BOY SCOUTS OF AMERICA

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Scouts individual accounts and use/tracking of funds

Hello Everyone,

I am new to Scouting and have stepped into a treasure role with my son as a new Wolf. This year is the beginning of our first year together and we are just about to wrap up Popcorn sales next week. Part of what was agreed upon was that a percentage of the sales commission would be used for Pack expenses/events and the remained held for scouts to use for Scouting expenses (Uniform, Scout Handbook, or events). We already have a family that is looking to use those earned funds towards the purchase of a uniform. Writing someone a check is out of the question, so how can we make sure that the funds that are being used are only for said item, ie. uniform? How are others doing this. Also, right now we are keeping track of all the Scouts “credits” per-say in a spreadsheet ledger. How is everyone keeping track of what credits are “consumed” by the scout? Another ledger or transaction sheet?

Sorry for all the questions. This is all very new to me. :slight_smile:

Thanks,
Ken

I can only go from my experience. First off this is an IRS NO NO. As they are gaining benefit but not paying taxes.

That being said. My unit only allows use of the funds for Unit Camping, National Events, or Scout Training. Like you said, getting into Dues, Uniforms, Books, gets messy real fast.

We use Quickbooks to track these funds, and update Scoutbook Payment log periodically to info families.

@DonovanMcNeil Thanks for the quick response.

That is kind of how I feel also. IRS is not something I want to deal with.

I had noted though, reading the BSA Product Sales Guide states:

“Unit funds may be used to reduce the cost of participation, including
the cost of attending camp or obtaining uniforms. They may be used to provide financial
assistance or awards to individual Scouts based upon their level of participation generally or
in specific activities benefiting the unit, chartered organization or community, attendance,
advancement and/or need.” -Page 9 Third Paragraph.

So I assume this really just means that as a collective account Pack/Unit account, it can be used to help Scouts afford something like a uniform or pay back dues. Or am I reading it incorrectly?

I the appreciate your experience provide from your unit!

This is a really thorny issue.

There are several sets of Bryan on Scouting articles on this topic over several years. The latest I know of is here:

https://blog.scoutingmagazine.org/2014/12/03/individual-scout-accounts/

The BSA also has a publication on this topic, which I find less than helpful personally.

There are also IRS letters of various forms out there.

ETA: If you’re really concerned, and your unit is chartered by a non-profit, I would recommend you caucus with their accounting folks about this.

Uniforms are a scouting expense, as the uniform is typically not suitable to wear for non-scouting occasions.

Reimbursing parents when they provide a receipt makes sure the money is used the way the unit specifies.

And again, chat with your CO to get their position on this. Technically, the money is theirs, as the CO owns the unit and all its resources.

One option would be to see if there is a volunteer who can pick said uniform up charging it to the pack’s account. Another is to provide a check made out to the scout shop noted for the uniform. Or call the scout shop and see what can be worked out. In my area they employees really want to be helpful.

Thanks for all the info. I will talk with the committee chair (who also happens to be the Charter Org. Rep.) about this an come to a decision about how the Chartered Org wants to proceed for better or worse.

Thanks again everyone and I’ll post back once I have more info.

Private benefit rules of the IRS prohibit those involved in nonprofit fundraising from receiving a substantial personal benefit for their efforts. Some practices where dollar for dollar credit is provided for the sole benefit of the person who sold product based upon amount sold could violate the private benefit prohibition. While the BSA has not endorsed “Individual Scout Accounts” for private benefit of individual Scouts who participate in fundraising because of the IRS rules, unit fundraising designed to make Scouting affordable is a fundamental part of Scouts “earning their way”. The best practice is that less than half of the profit / commission can be earned by the individual.
My unit sets aside 10% of the total sale for the scout. Usually the profit/commission is ~40% of the sale, so the individual is receiving only ~25% of what was earned as a unit. They may use their individual scout account funds to pay for scouting activities (camping), registration, and items that are scout or camping related (uniforms, tents, sleeping bags, etc.). They purchase the items and provide a receipt. The pack reimburses them, less any tax they paid.
We track via spreadsheet maintained by the treasurer. Each month the treasurer provides status of the ISAs as part of the Treasurer update.

Aimee,

Substantial is a tricky word and difficult to define, because of the way it is used in English. This is because it is often used in a sense of something on the weighty end of the spectrum. In contrast, insubstantial is often used only to describe something on the outer fringes of the minimal spectrum. That leaves a lot of undefined territory between what is normally described as substantial and what is normally described as insubstantial. If the two words must be able to, in combination, describe everything in existence, that gap is usually filled by the word substantial, and that means when the bar over which something must jump is labeled “substantial,” it isn’t very high.

I think it is great that you’re paying attention to this. No one really know what substantial means in this context, and the IRS will assert whatever it pleases in light of the situation it discovers. In my opinion, 25% of the profits is enough to be regarded as substantial, but I am by no means the final authority.

My pack had this discussion last year and We had found language in some IRS letter that defined “substantial” as 40% or greater and “insubstantial” as 2% or less. So anything in between sounds like a grey area. We didn’t want to risk jeopardizing our charter org’s tax exempt status, so we decided (at least for this year) NOT to put any proceeds from fundraisers into individual scout accounts. We have target sales goals at which we lower dues incrementally across the board. And we set some aside for need-based financial assistance.