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Decisive answers to questions about Scouting finances can be difficult to find. While researching an answer to an email question I found this PDF document: Fiscal Policies And Procedures For BSA Units dated August 2013, that provides answers to most common Scouting financial questions.
The short story is there are very specific policies that are applied in concert with national, state, and local laws. Every unit committee should review their practices and make sure they align with the policies described.
Here’s are the questions with excerpts of the answers:
Should our unit have a checking or savings account?
Yes. Unit funds should be deposited in a checking or savings account that requires two signatures on every check or withdrawal. The unit leader could be one of the signees, but it is recommended it be a committee person. It could be that the unit leaders have a petty cash fund (with the limit set by the committee) that is accounted for with receipts each month.Does a pack or troop need its own tax identification number? If so, where do we get it?
All units need a tax ID number (also referred to as an “EIN”—Employer Identification Number). Units should NOT use the Social Security number of an adult leader. If they do, the IRS will attribute all banking transactions, unit purchases, etc., to that leader as an individual. Units may use the tax ID number of their chartered organization, if given permission. This may be especially useful for the unit if that organization is tax-exempt. Most units obtain their own tax ID number by completing IRS Form SS-4. There is no fee involved. The current form and instructions are available on the IRS website (www.irs.gov). Also, the IRS now allows you to provide the information over the phone and immediately receive a unit EIN. The IRS phone number is 800-829-4933.Who is responsible for the finances of the unit?
The unit committee is responsible for the unit’s finances. A treasurer is assigned and the committee chair should receive the bank statement for monthly reconciliation.Should our unit consider insuring our unit equipment?
Yes. It is suggested that your unit insure its equipment.Can our unit deposit funds with the local council?
Yes. Most councils allow units to deposit funds to their credit in the council service center, thus
making it convenient for units to make purchases without sending cash.What happens to the unit funds and equipment should the unit dissolve?
In the event of the dissolution of a unit or the revocation or lapse of its charter, the unit committee shall apply unit funds and property to the payment of unit obligations and shall turn over the surplus, if any, to the local council. In the case of a chartered organization, any funds or equipment that may have been secured as property of the unit shall be held in trust by the chartered organization or the council, as may be agreed upon, pending reorganization of the unit or for the promotion of the program of the Boy Scouts of America.When should our unit submit a BSA Unit Money-Earning Application?
For all unit fundraising. All unit money-earning projects must be approved in advance by using the BSA’s Unit Money-Earning Application. Approval must be made by the chartered organization and the local council.Is our pack or troop considered tax-exempt by the IRS?
That depends on who charters your unit. The only time a unit can be considered “tax-exempt” is if its chartered organization is also tax-exempt and includes the unit.What is IRS Form 990-N and does our unit need to file one annually with the IRS?
The BSA national office consulted with the IRS and outside counsel about whether this filing requirement applies to Cub Scout packs, Boy Scout troops, Venturing crews, and other units. In their opinion, most Scout units do not have to file Form 990-N. For most units, no filing is required.Can our pack or troop be covered under the BSA’s group exemption?
No. The IRS allows only local councils (and council trust funds) to be included under the BSA group exemption.A volunteer suggested that our unit apply for its own tax-exempt status. Can we?
Units should not incorporate or apply for their own tax-exempt status.We can’t solicit gifts for our unit?
Units, unit leaders, and youth members may not solicit gifts in the name of Scouting or in support of unit needs and activities….Does that mean people can’t make gifts to our troop?
Units are not supposed to solicit gifts, but they can receive gifts. Anyone can contribute to a Scout pack, troop, or unit—and many donors don’t need or care about charitable deductions. Obviously, defining a “solicited gift” is not always easy. But we rely on our unit leaders to set good examples and honor the intent and spirit of these important guidelines.Can gifts go to the local council to benefit our unit, then “pass through” the council to us?
No. Your unit “belongs” to your chartered organization, not to your local council.My local company has employee volunteerism grants and will contribute to charities where I volunteer my time. Can these gifts go to our unit?
Employee incentive awards and volunteerism grants usually cannot go to a pack, troop, or unit due to the company’s giving restrictions.Can my unit credit amounts from fundraising to an individual toward their expenses?
No. The IRS has stated that crediting fundraising amounts constitutes private benefit. However, the unit could use the funds (all or a percentage) raised to reduce or eliminate dues and various registration fees, purchase uniforms and Scouting books, and purchase camping equipment. The unit could also use its funds to provide assistance to individual Scouts in cases of financial hardship.Are purchases by my unit exempt from sales and use tax?
State and local laws vary widely on this topic. The unit may qualify for a number of state and sales tax exemptions as a nonprofit organization under your state laws. Check with the state where you are making the purchase; this varies widely across the country. In some cases, the council may be issued certificates of sales tax exemption; others require only that verbal verification be made to the merchant at the time of purchase that the purchases will be used to benefit the programs of Scouting, while still others allow no exemptions for any not-for-profits.
Don’t take my word for it! Make sure to confirm these things with your local Scouting officials. If you learn something that contradicts or expands on any of this information be sure to let me know!
It sure is. And the IRS stance on this is confusing, and potentially contradictory, as well. For instance, the IRS allows for incentives as a part of fundraisers as a reasonable part of doing the fundraiser. So, in may sales including the BSA Trail’s End, boys can actually get gift cards as a prize which are essentially cash. That would certainly seem to me to be a “private benefit.”
What the IRS is trying to disallow (and again I’m not a professional) is the creation of large “booster club” programs, or situations where people essentially create employment for themselves through fundraising, where customers believe they are supporting the greater cause of scouting in contrast to Johnnie’s upcoming camping trip. But since they can’t write a rule with that amount of grey in it, they write a black-and-white rule and then deal with the grey areas through non-enforcement.
I think you are going to get some passionate responses to this and some good arguments about being “thrifty” and paying your own way, which I agree with. However it doesn’t change the fact of the rule.