Major Change in Chartered Organization Relationship

[GrammaScout]

What actually happens to a Troop without a Charter?  I have been told that it simply is no longer a BSA Troop.  Even with a Facilities Usage agreement....the Scouts cannot go to camps, advance, etc.   Is this correct?  Our Church Council just voted to end the Chartering with Troop 618...after 50 years but have offered a Facilities Agreement...rent free for one year...which surprised the living daylights out of all of us.  But can they 'meet' if they aren't chartered?....Once the Charter expires, then do all the gear, trailer, and funds 'owned' by this Church automatically go back to a 'non-existent' Troop or does the Council take 'ownership' ?

[jcousino]

Your last part of your question will cause the most problems as to understanding the relationship and ownership changes The council and the church will now have to agree to what happens to the equipment . The council view is that it was given in name of scout not the churches. Change from a few year back when it was fully the churches.

 

The answer to first part will the question of the year . My understanding is the the council may become to chartering organization. 

To my above , why would any other group want to take on the risk?

 

john

[fred8033]

38 minutes ago, GrammaScout said:

What actually happens to a Troop without a Charter?  I have been told that it simply is no longer a BSA Troop.  Even with a Facilities Usage agreement....the Scouts cannot go to camps, advance, etc.   Is this correct?  Our Church Council just voted to end the Chartering with Troop 618...after 50 years but have offered a Facilities Agreement...rent free for one year...which surprised the living daylights out of all of us.  But can they 'meet' if they aren't chartered?....Once the Charter expires, then do all the gear, trailer, and funds 'owned' by this Church automatically go back to a 'non-existent' Troop or does the Council take 'ownership' ?

Charter as a "Parents of" ... or "<city> scouting assocation".   Then, you are a real troop that would just meet at the CO.  No difference than before.

[gpurlee]

30 minutes ago, fred8033 said:

Charter as a "Parents of" ... or "<city> scouting assocation".   Then, you are a real troop that would just meet at the CO.  No difference than before.

Area units in our council have been told that this is no longer an option. Apparently, there are concerns about the legal standing of these groups unless they have been registered with the Secretary of State as a not-for-profit entity. This may be a local interpretation related to specific state requirements. 

In addition, consider if a major, long -established organization is reluctant to assume the liability risk of sponsorship, would a group of parents really want to assume that liability and potentially place their home and other assets at risk in today's environment? Remember that many of the current chartered organizations are dropping units because of the perception that the BSA may not provide promised insurance coverage and they potentially could be facing hundreds of thousands of dollars of unreimbursed legal expenses.

[GrammaScout]

1 hour ago, fred8033 said:

Charter as a "Parents of" ... or "<city> scouting assocation".   Then, you are a real troop that would just meet at the CO.  No difference than before.

I am told that this is not an option anymore.  And for good reason.

[GrammaScout]

34 minutes ago, gpurlee said:

Area units in our council have been told that this is no longer an option. Apparently, there are concerns about the legal standing of these groups unless they have been registered with the Secretary of State as a not-for-profit entity. This may be a local interpretation related to specific state requirements. 

In addition, consider if a major, long -established organization is reluctant to assume the liability risk of sponsorship, would a group of parents really want to assume that liability and potentially place their home and other assets at risk in today's environment? Remember that many of the current chartered organizations are dropping units because of the perception that the BSA may not provide promised insurance coverage and they potentially could be facing hundreds of thousands of dollars of unreimbursed legal expenses.

Rather extensive searches of Church/Scout History were done with former COR's, Scoutmasters, etc. and no reports of abuse or other claims were found.  We do know that this Troop does not have a sexual abuse claim made.  Thus the concern of litigation costs...but there is no litigation.  It is an unreasonable paranoia of such.  Protection of Assets of my Church is of course, important, but not for the reasons being sold.

