Scout Accounts for Individual Scouts

[Papadaddy 121]

Good point. If a Scout "earns" $500 from a fundraiser which is deposited in an account for his use, that's "taxable income" any way you look at it. A Scout is Trustworthy. Now if the funds raised were deposited into the Troop general account (which is actually the CO's account), and a single check written to pay for the troop's summer camp expenses (for example), that might be defensible. But it shouldn't be "earmarked" for specific scouts. That being said, I am just a Scouter with opinions who has done his own tax returns for 35 years...not a lawyer or accountant.

[qwazse 4342]

We see so much of the gear that scouts purchase handed down through the troop, that I don't fret over the individual SA's. I continue to see them as money over which the boys are stewards to help the troop and scouting at large.

 

Our troop benefits if boys recharter with us.

Our troop benefits if a boy comes to summer camp.

It benefits if each boy is geared up against hypothermia.

Our council contingent benefits if one of our boys can make it to jambo.

 

Now, SM_Travis' troop is hurting because it wasn't made clear to the boys (and their families, of course) that his troop would benefit from some of the funds raised being under the stewardship of the committee. (BTW, our SM just bought some plastic dinner plates for the troop mess kits -- with floral patterns that the boys just love!)

 

Hopefully, they'll be forgiving enough to make up for a few years of poor management. Really, this is nothing that can't be made right after a couple rounds of fundraising with a steeper allocation to the general fund. After that the boys will rib the adults complaining that "I had to buy a cheaper compass because y'all budgeted goofy!" "I'm hitch-hiking to Philmont" "Y'all let ___ walk of with my Seabase down-payment." etc ...

[topshot 10]

Is there some official national document that indicates you can't or shouldn't use scout accounts? We always have escrowed their money and haven't had any of the issues others have. The Scouts get 100% of their fundraising efforts. We charge an annual fee ($90 this year) and now run pay per activity in advance ($10 for food plus any other expenses) because we did have some issues when we considered the $10/month as dues with a few not paying for extended periods. So now you pay to play and only pay for those events where you attend.

[CalicoPenn 729]

Is there a National document? You mean from the BSA? I don't know but I have heard from many folks that said that their DE's and other Council folks encourage Scout Accounts.

 

If, on the other hand, you mean Federal, then yes, there is a national document - it's called the US Tax Code.

 

Let's see what the IRS has to say about it:

 

A June 2011 directive to IRS field agents issued by Lois Lerner, the IRS director of exempt organizations, stated “if a booster club confers benefits on a participant in return for his/her fundraising activities, such as crediting amounts raised by a participant toward that participant’s dues requirement, or by crediting amounts raised against the cost of a trip, the booster club is providing a private benefit to that participant. Consequently, such practices could result in the organization failing to be described in § 501©(3).â€

 

The IRS has also rejected recent applications for tax-exemption of youth athletic organizations on this same premise. Will they come after Scout units? Do you want to risk it?

 

Solution? Collect spending deficits from current Scouts. Zero out all other accounts now. Hold a couple of fundraisers (car washes, bake sales, whatever it takes) between now and Summer Camp to cover the potential cost of your "moral obligations", then never, ever, have Individual Scout Accounts again.

 

[Stosh 3452]

There's an ethical tone to this whole discussion that never gets mentioned. When people donate money to a BS troop do they know that part of their "donation" goes to the wellbeing of an individual scout? Sure, there's $10,000 in the accounts, but the troop is broke? People giving money for a particular cause really don't appreciate it being doled out to specific individuals of an organization, just consider the executive salaries for non-profit organization scandals. People who finally figure out they have been duped with their donation, they won't follow up a second time. Telephone solicitors for major causes such as Red Crosse, American Cancer Society, etc. all skim 95% of the money collected for the phone operator group and the remaining 5% to the cause. It's the biggest scam in America today. I would hate to think that BSA troops are shadowing this practice by paying their scouts to fundraise with skimmed money from the cause's profits. I really don't see a lot of honesty in the way many troops are run today.

[koolaidman 110]

Is there a National document? You mean from the BSA? I don't know but I have heard from many folks that said that their DE's and other Council folks encourage Scout Accounts.

 

If, on the other hand, you mean Federal, then yes, there is a national document - it's called the US Tax Code.

 

Let's see what the IRS has to say about it:

 

A June 2011 directive to IRS field agents issued by Lois Lerner, the IRS director of exempt organizations, stated “if a booster club confers benefits on a participant in return for his/her fundraising activities, such as crediting amounts raised by a participant toward that participant’s dues requirement, or by crediting amounts raised against the cost of a trip, the booster club is providing a private benefit to that participant. Consequently, such practices could result in the organization failing to be described in § 501©(3).â€

 

The IRS has also rejected recent applications for tax-exemption of youth athletic organizations on this same premise. Will they come after Scout units? Do you want to risk it?

