Chapter 11 announced

[Eagle1993]

4 minutes ago, 5thGenTexan said:

I don't know how things are other places so, this may be just applicable to my council.

 

I am a bit concerned about our Camp Rangers when properties may be sold off.  I think all of our rangers live on site in homes owned by the council.  Not only will they lose their jobs, they will also lose their homes.

I think this is very common.  I know the 3 camps we utilize all have ranger homes.  Those guys aren't the ones making 6+ figures.  Most of the rangers I met are great people.  Incredibly sad if they lose their job and home.  

[ThenNow]

39 minutes ago, CynicalScouter said:

Both. It is both core and it is restricted.

This may help explain restrictions, at least a bit. I don't understand the history and structure of the entity created to hold the property or the deal with the note. It goes to the argument for and against it being restricted and assume it is at the center of the push/pull between the BSA and TCC. 

On the creation of the entity and note, I'm wondering if both were a strategic mechanism to distance the BSA from imposing the restriction on their own, through a legal structure that looks like the "donor" imposed the restriction. Again, I am shooting in the dark...

Generally, funds are ‘restricted” when a donor places restrictions on their use.  Typically, there are two types of restrictions—permanent or temporary. 

Permanently restricted funds are those for which the donor says the recipient must retain the assets permanently but may spend some or all of the income for specified purposes.  The Uniform Prudent Management of Institutional Funds Act, adopted in some form in all states except Pennsylvania as the successor to the Uniform Management of Institutional Funds Act, has separate rules for handling this type of funds, which it calls “endowment.”  (See Ready Reference Pages:  “UMIFA Sets Rules for Charitable Endowments” and “New UPMIFA Sets Rules for Management of Charitable Funds.”)

Temporarily restricted funds are those for which the donor says they must be used only for a specific purpose or after a certain period of time.  The income from permanently restricted funds will be considered temporarily restricted if the donor requires that it be used for certain purposes.  Your question implies that the funds solicited at the event will be temporarily restricted for a certain purpose.

The key to restriction is that it must be donor-placed.  Boards, acting alone, cannot normally create legally enforceable restrictions.  If, however, a charity solicits funds for a specific purpose, it is generally believed that gifts made for that purpose become restricted for that purpose because the donor, by contributing for the purpose, has adopted the restriction. 

Most charitable solicitation registration laws (and other state consumer protection laws) require a charity to use funds for the purpose for which they are solicited.  That is one reason why solicitations ought to include broad charitable use language as well as specific intent.  If you get more than you can use, or if the project changes, you can still use the funds for general charitable purposes.

https://www.nonprofitissues.com/to-the-point/what-court-cases-or-irs-rulings-if-any-define-restricted-funds

Edited March 4, 2021 by ThenNow
Link to source

[InquisitiveScouter]

5 minutes ago, ThenNow said:

Most charitable solicitation registration laws (and other state consumer protection laws) require a charity to use funds for the purpose for which they are solicited.  That is one reason why solicitations ought to include broad charitable use language as well as specific intent.  If you get more than you can use, or if the project changes, you can still use the funds for general charitable purposes.

Just curious...when you make a donation and wish to earmark it specifically, with what document is this done?  A simple letter??

And this is why councils love FOS and the "$1000+ Knot" (James E. West Fellowship).  Income which is purely discretionary for them.  A council employee (involved with the money) once told me they frown on restricted donations, and that councils earnestly seek ways to work around them to get that "fiduciary monkey" off their back. 

[CynicalScouter]

2 minutes ago, InquisitiveScouter said:

A council employee (involved with the money) once told me they frown on restricted donations, and that councils earnestly seek ways to work around them to get that "fiduciary monkey" off their back. 

Yes, unrestricted money is much more difficult to work with. For example, let say someone donates and puts on a requirement that is be used EXCLUSIVELY for Varsity Teams. Now on paper people say "Council's rolling in money!" when in fact all that money is tied to Varsity Teams. And what happens when Varsity Teams cease to exist? Or there is a POT of money and only 1 Team left?

Then you get into a messy area of law called cy pres where you have to go to court and convince a judge to bend "Varsity Teams" to mean...something else?

I mean people want to fund THEIR pet project/THEIR pet program vs. general overhead.

[ThenNow]

18 minutes ago, InquisitiveScouter said:

Just curious...when you make a donation and wish to earmark it specifically, with what document is this done?  A simple letter??