Other Denominations have asked ... The United Methodist Church Council, for example...that the Churches just extend the Charters and wait until the end of March 2022 to determine the next steps.  Our ELCA Council basically said little other than be careful of what decision you make.   Boy, wasn't that a huge suggestion..........Our Church has given a Facilities Agreement to the Troop...no rent for a year.   That was not expected with the attitudes being shown but is something for which to be very grateful.   But again:   With no Charter, can they even meet...go to Camps,  Advance....I believe they cannot.   We suspect that many Parents/Scouts will just individually transfer to Troops who will be Chartered and this Troop will just disintegrate by natural means......But the Gear and the Trailer and the FUNDS....nothing clear about what happens there...and it should be clear.    Husband and I paid for over half of a Shed and if the Scouts cede over the rest of the 'ownership', heck we are gonna haul it out of there....ha  The Church would likely have no use for the Shed or the Trailer.....We pray for reason and ethical decisions.

 

[fred8033]

4 hours ago, gpurlee said:

Area units in our council have been told that this is no longer an option.

4 hours ago, GrammaScout said:

I am told that this is not an option anymore.  And for good reason.

Five / ten / fifteen years ago, I heard that too.  BSA wanted to move away from "friends of" COs.  This year I've seen several units re-chartered that way.  I'm familiar with the potential issues (legal, structural, etc).  I'm aware of at least three units lately that have re-chartered as effectively "friends of" or "parents of".  I'm betting if it's losing the troop or "parents of" that you will be able to charter as "parents of".  I'm not saying it's a perfect answer, but I'm betting it will keep your troop going.

Edited November 23, 2021 by fred8033

[InquisitiveScouter]

14 hours ago, gpurlee said:

Area units in our council have been told that this is no longer an option. Apparently, there are concerns about the legal standing of these groups unless they have been registered with the Secretary of State as a not-for-profit entity. This may be a local interpretation related to specific state requirements. 

In addition, consider if a major, long -established organization is reluctant to assume the liability risk of sponsorship, would a group of parents really want to assume that liability and potentially place their home and other assets at risk in today's environment? Remember that many of the current chartered organizations are dropping units because of the perception that the BSA may not provide promised insurance coverage and they potentially could be facing hundreds of thousands of dollars of unreimbursed legal expenses.

Registering in your state in part of the 501c3 non-profit establishment process.  You are creating a corporation.

The corporation is the legal entity which can own property and a bank account.  The corporation becomes the sponsor for the unit.  You will have to file several documents (for a fee, of course) to complete the process, but it is not overly complicated.

I'll ask the legal eagles to weigh in, but I understand that the assets of the corporation can be at risk, but the assets of the "officers" of the corporation are not.  If that were the case, wouldn't any and every national BSA corporate officer be at risk to lose their fortunes and property?

You place your personal assets at risk by your own intentional acts and/or negligence.  

If you want to avoid all risks associated with Scouting, then my advice is to avoid Scouting.  You bear risk as a leader when you lead a unit, no matter which corporation is the sponsor.

Here a primer on some of the issues:

https://www.nolo.com/legal-encyclopedia/nonprofit-directors-personal-liability-32357.html

This is also one of the big reasons that the bankruptcy and any lawsuits against the BSA cannot touch the pension fund...

[fred8033]

1 hour ago, InquisitiveScouter said:

Registering in your state in part of the 501c3 non-profit establishment process.  You are creating a corporation.

The corporation is the legal entity which can own property and a bank account.  The corporation becomes the sponsor for the unit.  You will have to file several documents (for a fee, of course) to complete the process, but it is not overly complicated.

I'll ask the legal eagles to weigh in, but I understand that the assets of the corporation can be at risk, but the assets of the "officers" of the corporation are not.  If that were the case, wouldn't any and every national BSA corporate officer be at risk to lose their fortunes and property?

You place your personal assets at risk by your own intentional acts and/or negligence.  

If you want to avoid all risks associated with Scouting, then my advice is to avoid Scouting.  You bear risk as a leader when you lead a unit, no matter which corporation is the sponsor.

Here a primer on some of the issues:

https://www.nolo.com/legal-encyclopedia/nonprofit-directors-personal-liability-32357.html

This is also one of the big reasons that the bankruptcy and any lawsuits against the BSA cannot touch the pension fund...

You hit on the main reason "friends of" were to be avoided.  It does take a bit of extra work.  It's easy to become a 501c3 / charter org.  The hard part is the small amount of work every year needed to stay as a valid 501c3.  Many will fail to file paperwork at some point and put their status at risk.  BUT, most scouting units are small and not targets.  ... If you wan to keep running, I think it's a good option.

