Unit Finance

A Scout is Thrifty

It’s good practice for Scout units, too. Business-like finance management not only assures that your unit will remain solvent and have what it needs when it needs it, it also provides a fine example for your youth members. A good unit should neither spend more than it earns nor earn more that it spends. As much harm can be done with one extreme as with the other.

How do we know how much money we need?

You need a budget: a plan for receiving and spending money. Your budget will show in dollars what your unit has planned for the year to come. In developing the budget, you need to estimate expenses for the year and create a plan for paying those expenses.

Look at your unit’s program for the upcoming year; where are you going to go and what are you going to do? And how do you plan to pay for it?

  • If you have receipts from the previous year, great – you have a guide.
  • If you’re a new unit, you can use a BSA budget planning worksheet to give you a list of items you might include in your budget. You could also ask advice from your Unit Commissioner (that’s a volunteer in your area whose job is to help a few units in your district) or your District Executive (that’s the BSA professional employee who is responsible for serving units in your district).
  • Whether you’re an existing unit or a new one, the best, safest, and most time-effective way to pay for your program is by taking part in our council’s annual Fall Product sale fundraiser.

In keeping with the principles of Scouting, a unit pays for its program by earning and saving the money it needs. Yes, a unit may have families who can afford to just “write a check” at the beginning of the year… but then its Scouts miss a valuable lesson in self-reliance.

Here’s a look at some basic expenses every Scout unit has:

  • Registration fees (this is the amount the national Boy Scouts of America and local council charges each youth and adult to join the organization)
  • Unit liability insurance fee (a required fee included with your annual BSA charter application)
  • Advancement and recognition items
  • Activities/Trips/Camps
  • Program materials (everything from camping equipment to ceremonial props)
  • Contingency/scholarship fund

How are we going to pay for everything?

Popcorn Sale

Our council’s annual Fall Product Sale provides a great opportunity to raise all of the money your unit needs for its annual program with the sale of Trail’s End Popcorn and Burger’s Products. You can’t make more money per each hour of time spent selling like you can with the product sale.

The sale is approved by our council’s Executive Board, meaning that your Scouts can wear their Scout uniform while selling (this is not true for any other fundraiser). You do not need to fill out a unit money-earning application to participate in the popcorn sale. Just let your District Popcorn “Kernel” (a volunteer who runs the popcorn sale in your district) or your District Executive (the BSA professional employee responsible for serving units in your district) that you want to participate in the popcorn sale, and they’ll tell you when training will take place and give you everything you need to take part.

Unit Money Earning Guidelines

If your unit chooses to raise money in a way other than selling popcorn, you must submit a Unit Money Earning Application to your district’s Fundraising Chairman (this is a volunteer like you) or District Executive (this is the BSA professional employee who serves units in your district).

 

Scout Accounts

The Internal Revenue Service (IRS) says if you are going to raise money as a nonprofit group, the group must benefit from the money you raise. So, if one Scout sells $500 of popcorn in your unit sale and another Scout sells $100 in your unit sale, both Scouts must benefit equally. That may sound a little backwards but that is the general definition of the IRS’ policy concerning what’s called an “individual benefit” within nonprofit fundraising.

Some units deal with this by raising money for specific items or ideas that benefit the entire unit: buying new tents that everyone will have the chance to use, paying for every Scout to go to Day Camp, etc.

You may hear some leaders talk about having “Scout accounts” for each youth member in their unit within their overall unit account. This idea goes back to a time before this IRS focus on “individual benefit”. Basically, a unit would keep track of how much each Scout earned through fundraising or allowance or working a job and allow each Scout to apply those funds how they wished (pay for camp, buy a new backpack from the Scout Shop, etc.). The idea of a “Scout account” is still OK under BSA rules, so long as the way it is managed doesn’t violate IRS rules.

Clear as mud? Here’s how BSA’s Steve McGowan explained this idea, during a 2014 interview with Scouting Magazine:

“An example would be if a Scout is part of a unit, and the unit raises money to offset the costs of Scouting for the entire unit. Nothing wrong with that. If they use it as a means to pay down the cost for the unit and each member to go to summer camp, nothing wrong with that.

On the other hand, when you move over to the other side, and a Scout goes out and sells a lot of popcorn, and the unit designates that money that he raises to be used only for that Scout and only for activities that benefit that Scout, we get into an issue of whether or not the IRS would consider that to be a substantial private benefit.

The IRS isn’t going to go after the typical young Cub Scout that’s selling popcorn, and it helps to pay for his uniforms or helps to pay for his summer camp. But to the extent we have people that are raising significant funds, and those funds are being used for costs that would normally be parental obligations in connection with Scouting, we’re getting into an area where the IRS has been and is paying more attention.”  

BSA has never allowed individual Scout accounts which provide for “substantial benefit”, which is the IRS term for what is prohibited, but we have allowed Scouts to have accounts which would make them more thrifty, make them more understanding of what does it mean to set goals and achieve goals and to earn their way. That’s been part of the Scouting way for many years and to the extent that the Scout is using fundraising to accomplish Scouting goals, then the IRS says that may be more allowable than when they’re simply out raising money for their own benefit.

Sales Tax Exemption

How do I apply for an exemption from sales tax?

