4-H Finances: Accountability and Reporting

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1 4-H Finances: Accountability and Reporting

2 Permission to Use the 4-H Name and Emblem If you are a 4-H member or volunteer, you are permitted to use the 4-H Name & Emblem once your club or group is chartered with the official 4-H Charter from National 4-H Headquarters at the Cooperative State Research, Education and Extension Service (CSREES), within the United States Department of Agriculture (USDA). With this privilege comes the responsibility to be accountable for its use and any funds that are raised or used in connection to 4-H. Is your 4-H club, council, foundation, or organization private? No. Federal law identifies you as an organization which normally receives a substantial part of their support from a governmental unit or from direct or indirect contributions from the general public. Because you are a public organization, you have an obligation to file a periodic report (at least annually) of your activities. There is information on name and emblem policies at the National 4-H Headquarters website: or call your local Extension office. Under Federal law whoever uses the 4-H emblem or any sign, insignia, or symbol in imitation of it, or the words 4-H Club or 4-H Clubs or any combination of these or other words or characters without being authorized, shall be fined not more than $5,000 for individuals and $10,000 for groups, or imprisoned not more than six months, or both. 4-H Tax Exempt Status As determined by the Internal Revenue Service (IRS), 4-H Clubs and Affiliated 4-H Organizations are exempt from federal income tax under the provisions which correspond to section 501(c)(3) of the IRS Code. Donors may deduct contributions to 4-H clubs and affiliated 4-H organizations such as; bequests, legacies, devises, transfers, or gifts as applicable under the IRS Code. Funds and organization assets earned in the name of 4-H must be expended for a tax exempt purpose. Getting an Employee Identification Number for Your Club The IRS has assigned a Federal Income Tax Group Exemption Number to 4-H which must be used by all 4-H Clubs and affiliated 4-H organizations when filing or corresponding with the IRS. The Group Exemption Number (GEN) is Additionally, there is a Federal Tax Identification Number, commonly know as an Employer Identification Number (EIN) assigned to the National 4- H Headquarters-USDA that identifies that office as the parent entity for 4-H Clubs and Affiliated 4-H Organizations. That Federal Tax Identification Number is These numbers are available for reference when addressing tax exemption status questions about 4-H clubs and affiliated 4-H organizations. In order for the IRS to verify the tax exempt status of individual 4-H clubs and affiliated 4-H organizations, you must: obtain a Federal Tax Identification Number or EIN; and submit a request in writing to the IRS for inclusion under the 4-H Group Exemption Number. The EIN may be obtained on-line from the IRS at Click on search EIN and complete form SS-4. Insure that the GEN 2704 is used when completing the form. The EIN is provided on-line. The written request should be submitted to: Internal Revenue Service, Ogden, UT, Include the name of the 4-H club or affiliated 4-H organization, mailing address, GEN 2704, EIN and effective date requested for inclusion under the Group Ruling. The written request MUST be signed by a state or local Cooperative Extension Service official. 1

3 You should never use your personal Social Security Number on an account for a 4-H organization in lieu of an EIN specifically designated for that account. You may lose your Tax Exempt Status in doing so. In addition, it is illegal for 4-H funds to be co-mingled with personal accounts or other organizational accounts which are not tax exempt under 501(c)(3) regulations. Fiscal Responsibility The privilege of using the name and emblem of 4-H carries the responsibility of being accountable for its use and any funds that are used in its name. The misuse or theft of funds, grants, equipment purchased with money through 4-H clubs and organizations, will be dealt with through law enforcement and the legal system. It is in everyone s interest to have safeguards and controls to minimize, or prevent, the opportunity for the misuse of 4-H funds. The 4-H Organization Financial Report is one way in which we can be accountable for the money raised and spent on 4-H educational events and activities across the state of Colorado. This annual report can be a part of your annual accounting for the benefit of the treasurer, officers, members and leaders of a club or group. The 4-H Treasurer s Record Book is a valuable resource to maintain records and develop fiscal responsibility for the group. Record keeping is one of the life skills developed in 4-H and it relates to groups and individuals. Financial Controls 1. Use pre-numbered checks and receipts. This will help your treasurer account for all transactions. Without pre-numbered checks and receipts checks can be written on the account by taking blank checks from the back of the book. 2. When you have a small fund-raising activity, keep the cash collections and receipts under the control of two persons (not from the same family). Counting cash and making a report should be done at the site, not taken home to be done later. A written report should be given at the next meeting. Any transactions to pay members/leaders for purchases for the event should be noted at the time and the receipt should indicate how repayment was made. The proceeds from this activity should be deposited as soon as possible after the event. 3. Receipts in the form of checks should be endorsed For Deposit Only and deposited immediately upon receipt. 4. All deposits should be deposited in the bank intact. It is a felony to endorse a check that does not belong to you and to use it (for any purpose or any time) for your own purpose. If the leader or someone else feels they are due any portion of this receipt, they should be paid by a check written by the treasurer. A bill or receipt should be kept to document this transaction. 5. All disbursements should be made by check and supporting documentation should be kept for review. Your club treasurer can staple the receipt or bill to the check stub for later accounting. Every check written should have a receipt available in a file which shows the itemized list of expenditures, when and where purchased. 6. If the treasurer is also the bookkeeper then two signatures should be required on all checks. The other signer should be the club president. 7. A person other than the bookkeeper should receive bank statements from the bank and compare it to the checkbook register. One way this can be done is to have the club president open the bank statement and reconcile it at an officers meeting or as soon as possible after receiving the statement. 8. Someone other than the club leader and the treasurer should authorize payment. 2

