SP you are treading a dangerous path refunding fundraising money to a scout from popcorn sale.

Our Pack charges a program fee to cover expenses.....every scout pays it. Covers pinewood, pack tshirt, den craft fees, blue and gold, advancement and recharter.

All fundraising goes into ISA accounts. We had a number of scouts pay for their entire year of scouts including camp outs and summer camp.

There has always been a fine line between individual scout accounts and money laundering. If people give to a scout troop, the money is to be used by the troop for their program. If people give to an individual scout, it can be used by the scout, i.e. grandma/grandpa pay for a kid's summer camp fees.

As a non-profit organization if someone gives money to it and they turn around and give it to it's membership instead of the program there could be problems down the road.

The fine line is when tents are bought are they the property of the troop or the boys? Over the line is giving boys money directly out of troop funds that they can use to buy personal scout gear.

I know there are a lot of people out there that do this, but that doesn't make it right.

Stosh

By 25% of popcorn sales, you mean 25% of the Pack's share of popcorn sales, right? You will want to make sure that the parents understand that otherwise they will expect $75 in a scout account if they sell $300 worth of popcorn rather than $25 of the $100 Pack share (assuming the split is still close to 1/3rd for each).

Rather than a cash reimbursement to the new families, you could credit their Scout Accounts that amount - better than reimbursing cash and trying to explain that if someone makes an issue out of it.

The biggest caution I have for you is the idea of transfering the Scout Account to a lad's Troop. Technically, the money you have raised for the Pack belongs to the Chartered Organization for use in the operations of their Pack. Most chartered organizations don't really want to control the funds and operate under the assumption that you can be trusted to use the money appropriately. On something like this, you want to make sure the CO is fully aware and approves of your plan to transfer money from their unit to another unit that may or may not be chartered by them. For accounting and tax purposes, this could be considered a donation from one tax-exempt organization to another. You aren't transfering a Scout Account, you are "donating" the equivalent to another organization.

The BSA does a very poor job in explaining how their units need to handle their accounting - probably because each state is different in their reporting requirements. In general though, on a federal level, each non-profit organization needs to file a federal income tax return. Technically, the money you raise as a Pack needs to be reported as part of the Chartered Organization's tax return (you shouldn't have your own - even if your Pack is chartered by a "Friends of" group, they file the taxes, not the Pack - and that's even if you have your own FEIN). Their are tax advantages to "donating" money to other units - and the CO should be aware.

You also need to make very sure that individual scout account moneys are properly accounted for and the money used just for scouting purposes - camping fees,, registration, and the like will fit that. You skate a fine line on purchasing uniforms (though if you purchase for a "uniform bank" for the Pack and lend the uniform, I think you'll be ok). Buying personal gear - sleeping bags, tents, etc. that a Scout will then keep after they leave the Pack is not recommended. The reason is that under federal and most state laws, individuals can NOT financially benefit from fundraising and buying gear that could be used outside of a scouting context could be considered an individual benefit rather than something that benefits the organization.

Now keep in mind, that's different from "awards". You could have a set limit (say $1,000 of sales) that allows a Scout to choose an award of a sleeping bag and that's perfectly acceptable. The award is considered part of the cost of doing the fundraiser. But once you put money into a "scout account", it's now separate from the fundraiser because it could be considered mixed with other fundraising funds (even if popcorn sales are your only fundraiser).

For a long time now, non-profits haven't been as closely looked at by the IRS and the states, unless there have been specific complaints or obvious evidence of fraud, but that is changing. The IRS recently purged their non-profit listing of thousands of organizations that have failed to file their returns, under the assumption that the organizations no longer exist. Their next step is going to be randomly auditing non-profits the way they randomly audit businesses and individuals. Don't put your chartered organization in a position of trying to explain something that the Pack did that they weren't aware of.

calico.....

I understand the not buying personal gear from the scout account......Could you cite a resource so I can get it corrected in our Troop.

Don't want to get the CO in trouble.

Yah, hmmmm....

Givin' a cash payment to people for selling popcorn? That's either a commission wage (in which case yeh have to comply with the child labor laws, withhold FICA, and collect tax info) or it's fundraisin' fraud. People are selling popcorn claiming that it's benefiting scouting but in fact they're pocketing a share. No different than the people who claim to be soliciting for hurricane relief but pocket the donations.

