FISCAL POLICIES AND PROCEDURES FOR BSA UNITS - Frequently Asked Questions
Printable Version - Fiscal Policies & Procedures
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. All unit funds should pass through the bank account; this includes but is not limited to dues, money from unit fundraisers, product sales, and gifts. An exception might be registration fees that are collected as part of an organized School Night program. In this case, fees are collected by district/council representatives and are transmitted to the Scout service center.
Should our unit consider insuring our unit equipment?
Yes. It is suggested that your unit insure its equipment. Remember, the chartered organization owns the unit, and all funds used by the unit remain the responsibility of the chartered organization as long as the charter issued by the BSA remains in place. It is recommended that an inventory of the unit’s equipment be given annually to the chartered organization, and needs for insurance coverage discussed at that time. Frequently, unit equipment can be added to an existing policy of the chartered organization at minimal cost.
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. A “unit account” is established for each unit that deposits funds with the council. At a minimum—at least annually— the council should provide a detailed statement of activities of your unit account for your unit to review.
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. The BSA National Council grants a charter to religious organizations, service clubs, businesses, and others who want to charter a Scout unit. A unit is actually “owned” by its chartered organization. Chartered organizations vary widely in tax status.
What is IRS Form 990-N and does our unit need to file one annually with the IRS?
Form 990-N is an abbreviated filing for small tax-exempt organizations with annual gross receipts of $50,000 or less. 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. The only exception is for the very small number of units that have filed for separate, federal tax exempt status under Section 501(c) (3) of the Internal Revenue Code. Those units must file either Form 990-N (if their annual gross receipts were $50,000 or less) or the more detailed Form 990 or 990EZ (if annual gross receipts were more than $50,000).
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. Packs, troops, and other Scout units cannot be included under the BSA group exemption because they “belong” to their chartered organization. (Note: Tax issues for Girl Scout troops are handled differently by the IRS because of how Girl Scout cookie sales are structured.)
IRS Form SS-4 asks for a “GEN.” What is that, and do we have one?
The “GEN” is the Group Exemption Number for the BSA. As discussed, only councils are covered under the BSA group exemption. Units cannot use this number. However, once your unit receives an EIN, the unit may still qualify for a number of state and sales tax exemptions as a nonprofit organization under your state laws. Check with your state; this varies widely across the country.
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. For one thing, units are not legal entities. Even if they were, this is an expensive and time-consuming process. Units are only permitted to raise funds through approved unit money-earning projects. Units could lose their charter if they tried to get their own tax-exempt status and solicit tax-deductible gifts.
We can’t solicit gifts for our unit?
No. Simply put, units are not permitted to solicit any gifts. Both the Charter and Bylaws and the Rules and Regulations of the BSA make this very clear; only local councils may solicit individuals, corporations, United Ways, or foundations for gifts in support of Scouting. Units, unit leaders, and youth members may not solicit gifts in the name of Scouting or in support of unit needs and activities (except in unusual circumstances where the unit has received permission to do so from the local council). Units are also prohibited from soliciting gifts on their websites.
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. We know it’s hard to stop people from being generous, especially toward Scouting.
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. IRS guidelines prohibit any charity from accepting gifts that are “passed through” to a person or unrelated entity. A council could accept a gift in the name of your unit and hold it in a unit account. The unit could then “draw down” on the account for camp fees, uniform and supply needs, etc. (This is how colleges handle student scholarships.) But be sure to first ask your local council if it has the staff and time to do this. This is entirely the council’s decision. A council accepting a gift in the name of the unit does not necessarily extend tax benefits to the donor.
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. Corporate donations often can go only to charities that are “501(c) (3) charities,” and many units are not chartered by tax-exempt charities. Also, many companies won’t make gifts to religious organizations. If a unit is “tax-exempt,” it’s often because it’s chartered to a church, synagogue, etc., so it couldn’t receive corporate funds either. Of course, corporate awards and grants may go to any local council for use at the discretion of the council.
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.
Questions? Need more information? Please contact your local council. Thank you for all you do for Scouting and the youth in your community.
Unit Money-Earning Application Form - This form is required BEFORE your unit has a fundraising activity.
Specific Instructions for Units (Packs, Troops, Posts) to Complete IRS Form SS-4, Application for Employer Identification Number (EIN) IRS Form SS-4
The Current IRS Form SS-4 must be carefully completed to meet BSA requirements. This procedure is necessary because 1) some chartered organizations do not have an EIN or will not permit units to use their number, and 2) financial institutions require an EIN or Social Security number for all interest-earning accounts and checking accounts. If a unit does not have its own EIN, all financial transactions are attributed to the individual unit leader who provided his or her Social Security number.