Not being an NGO attorney, but having been an Executive Director of one and an associate pastor of another, this is a sticky wicket of issues and mechanisms. For this purpose and often with this type of thing, it's by way of a restricted deed or reversionary clause, though the latter may negate the gift as tax deductible. Not my area, to restate. Maybe another member is better educated in this. 

One thing that muddles the area of earmarking and directing funds is there are "advised" donations and "restricted." Back when, we used to call the former "allocated" donations. This may help with these two categories:

Donors advising on the use of their donation sounds relatively the same as donors restricting the use of their donation, doesn’t it? These are actually very different concepts. Donor advised funds are separately identified accounts that are maintained by a public charity. After the donor makes an unrestricted donation to the donor advised fund/account, the charity has legal control over it. However, an arrangement or agreement has been made between the charity and the donor, where the donor retains advisory privileges on how those funds should be used throughout the existence of that separate account. A donor advised fund tends to be more of a long lived account that receives donations and from which disbursements are periodically made. Even though the donor can advise on the use of the funds, the charity still has the ultimate authority on the use, with the responsibility of ensuring that the use meets the tax exempt mission of the charity. Donor advised funds are carefully watched by the IRS due to past abuse with these funds where the donor essentially has control over the use of the funds, and then uses those funds in a way that results in an economic personal benefit to the donor, while the donor still receives a tax deduction. A charity can actually lose its tax exempt status if an individual uses the charity in some way in order to attain a personal benefit.

A restricted donation relates to a specific donation, rather than relating to a separate account set up specifically relating to one individual donor’s donations. A donor places either a time or purpose restriction on one specific donation, which is received by the charity and usually pooled into the general operating or investment accounts of the organization. The charity has the responsibility to use the donation in accordance with the donor’s wishes, but after the donor makes the donation, the donor generally does not have any further involvement and does not have any ongoing advisory privileges.

There is sometimes a misconception that a restricted donation can be made to a tax exempt entity, with the donor-restricted purpose naming an individual to benefit from the donation. Under IRS rules, no tax deduction is allowed if there is a direct personal benefit to the donor or any other person. Also, as mentioned above, a tax exempt entity is at risk of losing its tax exempt status if a personal benefit transaction occurs. For example, if a charity has a scholarship program, there should be an unbiased selection process as well as a conflict of interest policy to prevent personal benefit transactions from occurring.

https://www.hhcpa.com/blogs/non-profit-accounting-services/what-is-the-difference-between-donor-advised-funds-and-restricted-donations/

Edited March 4, 2021 by ThenNow
Link to source

[Eagle1993]

Found this from earlier in this thread.  Has BSA provided this information?  It sounds like this talks to the points @ThenNow is making.  

The TCC needs the Restricted Asset Information to assess the factual and legal basis for any claimed restriction for the purpose of making an accurate financial assessment of each Local Council. Determination of whether donor-restricted assets should be excluded from a financial analysis is complicated, and may require some or all of the following information:

 The donor or source of the asset;

 The identity of the initial recipient of each asset;

 Whether the recipient entity was independent from BSA or was a trust for which the trustee was unrelated to BSA;

 The source, manner, and timing of conveying any alleged donor restriction;

 The nature and specific language of such alleged donor restriction;

 Whether the donor restriction expressly indicated that BSA or its related party was to hold the asset in trust;

 The type of asset (e.g., cash or real property);

 How the assets were and are now held; and

 Whether the assets were commingled or transferred or spent such that their continued existence cannot be proven.

[ThenNow]

2 minutes ago, Eagle1993 said:

 The donor or source of the asset;

 The identity of the initial recipient of each asset;

 Whether the recipient entity was independent from BSA or was a trust for which the trustee was unrelated to BSA;

 The source, manner, and timing of conveying any alleged donor restriction;

Exactly. Thanks for this.

[Eagle1993]

Looking through the claims, GSUSA is asking for $8.4M and BSA's offer is $50K.  

[ThenNow]

29 minutes ago, Eagle1993 said:

Has BSA provided this information? 

Per the statement from the TCC, I believe the answer is an emphatic, "No!"

If an artificial structure was used to restrict the property in question, it is the same sort of thing that's been going on with transferring real property and liquid assets to trusts, as called out over the summer. You know I am on the "side" of claimants, though not seeking the demise of Scouting, but this sort of stuff was bound to bite back and damage the entire process. The transfers are particularly obvious and onerous, smack in the middle of the reorganization and in the nick of time before the mediation/negotiations started. All this went on in front of God, country and the judge, not to mention the TCC and claimants. It not only looks terrible, but makes us suspicious and mindful that games are being played for the obvious purpose of hiding asset, regardless the reasons given. Ack.