[elitts]

1 hour ago, fred8033 said:

You hit on the main reason "friends of" were to be avoided.  It does take a bit of extra work.  It's easy to become a 501c3 / charter org.  The hard part is the small amount of work every year needed to stay as a valid 501c3.  Many will fail to file paperwork at some point and put their status at risk.  BUT, most scouting units are small and not targets.  ... If you wan to keep running, I think it's a good option.

Just to be a little nit-picky.  "Non-profit" is not the same as "a valid 501c3 organization".  I am the sole member of a Non-Profit LLC in my state that exists for the purpose of "owning" a set of canoes for youth group use.  But since there's no money coming in or going out, I haven't bothered obtaining the 501c3 designation from the IRS.  So, all 501c3s are non-profit, but not all non-profits are 501c3s.

You could theoretically have a non-profit chartering a troop that simply filed taxes as a non-exempt entity.

[fred8033]

51 minutes ago, elitts said:

Just to be a little nit-picky.  "Non-profit" is not the same as "a valid 501c3 organization".  I am the sole member of a Non-Profit LLC in my state that exists for the purpose of "owning" a set of canoes for youth group use.  But since there's no money coming in or going out, I haven't bothered obtaining the 501c3 designation from the IRS.  So, all 501c3s are non-profit, but not all non-profits are 501c3s.

You could theoretically have a non-profit chartering a troop that simply filed taxes as a non-exempt entity.

Agreed.  I'm betting as a LLC, you still have at least annual paperwork to keep your LLC in good standing right?  Otherwise, it can lose it's registration.  

The topic is not hard, but it's not a big easy button that once pushed it's done.  There is needed knowledge and maintenance.

[SiouxRanger]

By way of background:

States issue corporate charters to folks who want to incorporate not-for-profit corporations.  It is analogous to a birth certificate-it establishes the legal existence of the not-for-profit corporation.  There are state fees to incorporate.  Check with your state's secretary of state's office for the amount.  There will be an annual renewal fee, also.  Factor that cost in to the annual budget.

Corporations, including not-for-profits, should have written By-Laws (about 30 pages of rules governing the corporation's operations-generally only prepared once at the time of incorporation) setting forth the rules of operation:  election of directors, election of officers, establishment of bank account(s), corporate meeting schedule, etc. "Housekeeping" stuff.  The By-Laws should be in conformity with the state's not-for-profit statute.  Those statutes can be different from state to state.

Not-for-profit corporations should hold corporate meetings, and should keep corporate records of those corporate meetings which would include recording any major corporate actions taken by the Board of Directors, elections of officers and such.  It is important that those meetings be held, minutes kept, written up and entered in the corporate minute book. Failure to observe the "corporate formalities" could result in a court finding that the corporation existed only in name and not in fact, meaning that a claimant suing the not-for-profit might be able to "pierce the corporate veil," and hold the directors personally liable for the legal obligations of the corporation. This result is precisely NOT what folks want when incorporating a not-for-profit to serve as the chartering organization of a scout unit.

Applying for a tax exempt status, 501(c)(3) status, is a Federal income tax issue and separate and apart from incorporating.  It is a separate form of some length because everyone would like to be tax exempt-the form is long to ensure that tax exempt status is warranted.

The cost of all of these initial steps, were an attorney and accountant to be hired to do the work, along with the state's incorporation fees could exceed several thousand dollars.

Some folks do their own incorporations without professional help.  That is fine if doing it solely for themselves because if not done correctly, only they suffer the consequences.  But, if done for others, aside from practicing a profession without a license, if not done correctly, and others who would have been protected had it been done right, have no protection because done inexpertly, the person who undertook the work may be held liable for the damages suffered by the person who would have been protected.  Typically, when someone undertakes to perform professional services but is unlicensed is held to the standard of performance of someone who holds the proper license.

Some states may provide some statutory protection for directors of not-for-profits.  It may depend on whether the director is uncompensated for their service, or the type of not-for-profit.  Exemption from liability for officers of the not-for-profit is another legal issue to investigate.

