Michigan 4-H Volunteers: Leading the Way to Financial Accountability

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2 Michigan 4-H Volunteers: Leading the Way to Financial Accountability

3 Why is this Information so Important? Because... 4-H wants to protect the reputation of its members, volunteers, staff, and the organization as a whole! Good financial records protect all of us.

4 Why ELSE is this Information Important? Because... 4-H funds are public funds. The public expects a higher standard of financial accountability for 4-H funds than they do for a private individual. 4-H is a public entity. Therefore, 4-H money is owned by the entire group, not by any one individual in the group. The US Dept. of Agriculture and Michigan State University require that 4-H staff have oversight of 4-H financial business.

5 Why NOW? Because... Michigan 4-H is now under Michigan State University s General Exemption Number with the IRS; therefore, 4-H must follow MSU s financial policies and protocols. The last 4-H financial resources was created in 1997; it was time for an update! For ease of use, the content has been broken into a manual for 4-H volunteers and a manual for 4-H treasurers. It is important that volunteers are familiar with the contents of both documents.

6 Helpful Terms Group = Any entity that is authorized to use the 4-H Name and Emblem. This includes clubs, councils, committees, boards and incorporated 4-H groups.

7 Helpful Terms 4-H Staff = MSU Extension 4-H Program Coordinators are your local connection!

8 Helpful Terms Meeting Minutes = Legal, auditable record of decisions made & expenditures approved at a 4-H business meeting. Meeting minutes are one key piece in creating a paper trail.

9 4-H Group Treasury Michigan 4-H members pay an annual $10 participation fee ($30 max/family); page 9. A 4-H group with more than $100 in its treasury for more than 30 days (not including 4-H participation fees) is required to keep their funds in a savings or checking account at a credit union or bank; page 7. All signers on the account must be registered 4-H volunteers or members. Signers should not be related. Dual signatures are recommended; page 39. The account address must be the county MSUE office; page 7. The 4-H treasurer must present a Treasurer s Report at each group meeting.

10 An Annual Budget is Highly Recommended A budget has numerous advantages - page 7:. The members discuss and decide ahead of time what they want to do for the year, including what expenses they anticipate, what income is needed, and how they plan to raise those funds. These discussions are beneficial for ensuring that all members and leaders have given input and are informed of the group s financial plan for the year. Once a budget is approved, it is not necessary to seek approval for payment of items already listed in the budget. A budget is not cast in stone; it can be amended by a vote of the membership. The experience of discussing finances is a key life skill for youth.

11 When Raising Funds for 4-H Complete the 4-H Fund- Raising Application to get signed approval from 4-H staff at least 10 days before the activity begins; page 40. All income (cash and non-cash) must be documented on a pre-numbered written receipt. The original goes to the customer; the carbon receipt should stay securely in the receipt book; page 15. This provides you with a crucial paper trail.

12 When Raising Funds for 4-H 4-H groups are required to pay state sales tax on the sale (or resale) of tangible personal property; pages Sales tax is also due on food sold at concession stands (like a restaurant). Tax must be included in the selling price. Sales tax is also due on silent and live auctions; the amount of the tax due is calculated on the final bid. The collected tax is remitted to the MSUE office with the Annual Financial Summary Report in the fall. Sales tax is not due on services like a car wash and babysitting nor on bake sales (like a grocery store) or pizza kits. Animal sales fall under different laws and are not taxed.

13 When Raising Funds for 4-H Complete the Fundraising Report form and submit it to 4-H staff within 10 days after the activity; page 41. Completing this report is required by the U.S. Dept. of Agriculture.

14 4-H Fundraising No Go s - page 12 The use of raffles, bingo and other games of chance (e.g. Millionaire Parties, Texas Hold Em tournaments, etc.) is prohibited as a means of 4-H fundraising. 4-H groups are restricted from using online fund-raising sites like GoFundMe, DonorsChoose, etc. 4-H groups may not use online payment sites or tools like PayPal or Square for fund collection or payment. No fundraising activities conducted by 4-H can involve the consumption or distribution of alcohol.

15 4-H fundraisers might be

16 Appropriate Use of 4-H Funds - page 16 All money raised using the 4-H name or emblem must be used only for 4-H unless explicitly noted otherwise. 4-H funds may be used to pay for educational programs, activities, workshops or 4-H group supplies. The source of the funds determines how the funds can be used. 4-H funds may not be given to other organizations or used to enrich individuals. To prevent complications, 4-H groups are strongly advised to have a written procedure for using and distributing funds. A paper trail helps ensure transparency. When in doubt, contact your county 4-H staff.

17 Michigan State University maintains a very high standard of fiscal security. Current MSU policy does not allow 4-H clubs, councils, boards, committees and incorporated groups to use an ATM card or a debit card; page 16. MSU policy also does not allow any 4-H group to have or use a credit card in the group s name.

18 W-9 Reporting - page 12 Any 4-H group that pays an individual or a vendor $600 or more (or provides an item valued at $600 or more) must get a completed W-9 from the recipient. For example: A scholarship paid directly to an individual for college tuition or to attend an event. A prize or gift (cash or noncash) valued at $600 or more (saddle, sewing machine, animal, computer tablet, etc.) Payment for services such as rental of space or equipment, catering, DJ, photography, printing, judging stipend, etc. Collect the completed W-9 before distributing the prize/scholarship. Submit the W-9 to 4-H staff within 10 days.

19 Annual Financial Summary Report (AFSR) The AFSR lists a group s financial activities during the previous 4-H program year (September 1 to August 31); page 27. Why is it important? Completes a federal requirement for financial accounting and fulfills the audit concerns of MSU. Creates an open, auditable, public record. Provides a paper trail and is wise fiscal practice; it helps protect the 4-H group s treasurer and leaders. 4-H staff need this information to complete the annual IRS tax paperwork. Submission of the AFSR is required of each 4-H group every year (even if the group does not handle funds). The AFSR is due to county 4-H staff each fall. Annual Financial Summary Report Directions: Complete each section of this report whether or not the group had a treasury, collected or spent funds, accepted donations or had property within the report period. Groups without a treasury, and whose participation fees did not pass through the group, must still complete the form (with zero [0] balances) and submit it by the county s designated deadline. Part 1. Group Information For the period September 1, 20 to August 31, 20 County Group name EIN Financial account No Yes Type Checking Savings CD/Money Market Other Financial Institution Name Account # Signatories,, Part 2. Group Income and Expenses Adjusted treasury balance as of September 1 of last year Taxable sales income (list each separately; attach additional sheet if necessary) A $ 3. Total from additional sheet Taxable sales subtotal (add items 1-3 above) $ Nontaxable income (list each separately; attach additional sheet if necessary) 1. 4-H participation fees collected B 2. Total monetary donations received Total from additional sheet Nontaxable sales subtotal (add items 1-5 above) $ C Total income for the period (add B and C) Expenses (list each separately; attach additional sheet if necessary) 1. 4-H participation fees paid to the MSU Extension office 2. D plus $ Total from additional sheet period (add A and D; Add checks that have not shown E minus $ up on statement Subtract F deposits that have not shown on statement G equals $ plus H minus Please respond to the following: I equals $ Adjusted balance (should agree with account statement) 1. The account statement was reconciled each month. Yes No 2. There is written documentation that all expenses were approved through an approved budget or by a vote of the full membership. Yes No 3. What was the group s total account balance as of June 30 of this period? $

20 These policies and expectations provide a paper trail to ensure transparency as a 4-H organization. They are in place to protect our valued 4-H volunteers! Thank you for your dedication to creating a strong 4-H program!

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