Virginia 4-H. Financial Management for 4-H Clubs Virginia Polytechnic Institute and State University

Transcription

1 Virginia 4-H Financial Management for 4-H Clubs 2012 Virginia Polytechnic Institute and State University Virginia Cooperative Extension programs and employment are open to all, regardless of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, or marital or family status. An equal opportunity/affirmative action employer. Issued in furtherance of Cooperative Extension work, Virginia Polytechnic Institute and State University, Virginia State University, and the U.S. Department of Agriculture cooperating. Edwin J. Jones, Director, Virginia Cooperative Extension, Virginia Tech, Blacksburg; Jewel E. Hairston, Administrator, 1890 Extension Program, Virginia State, Petersburg.

2 Table of Contents Philosophy Statement... 3 Financial Guidelines for 4-H Clubs and Groups... 4 Background... 5 Closing Accounts H Agency Accounts... 6 Deposits... 7 Expenditures Cash Change Fund Disbursement Fund Starting a 501 (c) (3) H Foundation

3 Philosophy Statement 4-H Clubs and Volunteer groups are organized by and support the educational mission of Virginia 4-H and Virginia Cooperative Extension. These groups function under the leadership of one or more of the professional staff and work within the parameters assigned to assist in carrying out this mission. The groups across the state are recognized as essential elements to the success of Extension s programs. This document provides general guidelines for fiduciary responsibility in 4-H clubs and groups, and gives specific information needed by each individual group. Virginia 4-H has a responsibility to: 1. Conduct its programs in such a way to maintain the public trust and safeguard the positive image of the organization; 2. provide training opportunities for clubs and volunteer groups to conduct their financial affairs using sound accounting principles, with understanding of the tax laws governing tax exempt organizations; and 3. accept certain fiduciary oversight responsibilities for these groups, including reviewing audit reports. The club or volunteer group has the responsibility to: 1. Conduct its organization in a professional manner consistent with the educational mission of Virginia 4-H; 2. accept compliance responsibility for all federal and state laws pertaining to volunteer organizations; 3. adhere to civil rights laws, including open access to membership and programs; and 4. obtain funding from various sources and dispense the funds in support of the 4-H educational mission. 3

4 Financial Guidelines for 4-H Clubs and Groups 1. Teaching children and youth the proper way to handle funds is an important component of the 4-H experience. Youth should be involved as much as possible in all phases of fundraising under the supervision of an adult: setting goals, choosing projects, collection, accounting and distribution of funds. Each club should elect a treasurer and follow the accounting guidelines listed in the 4-H Treasurer s Record Book. Adults should teach their 4-H members how to use committees to develop plans and how to use parliamentary procedure to make decisions. 2. All funds raised in the name of 4-H belong to 4-H, and not an individual or group of individuals. Because donors are allowed a tax deduction for their gifts, managed through the 4-H Foundation, it is imperative that the funds be used only for appropriate and authorized purposes. 3. The National 4-H emblem, the four-leaf clover with the letter H on each leaf, was recognized by an Act of Congress on June 25, 1948 and Regulations Governing Use and Authorization of the Name and Emblem of 4-H Club Work were published in the Federal Register on August 2, 1985, and amended in the Federal Register on March 17, (For more information on use of the 4-H clover see These regulations stress use of the 4-H Clover is a privilege, not a right. 4

5 Background National 4-H Headquarters notified each state that the national 4-H group exemption number had been sunsetted and that each Land Grant University would need to choose the most appropriate means of maintaining the tax exemption of their clubs and affiliates from a list of options developed by National 4-H Headquarters in partnership with the IRS. Virginia Cooperative Extension administration met several times over a two year period to consult with the university controller, administration of the Virginia Tech Foundation, VT Foundation and University attorneys, and the College of Agriculture and Life Sciences Finance Office. As a result, Virginia 4-H clubs and affiliates were offered the following options: Option A: Chartered Clubs/groups and affiliates could have elected to become activities of the University. Under this option, a new unit 4-H agency account was established within the university to handle the business of the clubs/groups and gifts to these groups that need to be gift receipted will be deposited into the unit 4- H account in the Virginia 4-H Foundation which is a subset of accounts within the Virginia Tech Foundation. Option B: Clubs/Groups/Affiliates could have declared their intention to apply for independent 501(c) (3) status with the IRS, completed and submitted the application and supporting documents to the IRS by July 23, 2012, and have a signed MOU with Virginia 4-H. Option B2: Counties could have chosen to have the County 4-H Volunteer Leaders group apply for Independent status with the intention of the other clubs in that county being activities of the new 501 (c) (3). This process should also have been completed by July 23, 2012, and have a signed MOU with Virginia 4-H. Closing Existing Club/Group Affiliate Accounts The club treasurer, or authorized signature authority will request to close the current club/group or affiliate account and receive a cashier s check payable to Treasurer of Virginia Tech for the balance of the account and request a letter from the bank showing that the account has been closed. The check will be taken 5