4 9. Records should be kept of all equipment purchased and inventories should be taken periodically. 10. Excess cash should be maintained in a separate bank or investment account and withdrawals should require two signatures. 11. At the end of every year, or whenever there is a change in treasurers, the club should require an internal review. In this process, two or three members/leaders should examine the checks and other transactions, compare these with the club minutes, and report back to the club about the status of the accounting. Club Financial Assessment Tool 1. Have the organizational leader and treasurer received training in handling cash? If other leaders or groups within the organization have separate accounts, have they also been trained? 2. Does your club have a bank account or access to an account with a sponsoring organization? 3. If you have a bank account do you require at least two signers on the account (one of them must be the treasurer)? Are they members of two different families? 4. Is there only one bank account in the club? Have the bank account number and EIN been reported to the Extension Office? 5. Does your club have an approved annual budget? 6. Are all club fund-raisers approved by the Extension Office? 7. After a fund-raising event, is the cash counted and reported by two individuals (not from the same family)? Is the deposit slip filled in and the money placed in a bank bag for deposit? 8. If reimbursements are made to individuals during the event, are the receipts signed and recorded as expenses? 9. Are all tickets safeguarded prior to assignment to club members? 10. Is an event report prepared immediately after each event? 11. Do all donors of money, services or supplies receive a letter acknowledging their gift? 12. Are cash receipts placed in a locked drawer or cash box and physically safeguarded against theft and loss? 13. Are pre-numbered receipts, cash register receipts and event tickets promptly issued to individuals for in-person payments as evidence that funds were received? 14. Are all checks made payable to the club account (not any leader, member or other individual or firm)? 15. Are all checks promptly and restrictively endorsed For Deposit Only in the name of the organization? 16. Are receipts balanced and deposited by the treasurer each month? Yes No N/A 3

5 17. Are receipts deposited intact, with no cash retained or expended by leader or treasurer? 18. Are cash shortages identified and reported? 19. Does a club member (other than the treasurer) verify that the validated receipt from the bank is correctly recorded? 20. Are money losses from fraudulent or dishonest acts immediately reported to law enforcement agencies and the Extension office? 21. Does a committee of 4-H members and leaders conduct a review of the books each year? 22. Are club annual financial reports on file with the Extension office? 4-H Club Dissolution/Disbursement of Funds When a 4-H club disbands it is obligated to disburse its remaining funds as set fort in their club bylaws and in accordance with guidelines established by the IRS for tax-exempt organizations. This is necessary because 4-H is tax exempt organization. Funds raised in the name of 4-H must be used carefully and with thoughtful consideration. Consider the following points and be sure to submit a club dissolution form to the local Extension office for approval before disbursement of any funds. All financial records and books should be turned in to the Extension office after the disbursement plan is approved and completed where they will be retained for the required number of years. All proceeds received from 4-H fund raising must be expended for tax exempt purposes, to further educational programs. The dissolution statement in the club bylaws should identify other tax exempt organizations which the membership wishes to receive remaining funds. It is recommended that other 4-H organizations, such as 4-H foundations or councils be included since this would allow the money raised for 4-H to remain in the program. 4-H funds may never be distributed to club members or leaders because of the tax exempt status of 4-H and rules associated with that status. In the event a club dissolves and has no further meetings at which the membership can make a decision about disbursement of funds, contact your local Extension agent for direction. A club may designate a part of the remaining funds to be held by the 4-H foundation or council for up to one year for the purpose of re-establishing the club under new leadership. A plan for those funds, should the club not reorganize, should be stated on the disbursement form. 4

6 Colorado 4-H Organization Financial Report Year Beginning October 1, 2 Year Ending September 30, 2 4-H Club/Organization Name Employer Identification Number Organization Leader Treasurer Location and Type of Accounts: List bank/savings institution, savings, checking and other accounts. If organization does not have an account, explain methods for financial accountability. Add additional pages if necessary. Bank Name Account Number Type Beginning Balance Ending Balance Person(s) authorized to sign checks, deposit and withdraw funds. (Two signatures are recommended) Name Name Name Title/Position Title/Position Title/Position Financial Summary Annual Income Dues $ Contributions $ Fund-raising Activity $ Other (Identify) $ TOTAL Income $ Annual Expenses Activities $ Supplies $ Other (Identify) $ TOTAL Expenses $ We believe the above information to an accurate and correct accounting of 4-H funds. We understand that Colorado State University Cooperative Extension has the legal authority, under federal and state law, to request and obtain information, freeze, and designate authorized signatures in regard to 4-H accounts. Authorized Signature Date Authorized Signature Date 5