 

Solution? Collect spending deficits from current Scouts. Zero out all other accounts now. Hold a couple of fundraisers (car washes, bake sales, whatever it takes) between now and Summer Camp to cover the potential cost of your "moral obligations", then never, ever, have Individual Scout Accounts again.

Calico, Thank you for the reference point. It is very helpful to have concrete evidence of the IRS's point of view. Link for those in need: http://www.irs.gov/pub/irs-tege/booster_club_field_directive_6-27.pdf

[fred8033 1592]

Ya know ... I'm not an expert but there is a way to make scout accounts work. You need to be careful though.

 

BUT FIRST DISCLAIMER. ***** TALK TO A TAX ATTORNEY *****

SECOND DISCLAIMER . ***** TALK TO A TAX ATTORNEY *****

 

 

- If you are not chartered by a non-profit, it is not an issue. BUT YOU PROBABLY HAVE A BIGGER TAX ISSUE FOR THE SALES

 

So if you are a non-profit ....

 

The IRS issue I see is the conferring private benefit.

 

- If you hold a "troop" fundraiser (jointly selling popcorn, car washes, etc), it is troop/non-profit money. You can't benefit individuals by crediting them with XX amount of the sales. That is clearly against the rules. Essentially, you can't give non-profit money to an individual because they participated in fundraising. Non-profit funds must benefit the community targetted by the non-profit. You can't benefit specific individuals.

 

- If scouts sell wreaths / popcorn and say "Would you like to purchase **** to support Troop ###?" or there is a big banner at the sale saying "Troop ### popcorn sales", then you are using the status of the non-profit to trigger sales. That is again a no no. The money earned by the sales must go to everyone the non-profit serves and can't be targetted back to the individuals that worked the fundraiser.

 

.... BUT ....

 

********

********

 

I'd like to confirm with a tax attorney that ... if a scout individually walks around saying "would you purchase popcorn? I'm raising money to pay for me to go to camp and to participate in my scouting activities." or similar, then the money is not being given to the non-profit. It's owned by the youth. It's his money ... and his tax issue if he wants to submit a tax statement ... pay sales tax ... submit a income tax return ... etc.

 

Very similar to if the scout said to his neighbor, can I wash your car or mow your yard? I'm earning money to go to camp.

 

Essentially, he's not using the non-profit status to benefit himself. It is clearly setup to benefit the specific individual. Also, it needs to be clear, the "sale" or "service" is not tax deductible.

 

********

********

 

Scout accounts can work. You just need to be darn careful.

[qwazse 4342]

I still see a scout attending camp as a service to his troop. He is volunteering his time so he can qualify to take his patrol hiking and camping. Or, he is volunteering his time and money to help other boys qualify to take their patrol hiking and camping. By having some troop funds allocated to him, he is committing to use those $$s in a way that will help the troop, and when he leaves, his stewardship stewardship of those funds is returned to the troop. Furthermore he commits to hand down gear and outgrown uniforms to scouts who need may need it more than he will.

 

That said, I do like using fundraisers to lower the cost of activities for everyone involved.

[CalicoPenn 729]

I still see a scout attending camp as a service to his troop. He is volunteering his time so he can qualify to take his patrol hiking and camping. Or, he is volunteering his time and money to help other boys qualify to take their patrol hiking and camping. By having some troop funds allocated to him, he is committing to use those $$s in a way that will help the troop, and when he leaves, his stewardship stewardship of those funds is returned to the troop. Furthermore he commits to hand down gear and outgrown uniforms to scouts who need may need it more than he will.

 

That said, I do like using fundraisers to lower the cost of activities for everyone involved.

I have to fundamentally disagree. Summer camp is an opportunity provided by the Boy Scouts to the Scout. Any benefit a Troop gets from a lad attending summer camp is incidental to the larger benefit a lad gets by attending summer camp. Scouts are the population being served by the Boy Scouts of America - let's not suggest that by being active in their Troop, they are volunteering to provide service to the Troop.

[CalicoPenn 729]

Ya know ... I'm not an expert but there is a way to make scout accounts work. You need to be careful though.

 

BUT FIRST DISCLAIMER. ***** TALK TO A TAX ATTORNEY *****

SECOND DISCLAIMER . ***** TALK TO A TAX ATTORNEY *****

 

 

- If you are not chartered by a non-profit, it is not an issue. BUT YOU PROBABLY HAVE A BIGGER TAX ISSUE FOR THE SALES

 

So if you are a non-profit ....

 

The IRS issue I see is the conferring private benefit.

 

- If you hold a "troop" fundraiser (jointly selling popcorn, car washes, etc), it is troop/non-profit money. You can't benefit individuals by crediting them with XX amount of the sales. That is clearly against the rules. Essentially, you can't give non-profit money to an individual because they participated in fundraising. Non-profit funds must benefit the community targetted by the non-profit. You can't benefit specific individuals.