Generally, statutory exemptions from liability extent only to negligent acts.  Intentional acts or willful and wanton acts are not exempt from liability.

Another huge problem is that a person is generally liable for their own actions.  So, someone signing off on an adult application of an adult who they know is suspect, runs the risk of being held accountable, even if they are also a director who may have an exemption from liability for other actions taken in their capacity as a director.  This a practical issue with respect to scout units because active adults generally hold several positions simultaneously. The issue then becomes was signing off on a suspect adult application their act as a director (which may afford protection), or as a unit leader (which does not afford protection)?  And further, is it an intentional or willful and wanton action that is not entitled to any protection at all?

Finally, there is the question of a unit obtaining errors and omissions insurance for as many adults and positions as possible.  Even, to the extent available, such insurance may not afford blanket protection.

As plaintiffs' attorneys' mantra is: "Sue everyone with even a remote possibility of being held liable and let the judge sort it out," means if you hold a position and there is a claim, you will be named a defendant will become entangled in a lawsuit.  If you are a named insured of a policy affording coverage for the claimed loss, you likely have coverage for the cost of your defense-your attorney's fees.  If no errors and omissions coverage, your attorney's fees are your expense.

[SiouxRanger]

Gee, a downvote for merely stating the "blackletter" (default, basic) rules of law pertaining to the formation of not-for-profits, related tax issues, and the liability protections and risks.

No opinion.  No position taken or advocated.  Just the mechanics of it all.

Like a downvote on a YouTube video explaining how to replace an oil filter on a truck.  Hmmm.

Never been a legislator, so don 't blame me for the rules.

[yknot]

3 hours ago, SiouxRanger said:

Gee, a downvote for merely stating the "blackletter" (default, basic) rules of law pertaining to the formation of not-for-profits, related tax issues, and the liability protections and risks.

No opinion.  No position taken or advocated.  Just the mechanics of it all.

Like a downvote on a YouTube video explaining how to replace an oil filter on a truck.  Hmmm.

Never been a legislator, so don 't blame me for the rules.

I thought it was an instructive post. The last point bears repeating. I was on the board of a nonprofit that was sued by a member over something fairly frivolous. While eventually dismissed, it dragged on and required taking time off work to attend court proceedings at inconvenient times and places. One thing to realize is that operating as part of a well regarded nonprofit community organization provides some cover that is weakened if you are just XYZ nonprofit. People who might be reluctant to risk community censure by suing a local church or volunteer fire department have no such compunction about suing what is essentially a group of parents they may have a personal beef with. 

 

[SiouxRanger]

On 11/24/2021 at 4:28 PM, yknot said:

I thought it was an instructive post. The last point bears repeating. I was on the board of a nonprofit that was sued by a member over something fairly frivolous. While eventually dismissed, it dragged on and required taking time off work to attend court proceedings at inconvenient times and places. One thing to realize is that operating as part of a well regarded nonprofit community organization provides some cover that is weakened if you are just XYZ nonprofit. People who might be reluctant to risk community censure by suing a local church or volunteer fire department have no such compunction about suing what is essentially a group of parents they may have a personal beef with. 

 

Thank you @yknot.

And, your last point "that bears repeating" does truly bear repeating.  Loud and boisterous fools and idiots can cause a world of pointless, expensive, and damaging rampage.

My totally unscientific, statistically unsupported analysis, (having Aced my 300 level statistics course) is that the typical spread of forum registered folks compared to unregistered folks on the forum is about 5 to 130, so about 90% to 94% of the folks viewing the posts on this forum are not registered (and that is fine).

And so I say again, chat and discussions among registered posters is not a MOVEMENT.

If this forum does not create a political force which affects National bankruptcy, then why have we all bothered?

95%± of the folks who view this forum do not comment and their views are unknown, and I encourage them to register and let us know what they think.

(And @Mrjohns2 and @qwaze, perhaps you might consider stating the basis of your downvotes, to which I will respond.  And please mention the law school of your J.D. Degrees and state of license, mine being the University of Illinois, College of Law, Champaign, Illinois, licensed in Illinois since 1977.)