6 to the unit Extension office and given to the Unit Administrative Assistant (UAA) for deposit. The deposit will be recorded on the 4-H Club Funds Received By Unit Office log as an official record and a receipt is given to the club. The UAA or Virginia Cooperative Extension (VCE) representative will make the initial deposit at the local bank and credit the deposit in Quicken to start the clubs account. A copy of the bank letter and a copy of the last the last bank statement is sent to the State 4-H Office and a copy is kept on file in the unit office. The original bank letter and statement are kept by the club in their files. The club will be responsible for making their own deposits from this point forward. 4-H Agency Accounts 4-H Agency Accounts are funds established under the University system to allow for Unit 4-H programs and 4-H clubs to deposit and disburse funds necessary for club/group or affiliate business. Forms used in this process are highlighted in this document and can be found on the 4-H Intranet website. Sales Tax Exemption- Most purchases of items using funds from the 4-H Agency Account are exempt from state sales taxes. Food items from restaurants are not exempt from state sales tax. A certificate of sales tax exemption is available at and may be presented to vendors as needed. Clubs purchasing items for re-sale (ie. fundraising, concessions, etc.) will pay sales tax at time of purchase, but will not collect sales tax. Receipt of Funds Process- Funds received by 4-H clubs must be accounted for and written receipts must be issued to the individual giving funds to 4-H. Each 4-H Club must have their own pre-numbered receipt book. Individual receipting is not required for sale of concession items, however, the club will write a receipt for itself at the end of the fundraiser for the total amount collected. For raffles and drawings where a ticket is sold, use pre-numbered tickets and keep the remaining portion as the receipt. The remaining portion of sold tickets is kept with the deposit ticket as verification of the amount sold. Numbered tickets must be accounted for by number, indicating which have been issued and sold and also accounting for any that have been returned and unsold. Unused tickets must be kept in a secure location. 6

7 Checks Checks are to be made payable to Treasurer of Virginia Tech. The name of the individual 4-H club/group/affiliate should be written on the memo line. Securing Funds: Cash, checks, and receipts must be kept in a secure location. To protect the funds, they should be kept in a lockable container, such as a cash box, and stored in an area that is not visible to unauthorized personnel. The container should not be left unattended during the working day. All funds must be kept in a secured (locked) storage area, such as a file cabinet or safe, at night. Non-Wells Fargo Accounts- Units which maintain a checking account with a local bank other than Wells Fargo are authorized to write checks to Treasurer Virginia Tech as a procedural matter to sweep their account on a regular basis (monthly). No other check should be written from these accounts. Disbursements- All disbursements should be made through HokieMart or via university purchasing cards. The manager or supervisor (e.g. unit coordinator) should approve all HokieMart transactions. Purchases by 4-H clubs must not exceed their available balance. This includes purchasing card transactions, purchases made individually for which reimbursement will be sought, travel reimbursement, and transactions in HokieMart. P-Cards- Purchasing Cards may be obtained by Extension Agents for use in purchasing items on site or on-line. Only Virginia Tech employees may have access to P-Cards. Volunteers may not use university purchasing cards. Restrictions on use- 4-H club funds may not be used for purchase of alcoholic beverages, the purchase of gift cards, and the purchase of gas cards. Deposits Club deposits must be handled in accordance with established policy. Deposits can occur as a result of funds received through fees, fund raisers, and donations/gifts. Note: All gifts and donations whether monetary or gift-in-kind, where the donor requires a tax receipt, must be processed through the units 4-H Foundation Account (see section on Foundation). Gifts processed any other way are NOT tax deductible. A $50 fee will be assessed for returned checks. A sign indicating the 7