 

- If scouts sell wreaths / popcorn and say "Would you like to purchase **** to support Troop ###?" or there is a big banner at the sale saying "Troop ### popcorn sales", then you are using the status of the non-profit to trigger sales. That is again a no no. The money earned by the sales must go to everyone the non-profit serves and can't be targetted back to the individuals that worked the fundraiser.

 

.... BUT ....

 

********

********

 

I'd like to confirm with a tax attorney that ... if a scout individually walks around saying "would you purchase popcorn? I'm raising money to pay for me to go to camp and to participate in my scouting activities." or similar, then the money is not being given to the non-profit. It's owned by the youth. It's his money ... and his tax issue if he wants to submit a tax statement ... pay sales tax ... submit a income tax return ... etc.

 

Very similar to if the scout said to his neighbor, can I wash your car or mow your yard? I'm earning money to go to camp.

 

Essentially, he's not using the non-profit status to benefit himself. It is clearly setup to benefit the specific individual. Also, it needs to be clear, the "sale" or "service" is not tax deductible.

 

********

********

 

Scout accounts can work. You just need to be darn careful.

Well, if he's raising money on his own, mowing lawns shoveling sidewalks, selling greeting cards, then the money he earns should go into a personal savings account that he can use for his Scouting expenses. No one will have an issue with that.

 

If, on the other hand, he's selling popcorn, or pancake breakfast tickets, or wreaths, as part of a fundraiser arranged by the unit, and he's telling folks he's earning money for HIM to go to camp, then he's raising funds under the auspices of a non-profit for personal gain, and it's not allowed. On the other hand, if he's saying he's earning money for the Troop to go to camp, then he's raising money for the Troop, and not for himself. But, to make sure the Troop doesn't run afoul of the personal gain clauses in the tax code, the Troop should, if they intend to use the money to send folks to summer camp, apportion the funds set aside for camp equally amongst all the folks going to camp, regardess of the amount of time, effort, or funds raised they may have contributed during the funding drive.

 

The only Scout Accounts that can work are those in which the Scout deposits x-amount of his own money with the Troop every week or month for the unit to hold onto for his Scouting expenses and the only way I would do that as a Unit would be with the funds deposited in a separate savings account that isn't touched until a withdraw is needed to pay for a Scout's needs. Even then, with banking laws the way they are today, I'm not even sure I'd want to take on that kind of responsibility.

 

In the long ago days, Scouts were not only encouraged to be thrifty, they had to prove it up - and maybe it's time we get back to that again. There are very few banks anymore that do the old fashioned Christmas Club account, but there is nothing that prevents us, as mentors and leaders, from telling Scouts they need to open up a savings account and bring in their passbooks every once in a while to show that they are adding funds to their savings accounts.

[howarthe 42]

I don't have any experience in this, but some possible solutions I can think of: (1) increase dues, (2) decrease the percentages allocated to the individual accounts, (3) add another fundraiser.

[Basementdweller 608]

One of the many problems we have in the public eye......We, the BSA, is always asking for money.......

[SSScout 1615]

Test the fund test.

[koolaidman 110]

For additional clarity of the IRS/scout account issue, I stumbled across this the other day: http://www.samhoustonbsa.org/my_files/unit_scout_accounts_-_national.pdf

 

It is an undated memo from national stating that allocation of fundraising proceeds to scout accounts based on units sold, or hours worked may be reportable income to the scout and may call into question the NFP status of the CO, Council and BSA.

Please don't take my word for it and read it yourself. It's not technical and it's only one page.

 

Bottom line recommendation from BSA if you wish to continue scout accounts (taken directly from the memo):

 

Units who wish to continue to offer “boy account†type plans need to

 

 

develop fund distribution plans that include criteria other than the sale of

 

 

items. These might include:

 

 

• Participation

 

 

• Leadership

 

 

• Scout spirit

 

 

• Advancement

 

 

 

 

[NealOnWheels 73]

For additional clarity of the IRS/scout account issue, I stumbled across this the other day: http://www.samhoustonbsa.org/my_files/unit_scout_accounts_-_national.pdf

 

It is an undated memo from national stating that allocation of fundraising proceeds to scout accounts based on units sold, or hours worked may be reportable income to the scout and may call into question the NFP status of the CO, Council and BSA.

Please don't take my word for it and read it yourself. It's not technical and it's only one page.

 

Bottom line recommendation from BSA if you wish to continue scout accounts (taken directly from the memo):

 

Units who wish to continue to offer “boy account†type plans need to

 

 

develop fund distribution plans that include criteria other than the sale of

 

 

items. These might include:

 

 

• Participation

 

 

• Leadership

 

 

• Scout spirit

 

 

• Advancement

 

 

 

No date, no author, no letterhead. Does not seem to be an official document. May not have come from national either. If it is an official document it was not distributed to the general membership.