Scouts-L Mail Archive for December of 1999: Re: donations
Bruce E. Cobern
Sun, 19 Dec 1999 01:23:12 -0500
> From: Scouts-L Youth Group List [mailto:Scouts-L@listserv.tcu.edu]On
> Behalf Of Kirk and Nena Barley
> Sent: Saturday, December 18, 1999 10:41 PM
> A Council is the lowest level of BSA organization that
> normally receives a charitable organization
> determination by the state and IRS. Units operation
> is independent of BSA. They are part of their parent
> organization. If the Chartered Organization has
> been given a charitable designation by the IRS, its
> units can receive the same tax benefits that the
> Council refers to in its SME pitch.
These statements are PARTIALLY true. First of all, I am not sure that
the council is the lowest level of the organization that receives a
charitable organization determination from the IRS. As I stated in a
previous post, I believe that the BSA determination letter from national
might very well have been a blanket determination which covers all
subsidiary parts of the organization, which would include councils and
units. Besides, deductibility of contributions is determined by Section
170 of the Internal Revenue Code, and NOT by Section 501(c)(3). As I
read 170 it is possible to receive deductible contributions even if you
have not qualified under 501(c)(3). I believe that a "subgroup" of a
nonqualifying organization can itself qualify. Thus, even if you
believe the conventional wisdom that the unit is part of the sponsor,
which I absolutely believe NOT to be the case, and which I think we
proved by our discussion of distribution of assets on termination, it is
possible for contributions to a unit to be deductible even if
contributions to their sponsor would not be.
I also believe, as someone else posted, that deductibility depends on
whether the organization is operated in a manner that it COULD qualify,
even if it has not formally applied to the IRS. I fully believe that
each unit is an unincorporated association, which is a legal entity
which can operate and acquire property, etc. in most jurisdictions.
Based on this, for a council to state, or even imply, as many do, that
contributions to units either are not deductible, or might not be
deductible, is playing fast and loose with facts, for the specific
purpose, IMO, of improving their ability to raise funds at the expense
of the ability of units to do so.
> This is a point of law and economics, not a Council
> sales pitch. If you want this changed, write your Congressional
> Representative and ask for a simpler Tax Code.
But this argument would be much easier if those making the arguments
actually knew and understood both the law and the BSA documents
describing the structure and operations of units. The section of the
Rules and Regulations dealing with termination of the unit make it
absolutely clear that the BSA does NOT consider the assets of the unit
to belong to the sponsor. Rather, those rules are written exactly as
they would be if the unit were a separate entity, an unincorporated
> Why would you feel that the fund raising efforts of Council
> and Units is competitive?
Councils certainly do. They actively try to prevent units from
attempting to solicit funds or material from corporations that might be
council contributors. We can argue about the wisdom of that policy, but
it is certainly there in many councils.
> Units are the responsibility of their Chartered
> Organization and the families that benefit from them. Their
> efforts do not directly benefit the Community. Councils,
> on the other hand, are in existence to benefit the
Do you really believe that it is the COUNCIL that provides the community
benefit from Scouting? I believe it is clearly the individual units,
which are the ONLY part of Scouting that directly impacts the citizens
of that community by virtue of their training in citizenship, fitness,
> Council should be funded by Scouters and the Community.
I believe that councils should be supported by the community. There is
too much effort in Scouting to move money from one Scouting pocket to
another. This does nothing to increase the overall assets available to
provide the program. It only moves the venue for the use of this money.
Our finance campaigns should be directed to OUTSIDE sources, so that the
insiders can directly support the units that are providing the direct
benefit to our target population.
Bruce E. Cobern