fundraised a boatload to cover their kids campouts already and why were we short so we looked into it.

 

Same old problem, had a significant number of scouts that were attending campout after campout (Troop weekend deals) and didn't raise one lick of funds and parents never bothered to write a check, the net expenditures were outstripping the incoming funds so we came up with the spreadsheet scorecard and put and end to that nonsense. The freelaoders were sucking up the resources put in by others.

 

Year two I had many private conversations with parents, many were good friends and got in their face and to the point at times. Told them your son isn't doing anymore campouts till you pony up a check, which of the other parents in the room do you wish to go up to and ask them if they will help fund your kids expense. Still took up to 6 months sometimes to get some of these folks to cough up money and I am talking abut parents who could very well afford to stroke a check for 60 or a hundred bucks.

 

Until you show you can account clearly for things, people will continue to take advantage of you. The fundraising for the general troop doesn't work in the real world, the 10-15% of the kids in the troop who work at a fundraiser see the lazy kids who never help getting the same benefits they are, doesn't take long for the worker bees to decide to do nothing and get benefits just like their lazy scout friends and thus fundraising falls off to zero.

 

No one is getting arrested at no score, no one loses feel good youth league for keeping track of the score on a scrap of paper and no one is going to get in trouble for keeping score of what portion of a pot of money is attributed to certain people. I know from experience, NOT keeping track of who is responsible for exactly what portion of that pot of money causes troop financial problems and gets you a lot of grief from some scout families who earned a whole lot better.d 

[SeattlePioneer]

<<I apologize if I came across as saying you were dishonest.  I don't know you and can't make that judgment.  I was reacting to what I sensed was an "I'll ignore the law if I don't agree with it" attitude.  I realize that you were ignoring my advice which you didn't think had much weight coming from an anonomous Hedgehog on the internet.  That's understandable.

>> 

 

 

One of the reasons for lengthy threads is that people may actually start understanding one another.  It's pretty common to wind up talking past one another repeatedly!

 

<<1.  All funds are in kept the unit's name.

2.  Funds can only be transferred between units within the same chartered organization

3.  Only a portion of the proceeds should be set aside for the scout engaging in the fundraising activity if the fundraisesr is for general purposes.  The rest should go to the unit (or if it is popcorn, a portion also goes to national/council)

4.  If the fundraiser is for a specific trip (Philmont) have the activity be something that everyone can (and is encouraged if not required to participate) in and apply the proceeds equally to reduce everone's cost.

5.  If a scout's family is financially challenged, it is ok to provide them with additional assistance

6.  Scout Accounts can't be used to for personal purchases such as backpacks or hiking boots or ever given to scouts when they leave.

7.  Scout Accounts can be used to fund Eagle projects

8.  Incentives are permissible as a cost of sales -- be them at the National, Council or unit level.  >> 

 

 

 

Interesting set of suggestions.

 

2)  When Cub Scouts graduate into Boy Scouts,  I will pay out money from accumulated ISA for  troop membership,  activities, outings, camp and such.   The family just needs to provide me with receipts for their payment,  or something like a bill from the Scout Troop if we're going to pay for summer camp or whatever.

 

Does that sound like a reasonable practice?

 

 

The rest of the rules we either comply with or they don;t really apply to the popcorn sale.

[Jeff5521]

I'd like to say this thread has been very useful to me.  I just took over as treasury for a troop that had very little record keeping.  Between rechartering, banking issues, re establishing dues, budgeting, etc it is like "drinking from a fire hose" as we like to say at work.

 

Great discussion, thanks!

[Hedgehog]

I understand all of the general fundraising and agree I just get hung up on popcorn.  Some of our scouts go out and sell, some of our scouts do not the the extra time to sell.   The parents of scouts that do not sell are happy to just write a check for camp fees.  However the parents of the kids selling popcorn are expecting the commission to pay down their scouting expenses.   Perhaps we need to reset that expectation, however I can guarantee this will end popcorn sales for us. 

 

Perhaps we could say all popcorn sells go into a campership fund and the any parent can apply for a scholarship from the fund? 

 

Also if this makes a difference for Scout accounts we are talking about an entry on a spreadsheet not an actual bank account.

 

Jeff:

 

As long as popcorn is in line with the guidelines I posted above (only a portion to the scout -- some to the unit and some to council/national) , it should be OK because the benefit is arguably insubstantial. I think you idea of a campership fund is good... unless the only people who get camperships are those that did the fundraising -- then it just looks like a subterfuge (or as the IRS sas, form over substance).  The private benefit is still there is the "account" is a spreadsheet divying up the amounts in the Troop's account (see above posts for secondary analysis on substantiality)

 

I'm more about doing the right thing than doing things the right way. Lord knows there are enough rules/laws guidelines and some simply run contrary to what we are trying to do or make it 10 times more difficult to get from point a to point b. If a scout is active fundraising and it saves his parents from writing a few checks I don't see that as a personal benefit, it is not like he is allowed to go buy camping equipment or even uniforms, it covers his cost for a troop 2 night weekend campout, not enough for anyone to break a sweat.