8 charge for returned checks should be posted in a visible location. In flyers, letters or other materials advertising a program with a fee, a statement should be made concerning the charge for returned checks. Club Responsibility Fundraising- Clubs conducting fund raising activities (which may include concession sales, plant sales, fruit sales, candy sales, doughnut sales, magazine sales, etc.) will account for all funds collected by members and will be responsible for proper preparation of deposit tickets. An order log is sufficient documentation to account for collection of funds by club members from individuals purchasing items for sale. Clubs purchasing items for re-sale (ie. fundraising, concessions, etc.) will pay sales tax at time of purchase. Other Income- Donations to the club from individuals who do not require tax receipting, must be acknowledged with a written receipt. Fees paid by individuals to the club for club activities, must be acknowledged with a written receipt. Deposit of Funds- Funds must be deposited within 24 hours from the time of receipt if total daily receipts exceed $400. If the club has adequate safekeeping facilities and total receipts do not exceed $400, then the club may accumulate receipts until they reach $400 before making a bank deposit. However, bank deposits should be made at least weekly regardless of amount. Club representatives (treasurer/volunteer) are responsible for counting and verifying cash deposits and preparing deposit slips. No less than two (2) club representatives (not from the same family) must complete and sign the 4-H Club Deposit Form to verify accuracy. Checks must be stamped with an official endorsement stamp which states: For Deposit Only Virginia Cooperative Extension Unit Name Virginia Tech Stamps are available through a centralized ordering system. The deposit and 4-H Club Deposit Form must be placed in a tamper proof bag and delivered to the local bank. You will ask the bank teller to give the club deposit form back to you as a record of who counted and verified the amount of funds in the bag. 8

9 Wells Fargo Customers- A supply of numbered deposit tickets will be provided to 4-H clubs so that they can make direct deposits. The Extension office will track which tickets have been given to each club. New tickets will be provided to the 4- H club once the supply is depleted. Deposits must be entered in the Banner system by the UAA or an assigned back-up in order for the funds to be assigned to the appropriate fund. Non-Wells Fargo Customers- A supply of deposit tickets will be provided to the 4-H clubs so that they can make direct deposits. No tracking of tickets required. Accounting for the Deposit The 4-H club representative will take the bank validated deposit ticket stapled to the tear-off from the tamper proof bag, along with the 4-H Club Deposit Form to the local Extension office to be credited to the appropriate account in Quicken. This should be done within 3 days of the deposit. A copy of the deposit ticket will be given to the club representative for their records. The 4-H club/organization Treasurer will keep an accurate record of deposits and expenditures. The 4-H Treasurer s Record Book may be used for this purpose. The original deposit ticket will be filed in a unit office file by club name. Extension Responsibility The UAA or VCE Representative will receive the bank validated deposit ticket from the 4-H club representative and will document the deposits on the 4-H Club Funds Received By Unit Office log as an official record and will provide a copy of the deposit ticket and a receipt to the 4-H club representative for their records. The original deposit ticket will be filed in a unit office file by club name. The UAA will record the deposit amount into the Quicken account set up for the 4-H club/organization. For Wells Fargo customers, the deposits must also be entered in the Banner system by the UAA or an assigned back-up in order for the funds to be assigned to the appropriate fund number. During the first week of each month, all Quicken Accounts will be reconciled. One copy of the 4-H clubs account will be sent to the 4-H Club Leader/Treasurer for their records and second copy will be filed in a unit office file by club name. 9