Are yeh too small for anybody to bother with in terms of enforcement? Probably. Whether "I can get away with it" is an appropriate answer is up to how yeh approach the Scout Oath and Law.

Basementdweller, the language you're lookin' for is from the tax code: "no part of the net income of the nonprofit agency may inure to the benefit of any shareholder or other individual" (41 CFR 51-4). That's in the section on qualifications of a NFP entity. In other words, any entity that allows any part of the income of a NFP to inure to the benefit of a member or individual loses its NFP status.

"Inure to the benefit of" is a legal term of art that roughly means to be of personal use or benefit. That would apply to cash as well as goods that became the personal property of a member. Yeh can see why, eh? It's a way for the individual to make personal income while avoiding tax.

Beavah
(This message has been edited by Beavah)

Thanks, Beavah.

yes thanks a million. when we created our ISA accounts we modeled it after a neighboring troop.......Oh well.

Guess we need to revisit the language on how or what can be purchased.

Hmmm. I hadn't considered the employment angle. My aim was to reimburse families for the cash they spent to join the Cub Scout program----

$5/month BSA membership and pack expenses (Sept-Dec) + $10 for a Cub Scout den book. That's $30, which could be a barrier to families in our low to moderate income area.

Last year we charged $20 for membership and pack dues in December and left it up to families to get a den handbook. A good many never did.

Any suggestions on how to accomplish the same purpose in a different way? I suppose we could award den handbooks to boys when they sold a total of $240 of popcorn, but of course some people do buy their own books, and we need to keep things simple.

Last year our 2011 BSA dues + pack dues was $5/month = $60, which was paid if a family sold $200 or more in popcorn. Most did. A few paid $60 and sold nominal amounts of popcorn.

This year I'm figuring the same $60 BSA & Pack dues. Pay cash or sell $200 in popcorn.

The question --- what then? Offering payments to Scout accounts seems like a good way to motivate parents to help their Cub Scout sell popcorn. I'm figuring paying 25% of SALES beyond the initial $200 to Scout accounts. The pack would collect the remaining 10% of sales, for a total commission of 35%.

We get usually 35% profit on popcorn sales.

We try to "give" 15% to 20% of popcorn sales to the scout, so the pack gets 20-15% to use on expenses. Depending on if we meet or beat our sales goal for the year, we vote in a leader meeting for the % to go to the scouts.

Our goal is usually $200 per boy, but we don't count sales individually. in that if you make your goal we don't reward you more or less than if you didn't make your goal, except that you get the %.

Money is set aside in a scout account with the boy's name on it but no cash ever changes hands with the parents. the scout account balance can be used for 2 things. to be used to cover all or part of the cost of your registration for the next year (we collect annual recharter fees in Nov/Dec) or to be used to cover all or part of the cost of your day camp or resident camp.

If you transfer to boy scouts, we use it to ideally pay from our pack to the council camp directly in your name, so we are still using the $ to benefit our boys going to camp, which seems part of our usual and expected expenses for the unit.

I understand that the $ paid at first seems a lot in some instances, that's why we charge $40 registration to brand new boys in August, which covers boy's life, insurance, registration, cost of initial awards until you can help us with fundraisers, and includes the cost of the handbook. sometimes we are able to include a pack tshirt in there depending on how many new boys we get at roundup and the cost of reprinting more tshirts.

For recharter we charge $48-$50(depending on whether our treasurer wants to have extra dollar bills on hand due in November after everyone has had a chance to sell as much popcorn as possible, earn their 15-20% to help offset that cost.

most of our boys cover 25-50% of their registration for the next year from popcorn sales. Included in the fee we charge is an understanding that the pack will provide your next year's handbook end of May/1st of June at no cost. We usually have a handful of boys who sell enough popcorn to cover their recharter at 100% plus have all or part of day camp covered. The unit also covers registration and day camp costs for boys who cannot afford it, and underwrites those things in some amount for all boys.

Well when we created scout accounts and instituted Program fees to cover the pack expenses we went from selling $1000 in popcorn to $11000 in on year. Most of the boys sold enough to cover the recharter, pack program fee and pay for summer camp. Our average sales went from $40 to nearly $400.

Yes it works and motivates. Just sayin.