 

***

 

No one is getting arrested at no score, no one loses feel good youth league for keeping track of the score on a scrap of paper and no one is going to get in trouble for keeping score of what portion of a pot of money is attributed to certain people. I know from experience, NOT keeping track of who is responsible for exactly what portion of that pot of money causes troop financial problems and gets you a lot of grief from some scout families who earned a whole lot better.

It really doesn't matter if you think there is a private benefit. Rather it only matters if the IRS thinks so.  Any scout account is a private benefit based on my interpretation of the statute, regulations and case law.  As discussed above, even if there is a private benefit it is permissible if it is insubstantial.

 

Tax exempt organization have lost their tax exempt status for having individual fundraising accounts.  So you won't be arrested, but your chartered organization's tax exempt status could be in jeopardy.

 

One of the reasons for lengthy threads is that people may actually start understanding one another.  It's pretty common to wind up talking past one another repeatedly!

 

***

 

2)  When Cub Scouts graduate into Boy Scouts,  I will pay out money from accumulated ISA for  troop membership,  activities, outings, camp and such.   The family just needs to provide me with receipts for their payment,  or something like a bill from the Scout Troop if we're going to pay for summer camp or whatever.

 

Does that sound like a reasonable practice?

So, in my view, there is a private benefit (which would be the same as if it reduced fees for a Cub Scout campout).  It is much better that the pack is paying an expense rather than giving it to the scouts and saying "I hope you use it for something scout related."  If the troop is part of the same CO, there is no problem in transferring funds (the Pack's funds belong to the CO and the Troops funds belong to the CO because the CO "owns" both of them).  If it is not part of the CO, I think that the expenditure is consistent with the pack's mission to develop youth though scouting -- after all, most packs are viewed as sources of boy scouts.  But this is a grey area.  In the Bryan on Scouting post, http://blog.scoutingmagazine.org/2014/12/03/individual-scout-accounts/it said:

 

“If the unit is part of the same chartered organization, I certainly see no problem with that,†McGowan says. “The chartered organization owning both units, no problem. If we now talk about changing chartered partners, the IRS has not issued any guidance.â€

 

Sorry I couldn't be more definitive.

[5yearscouter]

We were going to change from scout accounts to a scout bucks prizes for fundraisers program.

Sell within a certain range of popcorn and get a coupon for a campout,

a higher sells numbers get a coupon for x% off summer camp.

a certain range of sales, pays for your recharter for the year.

 

 

so like sell $100-$200 in popcorn and get a campout coupon

post flags for our flag program fundraiser and get two free campout coupons

sell $250-400 get recharter paid

sell $500 and get $100 off of summer camp.

It was also going to include  advancing in rank, get a free campout coupon,

Getting chosen for a por and going to tlt get a free campout coupon.

Highest attendance at meetings, get a free campout coupon.

and maybe a couple other things.

With off the top of profit at least x% going into the troop account general fund

and x% going into a campership fund that would award things like free campout coupons.

of course one of the questions will be have you participated in the fundraisers, but also advancing, pors, and family need levels.

And that the troop would toss in a few of the coupons for door prizes for attendance at court of honors and service projects just for fun.

 

The idea is that the reward/benefit would not be determined only by how much popcorn you sell,

and that a reward/benefit can be earned without participation in the fundraiser itself.

But that if you do participate extra in the fundraisers, you could "earn" more and help pay your way to camping.

It would be more work for someone to track at least at first, but once the certificates were passed out it would be up to the boy/family to keep track of

 

Then our CO said they didn't think it was a problem and to continue what we are currently doing. Our CO is a small non-profit with express purpose of keeping up our local scout lodge and supporting local packs/troops.

 

We sell over $20k in popcorn and scouts "earn" 35% profit.,

but we also get about $9 k a year from our troop flag fundraiser and only about 10% of that goes out to the youth as reward for working the program.

Right now all profit from popcorn goes to the scout, he can use it on campouts, summer camp, recharter, food for campouts, uniforms, hiking boots, etc etc.  And if we go skiing, he can use the $ to pay for his family's costs if it's designated a family outing.....

And when he changes troops he can take the money with him even if it's a different CO.  It sure looks like a bad case of private benefit and not enough other funds in the CO so that it's insubstantial amount.  But I'm not a tax lawyer.