Any social, civic, religious, political subdivision, or educational organization can apply for a sales tax exemption by completing Form 1746, Missouri Sales Tax Exemption Application. This form lists the information needed to verify the organization is indeed a tax-exempt non-profit organization.

Submit the listed items to ensure the Department can process your exemption application.

  • Application – A fully completed and signed Missouri Sales or Use Tax Exemption Application (Form 1746).
  • Determination of Exemption – A copy IRS determination of exemption federal Form 501(c). Obtain from the Great Rivers Council.
  • Certificate of Incorporation or Registration – A copy of the Certificate of Incorporation or Registration issued by the Missouri Secretary of State, IF REGISTERED OR INCORPORATED. Contact Missouri Secretaty of State.
  • Bylaws – A copy of the organization’s bylaws.
  • Finanical Statement – A three-year financial statement (or number of years in existence if less than three providing sources and amounts of income. If the organization has just started (less than six months old) a projected budget for one year should be provided. The projected budget must include sources and amounts of income and expenses for one year. The financial statement can be in the form of a spreadsheet, ledger book or you may submit copies of the Return of Organization Exempt From Income Tax (Form 990) (must include all pages). All schedules must include detailed information to avoid a delay in processing your application. The Department does not accept bank statements.

How do I apply for a EIN (Employer Identification Number)?

Every unit will eventually need to have a checking account. Sometimes this gets confusing for the newly organized unit because financial institutions demand a federal tax number to open an account. Do not use your social security number for this purpose because all financial transactions are attributed to the individual unit leader providing their social security number. This obviously could pose problems! Here are two approaches.

Plan A

Due to the charter agreement and tax laws, Units are “subordinate” to the chartered partner. Some chartered partners are willing to allow units to use their tax number so their unit will be able to obtain a checking account. If the chartered partner does not feel they can help you in this fashion, don’t worry; go to Plan B. If your chartered partner is a business, public school, or PTA/PTO go straight to plan B without presenting the Plan A concept.

Plan B

What follows are specific instructions for units (packs, troops, crews, ships, posts) to complete IRS form SS-4 (Application for Employer Identification Number). 

There is no cost 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 “tax ID hotline” is 800-829-4933.

Surplus Property

As a non-profit organization the Great Rivers Council has access to Federal and State Surplus Property agencies to purchase surplus items.

Missouri State Agency for Surplus Property
2846 Highway 179
Jefferson City, MO 65109
(573) 751-3415 or toll free (888) 295-7796
Fax (573) 751-1264

Paying with a Unit Check

To purchase state and federal surplus property the unit committee’s designee must have a unit check in his or her possession.

Paying with a Purchase Property

The unit should submit to the Great Rivers Council service center this application two weeks prior to their planned visit to surplus property.

To purchase state and federal surplus property the unit committee’s designee must have in his or her possession an approved copy of this form as well as a signed purchase order.

To purchase state and federal surplus property the unit committee’s designee must have in his or her possession an approved copy of this form as well as a signed purchase order.

The approved purchaser listed on this form must be the person actually completing the purchase.

The unit understands that there are specific requirements regarding the use of the surplus property and its disposal.  Precise inventories must be kept of surplus property purchased.  At any given time during the life of the property, the unit must be able to report the status of the property to the appropriate government agencies as well as to the local council.

Who Pays for Scouting?

Youth
Assisted by their parents or guardians, scouts in Cub Scouting, Scouts BSA, and Venturing pay their share from personal savings and through participation in money-earning projects. Members buy their own uniforms, handbooks, and personal equipment, and they pay their own camp fees.

Units
Weekly or monthly dues and funds from approved money-earning projects meet expenses for supplies and activities in the Cub Scout pack, Scouts BSA troop, and Venturing crew. These monies help pay for camping equipment, registration fees, Boys’ Life magazine, uniform insignia, special activities, and program materials. Units are strongly encouraged to create individual youth accounts that allow members to save for events and programs.insignia, special activities, and program materials.

Chartered Organizations
Each chartered organization using the Scouting program provides a meeting place and adult volunteer leadership for its BSA unit(s). The chartered organization and local council must approve unit money-earning projects before the launch of the project.

The Council
Financial resources for the local council (the local nonprofit corporation chartered by the National Council) come from an annual Friends of Scouting campaign, local United Ways, foundation grants, special events, project sales, investment income, trust funds, bequests, and gifts of real and personal property.

These funds provide for professional staff supervision, organization of new Scouting units, service for existing units, training of volunteer leaders, and maintenance of council camps. They also finance the operation of the local council service center, where volunteer leaders can obtain literature, insignia, advancement badges, and other items vital to the program. In addition, the service center maintains advancement and membership records.

National Council
Funds to support the national organization of the Boy Scouts of America come from registration fees, local council service fees, investment income, Scouting and Boys’ Life magazines, sale of uniforms and equipment, and contributions from individuals. These monies help to deliver the program of the BSA to chartered organizations that use the Scouting program to meet the needs of their youth.

The National Boy Scouts of America Foundation also provides funding for both local council needs and national organization initiatives. Most of this funding comes from specifically designated gifts made to the foundation by individuals, corporations, and other foundations.