10 Expenditures Club expenditures can occur in several ways. Since 4-H Clubs will no longer write checks, the process will be different. Expenditures may be processed through personal reimbursement using the HokieMart system, travel reimbursement, direct orders using the HokieMart system, direct billing as available, pre-payments to vendors, and using the Purchasing Card (P-Card) held by the Agent. Pre-Approval- All club expenditures must be approved in advance by the club membership and recorded in the meeting minutes. This pre-approval of expenditure is necessary to ensure that the club has adequate funds to cover the expense and that the club account is not overspent. The 4-H Club Payment Processing Form must accompany any request to purchase items using 4-H club forms and must be signed club leaders/treasurer approving purchase. Reimbursement- One method for paying for club expenses is through a reimbursement. Should a volunteer pay for club expenses out of personal funds, they must provide the original itemized receipt of purchase(s) along with a 4-H Club Individual Reimbursement Form, signed by club leaders approving payment. The club treasurer should be one of the signers. If reimbursement is for a club leader, then the reimbursement form must be signed by another authorized club leader. Individuals may not approve their own reimbursement. The 4-H Agent initials the form for verification if they are not the Unit Coordinator. The expenditure is entered into HokieMart by the UAA for payment and approved by the Unit Coordinator (UC). Payment to the individual may take up to 30 days from the date of approval by the UC. Documentation of the purchase is given to the UAA so that it can be entered into Quicken to debit the appropriate club account. A printed receipt if purchased on-line or the actual itemized store receipt if purchased in-store along with the reimbursement form signed by the volunteer will be adequate documentation. The UAA will file the documentation in the unit file for the respective 4-H club and provide a copy to the club for their records. Travel Reimbursement- Receipts for travel including mileage, lodging, meals, parking, tips, tolls, are submitted to the UAA so that the travel form can be completed. Mileage is reimbursed at the standard rate for VCE. The 4-H Club Payment Processing Form must accompany the request. The 4-H Agent initials 10

11 the form for verification if they are not the Unit Coordinator. The UC approves the travel form and it is sent to Virginia Tech for payment. The check will be mailed to the home of the volunteer. Time for reimbursement is up to 30 days from the date that the documentation is received by the controller s office. The payment is debited from the club account in Quicken by the UAA. Direct Orders in HokieMart- The HokieMart purchasing system allows for ordering of items for club use in advance of need. Pre-planning is needed to use this system. Should a vendor be willing to provide an invoice for payment, this can also be processed through the HokieMart system. The UAA can assist with this process. The payment is debited from the club account in Quicken by the UAA. The 4-H Club Payment Processing Form must accompany the request. Direct Billing- Several hotels will allow direct billing which prevents up-front payments by clubs and volunteers. Contact the facility directly and ask will you accept a purchase order from Virginia Tech? to determine if they allow direct billing and also if they will honor the state government rate. If so, then you will receive an estimate for the total amount of the lodging. To process the payment the UAA will enter the purchase order (PO) in HokieMart for payment to the facility. The 4-H Club Payment Processing Form must accompany the request. After the lodging stay, you will receive an invoice from the hotel. The invoice is then mailed to the VT Accounts Payable office with a reference to the PO number and the hotel will receive payment. If the hotel states that they will direct bill, but do not have an account for Virginia Tech, then you can establish one. Often a credit application is required by the facility, which they can send you electronically. In this case, the credit application is forwarded to Dorothy Carter dicarter@vt.edu in the VT Accounts Payable office to set up the direct billing process. In Dorothy Carters absence, Mike Long milong@vt.edu is a back-up for the process. Allow 30 days notice to set up this avenue for payment. The form is then returned to you so that you can forward it on to the hotel. Once the hotel approves the account, you can make reservations. After the lodging stay, the hotel will provide you with an invoice for payment, which will then be entered into HokieMart for payment. The amount is then debited from the club account in Quicken by the UAA. 11