Posted by MYCVAStory, I believe:

The plan seeks to force abuse survivors to release the Boy Scouts Local Councils even though not a single local council has filed its own bankruptcy.  Throughout the BSA bankruptcy case, the TCC, as a fiduciary for all abuse survivors, has sought complete disclosure of the local councils’ assets and liabilities to ensure they provide, as they must, adequate compensation in exchange for release of the sexual abuse they are trying to avoid. “Getting information from the local councils has been an uphill fight” observed Douglas Kennedy, co-chair of the TCC, adding “they want to force us to release the local councils but have not provided the financial transparency that is necessary for survivors to make an informed decision on whether to release the local councils where the majority of the abuse occurred.”

[ThenNow]

29 minutes ago, Eagle1993 said:

GSUSA is asking for $8.4M and BSA's offer is $50K.  

I guess there's something to be said for consistency. Well, it may be misapplied here.

[walk in the woods]

8 hours ago, ThenNow said:

I don't know the detail or if there is anything substantive involved, but doesn't National present an annual report to Congress on the state of Scouting? (I've often wondered why/how the matter of the abuse has been avoided in that discussion, but that's another point.)

It's in the Annual Report, well, the Treasurers Report.  Here's the report from 2017 (the most recent one I could find) https://www.scoutingnewsroom.org/wp-content/uploads/2018/06/Treasurers-Report-2017-Final.pdf.  If you read down to the Contingencies section on Page 22 you'll find this:

Quote

The National Council maintains insurance for various types of damages, including general liability losses. Depending on the policy terms, a portion of the potential claims, representing deductibles or aggregate excess limits, are selfinsured by the National Council. Reserves are maintained for estimated self-insured losses.

The National Council has been named as a defendant in several lawsuits alleging inappropriate conduct by local council employees or Scouting unit volunteers, including allegations of conduct that did not occur within Scouting and allegations of incidents dating back as far as the early 1960s. The National Council is also aware of threatened and expanding litigation of a similar nature. Most of the cases claim specific amounts of compensatory damages and, in a few cases, unspecified amounts of punitive damages.

There continues to be additional lawsuits filed alleging sexual abuse, including claims for punitive damages. The National Council could be required to pay damages out of its own funds to the extent the claims are not covered by insurance or if the insurance carriers are unable or unwilling to honor the claims. Based upon the nature of and management’s understanding of the facts and circumstances that give rise to such actions and claims, management believes the reserves established by the General Liability Insurance Program of the National Council are sufficient to provide for the resolution of these lawsuits. However, in the event the General Liability Insurance Program or its reserves are insufficient to resolve such claims, it is the opinion of the National Council that the total amount of payments to resolve current and future claims could have a significant impact on the financial position or results of operations of the National Council in the future.

 

[Eagle94-A1]

3 hours ago, Eagle1993 said:

Looking through the claims, GSUSA is asking for $8.4M and BSA's offer is $50K.  

BSA is being generous IMHO. I would give them nothing since they deliberately called themselves Scouts and not Guides to piggyback on BSA.

 

[Eagle94-A1]

If memory serves, individual councils paid insurance premiums to National, so National would be on the hook for claims.

[Eagle1993]

11 hours ago, Eagle94-A1 said:

If memory serves, individual councils paid insurance premiums to National, so National would be on the hook for claims.

I think that is one of the debates in the courts.  To me, this is the #1 question on the table.  How liable are our local councils? 

My understanding that if the court determines that LCs are separate and there is no negotiated settlement, lawsuits could start against COs and LCs.  Then, the state court where those lawsuits are brought would determine liability on a case by case basis and results would follow state law.  If these cases then drive LCs into bankruptcy court, that court would take over for each LC.   I wouldn't be surprised that councils in certain states would end up in bankruptcy court if there is no settlement.  

[scoutldr]

That would make sense, since I assume the vast majority of alleged crimes took place at the local level, not in the corporate offices of BSA, Inc.  (with the exception of National-owned properties, i.e. Philmont, etc).  I have always heard that our scout Reservation was donated to our Council in 1958, and the deed specifies that if it is ever no longer wanted/needed, the deed is to revert back to the family.  Not sure how true (or legal) that is...could prove interesting.  It is prime waterfront property and a former plantation, so is worth millions.