Company Matched Donations to Troop

[YinYan75]

Hello, I am a new-ish Committee Chair trying to get a handle on fundraising/donation policies and rules and regs. We have a scenario right now where a registered parent of a scout has donated money (say $500) through a company's Charitable Matching program they have. It's a big banking company and the program is legit. They expected the money to be matched, then when the company matched it and sent a check through our chartered church to our troop as a $1000 (for example). Once the money comes to our treasurer, the parent is expecting half the money back, to be used for his son's troop activity fee, summer camp fee, etc. Kind of like an individual scout account. I have told her this is not how charitable donations work. The parent wants to tell other parents how to get this done through their company's match programs too. I thought the check would be decided on how to be used by the troops committee for the good of the troop.

I feel that they are either defrauding the company, or taking the money out of the scout's pocket once it comes back to us. It was a donation and not an investment that gets doubled. Am I right in thinking this way? Or should we be giving a percentage back to the scout that donated the money?

As far as I know, we do not have solid troop policies in place for donations and and individual scout accounts. We do fundraising activities, like car washes, chocolate sales etc. where all the money raised just goes to the troop. But I would like to put together some things in place for the parents to follow for the donations and fundraising, where we are following actual legal rules and regulations.

Thank you for your help and input!

[RememberSchiff]

@YinYan75   welcome to scouter.com

[InquisitiveScouter]

Off to a Troop meeting, but will chime in on this later.

Tread carefully...

And no, the money does not go to the Scout... yikes

 

[mrjohns2]

I am all for Scout accounts and even fund raising proceeds going into a scout account based on what they sold. What this family is saying? No, not ok. It is "over the line" for me.

[Tron]

This is not correct. Once money is donated to a unit is technically property of the unit. There are a lot of IRS rules that dance around scout accounts and if you give money back to the parent, even as a sub account/scout account line item in this nature you risk your charter organizations non-profit status due to the personal inurement regulations of the IRS.

[scoutldr]

Your Council has firm policies on fundraising and donations.  Consult your Scout Executive. What's being proposed is NOT acceptable, unless your unit is registered with the IRS as a 501(c)(3) charitable organization.  

[InquisitiveScouter]

Programs like this are indeed legit.  Do not contact anyone at council until you thoroughly understand all the info below.

OK, going through your post item by item...

"We have a scenario right now where a registered parent of a scout has donated money (say $500) through a company's Charitable Matching program they have. It's a big banking company and the program is legit. They expected the money to be matched, then when the company matched it and sent a check through our chartered church to our troop as a $1000 (for example)."

Let's verify who the actual donees are first.  To whom did the parents write their check?  Was the check made out to Troop X or some other recipient?  To whom did the Company make out their portion, AND, to which Employer Identification Number (EIN) did they credit the donation?  (This info should be on their check or the check stub (or some accompanying letter.)  These company programs may only make the donations to a legitimate 501 c (3) charity, and each charity has an IRS assigned EIN.  You can try to find the EIN / Charitable Organization using this tool: https://apps.irs.gov/app/eos/  Make sure the EIN matches the CO name.

Now, if the Bank put in the EIN for your local council, or the National council, then you have a problem.  The money then technically belongs to the council, or whoever is listed by EIN on the check.  [Your Troop is most likely not registered as a 501 c(3).  It could be.]  

Let's assume for a second that everything is as it should be... that is, 1)  Your unit is not a separate charitable org.  2) the parent check was written to Troop X, and 3) the bank check indicates the EIN for your CO.  If these are true, then that money technically belongs to the CO.  Did you or anyone inform/coordinate this donation with the CO?  Does the Treasurer for the CO understand that this donation is to be used for the Troop?   There are other details involved with this, but let's leave it at that for the moment.

What the parent proposes, giving the donation money solely for the use of their Scout, is ILLEGAL!!!  Do not, under any circumstances do this.  As @Tron points out, there is a principal the IRS looks at called Inurement (or private benefit) https://www.irs.gov/charities-non-profits/charitable-organizations/inurement-private-benefit-charitable-organizations

If your unit gives any of this donated money (either the check from the parent's or the matched bank donation, as the two amounts are "tied" together) to only that Scout, then you violate federal law, specifically the Internal Revenue Code passed by Congress.  In doing so you also would place your CO's charitable organization status in jeopardy!

One way you could use the money is to give each and every Scout an equal share of the total sum, and credit those in Scoutbook.  But, even that could present problems if the amounts are large.  The IRS has given NO specific guidance on this.  So, if the equal share for each Scout was $25, no one would blink an eye at that.  If the equal share for each Scout is $2500, then you are in troubled waters...  

Here are some related threads you might read to gain a more fulsome understanding.

If you need more specificity on this, and you are not comfortable posting information here, you may DM me...

Regards

 

[Tron]

When distributing equalized there are some dangers based on how much and to how many. At any time if 30% of net income (annual) benefits any 1 individual it violates the inurement rules (Wendy L Parker Rehabilitation Foundation INC v C.I.R). If an excess of 8% of gross revenue (annual) goes to member benefits it violates personal gain versus non-profit mission rules (Spokane Motorcycle Club V US 222 F. Supp 151 ). 
 

There are a bunch of other cases that touch on smaller amounts but you're dealing with a big dollar item so these 2 are the most probable court cases that define IRS rules that you need to be weary of.

[qwazse]

The best benefit a scout could have is lots of buddies being able to afford to join the troop.

We’d use windfalls like this to offset registration or camp fees.

You could even recognize that a particular weekend was thanks to the efforts of the family and their corporate matching program.

[BetterWithCheddar]

On 3/30/2025 at 6:38 PM, YinYan75 said:

Once the money comes to our treasurer, the parent is expecting half the money back, to be used for his son's troop activity fee, summer camp fee, etc. Kind of like an individual scout account.

I can't tell you whether this is feasible or even acceptable, but that parent is making an unusual presumption.

Of all the points of the Scout Law, I best personify "thrifty" (wife can confirm). My penny-pinching brain would never devise a rebate system where I make a "donation" to a legitimate company match program only to turn around and expect that amount rebated to personal slush fund without first consulting the other parties. I'm sorry this puts you in such a difficult position.