12 Pre-payments to Vendors- Pre-payments can be processed through HokieMart if the amount owed for a service is known ahead of time. Examples would be for judges, bus drivers, 4-H Camp. An invoice must be received in advance for the full amount of payment. The 4-H Club Payment Processing Form must accompany the request. Payments to individuals for a service requires that a W-9 be obtained from the individual prior to processing the payment. The W-9 form can be found at A check is issued to the Extension Office and the volunteer will pick up the check to deliver to the payee. Allow 15 days to process the pre-payment. The amount of payment is debited from the club account in Quicken by the UAA. P-Card Purchases- Extension Agents are eligible to apply for a purchasing card to use for on-line or in-store purchases. Volunteers and staff are not eligible to have a P-card. Therefore, prior arrangements must be made with the 4-H Agent to purchase items using this method. P-card purchases must be pre-approved by the Agent. The 4-H Club Payment Processing Form must accompany the request. Payments are directly billed to the 4-H account number and debited from the club account in Quicken by the UAA. Cash There are times when a 4-H club may need access to cash in order to conduct business of the club. There are two primary methods available for obtaining cash; change funds and disbursement funds. Cash funds may NOT be used for purchasing items for club use. Change Fund- A change fund is a cash fund that is made available for start-up funds for concessions. Change funds may be up to $200 and may be for temporary or ongoing use. Units establishing a change fund will use the following procedure. 1. An Agent must complete the Change Fund Request form and send to the District Director for signature. The form is then sent to the CALS finance office for approval where it is then forwarded to the VT Controllers office and Bursars office for processing. Once approved, a check is sent to the unit office in the name of the requesting Agent, is cashed at the local bank, and placed in a locked and secure location. The Agent is responsible for the change fund. Allow 45 days to establish the initial fund. 12

13 2. 4-H clubs/organizations wishing to request a change fund will notify the Extension Office at least 7 days prior to the event. 3. When funds are picked up, the authorized club representative will complete a Non-employee Temporary Cash Change of Custodian form for the amount of funds received. Funds will be placed in a tamper proof bag. During the time that the funds are out, they are the responsibility of the individual who signed the change of custodian form. 4. The change funds must be returned to the Extension Office in a tamper proof bag within 3 days after the event along with the bank validated deposit ticket for funds raised. The deposit will be recorded on the 4-H Club Funds Received By Unit Office log as an official record, noting that change funds were returned, and a receipt is given to the club for the amount of the deposit. 5. The Agent will receive the change fund and complete the bottom portion of the Non-employee Temporary Cash Change of Custodian form, placing the funds back into their custody. 6. If the Agent who has permanent custody of the change fund will be out of the office for an extended period of time, they may temporarily transfer custody of the fund to another employee by completing the Employee Temporary Cash Change of Custodian form. This will allow 4-H clubs/organizations access to the funds during that time. 7. When the Agent with permanent custody returns, the bottom portion of the Employee Temporary Cash Change of Custodian form is completed to place the funds back into their custody. Funds must be kept in a locked and secure location. 8. Once a month a random audit of funds is conducted by the permanent fund custodian and another Agent. The change fund balance is verified and signed by the two Agents and filed. The 4-H Change Fund Verification form is used for recording this action. Disbursement Fund- A disbursement fund is a cash fund that is used when larger amounts of cash, up to $2,000, is needed for a club event or activity. Examples include premiums for county horse shows, livestock shows, exhibits, awards at achievement programs. 4-H clubs/organizations wishing to request a disbursement 13

14 fund will notify the Extension Office at least 45 days prior to the event. Units requesting a disbursement fund will use the following procedure. 1. An Extension Agent must be the individual making the official request for the disbursement fund and will complete the Disbursement Fund Request form. The Agent assumes personal responsibility for the funds while in their custody. Disbursement funds may be for amounts up to $2, Units establishing a disbursement fund must have an Agent to complete the request form and send to the District Director for signature. 3. A complete and detailed description of the funds purpose must accompany the request form (ie. A list of classes and premiums needed to fund all classes in a show). 4. The form is then sent to the CALS finance office for approval where it is then forwarded to the VT Controllers office and Bursars office for processing. Once approved, a check is sent to the unit office in the name of the requesting agent, is cashed at the local bank, and placed in a locked and secure location. 5. When funds are picked up, the authorized club representative will complete a Non-employee Temporary Cash Change of Custodian form for the amount of funds received. Funds are placed in a tamper proof bag when given to the club representative. During the time that the funds are out, they are the responsibility of the individual who signed the custody transfer form. 6. For participants earning $50 or more in awards, a W-9 must be completed and the individual will be paid by check as a vendor through the HokieMart system. Participants earning less than $50 may be paid in cash the day of the show. The W-9 form may be found at The W-9 form is completed only once for an individual receiving payment through these accounts, and does not need to be renewed or completed again unless there is a change of address. 7. Any unused funds must be returned to the Extension Office, within 3 days after the event in a tamper proof bag, along with the completed spreadsheet of participation and class placing s, a participation log showing the name of the event, location, date, participants name, address, total cash amount 14

