Scouts don’t allow individual fundraising account (and neither should you!)

BoyScout

 

I am frequently asked questions about fundraisers for homeschool groups, especially about individual fundraising accounts.

What’s in Individual Fundraising Account?

An individual fundraising account is any method by which a nonprofit group credits an individual or family for some or all of the funds raised by that individual or family. Usually, credit is given for sales of products and services at the organization’s fundraising events.

Aren’t IFAs used by a lot of youth organizations?

These IFAs are very common, especially in scouting and  youth sports. In the past, youth organizations followed some simple guidelines  that they thought made the practice of creating IFAs acceptable. Here’s an example of an IFA policy.

I’m a conservative CPA and always discouraged the use of any IFAs. I’m not alone. ParentBooster.com strongly discourages IFAs and Trail Life USA  disallows IFAs for their members.

Boy Scouts discontinuing Individual Fundraising Accounts

And now it appears that the Boy Scouts USA has also changed their policy regarding IFAs. According to BobwhiteBather.com,

Source: http://bobwhiteblather.com/new-policy-prohibits-individual-scout-fundraising-accounts/

… the Boy Scouts of America is beginning to inform units that they may no longer allocate fundraising proceeds to “Scout accounts” for the private use of members to pay their expenses. This goes against a longstanding recommendation that units should use fundraising to allow individual Scouts to pay their own way. The new policy was first found buried in a publication aimed at councils on running effective product sales, which was released late last summer, and most recently appeared in Fiscal Policies and Procedures for BSA Unitsa summary of frequently-asked questions about unit finance.

 

FYI, the Boy Scout document cited above says quite clearly, “Funds raised by the unit from product sales belong to the unit. They may not be transferred to the Scout.”

So, my advice to homeschool organizations is unchanged:

  • Do NOT set up individual fundraising accounts.
  • If you have them now, STOP!
  • If you conduct fundraising, do not record how much each family brought in.
  • Do not have a system where tuition or dues are reduced by the amount of fundraising a family conducts.

You may find your organization can still function quite well, or even better without individual fundraising accounts like Becky’s homeschool group did.

Carol Topp, CPA

Comments

  1. brenda says:

    is it ok to allow only those who participate in the fundraiser to benefit from the money that is raised? In other words, can we evenly distribute the money raised only to the families that participate in the fundraiser? Those who chose not to participate need to pay the full amount of our membership fees.

  2. Carol Topp says:

    Brenda,
    No, it would not be okay to distribute your fund raising proceeds to individual families as you described.
    Some nonprofits (especially youth sorts groups) have a “fund raise or pay” policy. Families must fund raise a certain amount or if they do not participate in fundraising they must pay an additional fee. Some folks have more money than time, so this helps them and the organization both.

  3. Brenda says:

    Thank you! So, it needs to be set up such that if they don’t participate in the fundraising they have to pay an additional fee? (Not that they can pay less if they participate?)

  4. Carol Topp says:

    Brenda, There is no “need to set up” or “they have to pay” conditions in my reply. I was explaining what some nonprofits do to raise funds.

    All I was advising you to do it not distribute any fundraiser profits to individual families. The profits from fundraisers stay in the group and do NOT belong to an individual.

  5. brenda says:

    Very good. Thank you so much.

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