15 awarded to each individual, and their signature showing that they received the cash. The total amount awarded and received must show at the bottom of the log signed by the custodian of the disbursement fund. The sum of the unused cash and the total amount awarded must equal the total of the disbursement funds received. Participants earning $50 or more will be listed on a separate participation log, which will be given to the UAA for entry in HokieMart for payment. 8. Once funds are returned to the Extension Office, bottom portion of the Non-employee Temporary Cash Change of Custodian form is completed, placing custody of the funds back to the Agent originally making the request. 9. To ensure that disbursement funds are accounted for accurately by the University, the Agent will make payment for the amount of unused cash by using the on-line system through HokieSpa at: The UAA will then complete a HokieMart ISR to the Bursar s Office vendor id to repay the loan for the actual disbursements made. An image of supporting documentation (participation spreadsheet) must be attached in HokieMart to the requisition. The HokieMart requisition is approved by the UC or DD as appropriate. 11. The UAA debits the 4-H club Quicken account for actual funds disbursed, less unused cash returned. Starting a 501 (c) (3) 4-H clubs and organizations which chose to establish their own independent 501 (c) (3) for management of their finances and, in some cases, have other clubs/groups act as activities of their organization will be financially separate from the university. There must be a memorandum of understanding (MOU) in place between the organization and the university for use of the 4-H name and emblem. The MOU must be completed and signed by the club and also the Director of Virginia Cooperative Extension. Templates for the two MOU s are available on the 4-H Intranet. Copies of all 501 (c) (3) applications, supporting documents, and signed MOUs must be forwarded to the State 4-H office. 15

16 The responsibility for ensuring appropriate steps are taken with the IRS to establish the 501 (c) (3) resides with the 4-H club/organization. An option was available for a unit 4-H Volunteer Leaders group to apply for independent status and have other clubs within the unit to act as activities under their independent group. Foundation Accounts Every unit in Virginia has a 4-H Foundation Account that has been established for them as a sub-account under the Virginia 4-H Foundation. This account allows 4-H clubs and organizations to receive gifts (monetary or in-kind) from donors who desire a tax deduction for their gift. This is the ONLY avenue for 4-H clubs in Virginia to receive gifts unless clubs have established their own 501(c) (3). The two primary sources of revenue into the Foundation are gifts and other income. To process gifts, a Gift Transmittal Form must be completed and sent with the monies. For non-monetary gifts which may include equipment, the Gifts-in-Kind Transmittal Form must be completed to record these gifts. Gifts are subject to a one-time reinvestment fee. No fee is assessed on monies deposited as other income. For detailed information on fund deposits and payments, please refer to the VTF faculty/staff handbook which may be found on-line at Endowment Funds- Endowments are funds or monies that are permanently restricted by a donor. The intent is that the principal of the original gift can be used to provide a perpetual stream of financial support to a program, scholarship or professorship. A new foundation account will be established for an endowment. Recording Gifts to and Expenditures from Foundation- The UAA will maintain a separate Quicken account to credit deposits to the Foundation account and to debit expenditures from the Foundation account. A sub-account in Quicken should be established to account for gifts made to specific 4-H clubs/organizations and reports provided monthly to those clubs. The UAA will subtract any reinvestment fees from the Quicken file. Requests for Payment- The Foundation is committed to prompt payment of all requests for payment. Generally, checks are mailed within 15 calendar days of receipt of the check request. The Foundation requires original itemized receipts attached to the payment request forms. The Foundation is Exempt from Virginia 16

17 sales tax and will appropriately deduct sales tax in accordance with Virginia law. When purchases are made through the Foundation, vendors should be informed that the Foundation is tax exempt. If you are applying for funds which require documentation of the Foundation s tax exempt status or other supporting documents, please contact Amanda Lucas at or alucas4@vt.edu Questions concerning 4-H Foundation accounts can be directed to Amanda who will forward them to the appropriate person. Contact Mr. Ben Grove, Associate Director of Development, CALS at ben.grove@vt.edu or for assistance with major gifts or establishment of endowments. 17