Policies and procedures

section 10: Financial management

 

10.1 Basic Principles of 4-H Financial Policies and Practices

10.1.1 Final Decision

The Assistant Director of Extension - 4-H Program Leader has the final decision regarding all financial
policies for all 4-H entities, whether or not the policies are listed in the sections below.

10.1.2 YOUTH RESPONSIBILITIES

Youth learn important life skills (e.g., budgeting, record keeping, etc.) through managing financial resources in 4-H Clubs. Youth therefore should be involved in collecting, accounting and distributing funds. Financial institutions may require individuals to be at least 18 years old to be a signatory on an account. This does NOT prohibit younger members from writing (but not signing) checks, recording transactions, balancing the checkbook, and preparing treasurer’s reports, with adult guidance.

10.1.3 4-H Youth Extension Educator responsibilities

An Extension Educator is responsible for the 4-H organizations at the local level. The Educator’s fiscal responsibilities include:

  1. Issue authorization for group or volunteer leader to carry out programs and activities using the 4-H name and emblem.
  2. Keep record of all 4-H organizations with this authority.
  3. Secure from each 4-H organization an annual report of its Review each local 4-H unit’s activities to determine that the unit meets the particular 4-H program objectives for which it was established and that the 4-H Name and Emblem are used in accordance with the statute.
  4. Inform each 4-H unit’s leadership of the annual IRS Form 990 filing requirements.
  5. Ask each 4-H unit to submit an annual report of its financial activities using the Annual 4-H Unit/Club Financial Report template in the Financial Management Forms section. Recommended timeframe: January/February (allowing time for volunteers to obtain December financial records from their financial institutions).
  6. Establish the schedule for annual financial reviews/audits and notify the clubs of the review/audit date. Notification should be sent 10-12 months ahead of the time that the review/audit will be conducted to allow time for the volunteers to collect the necessary financial records. Recommended timeframe for financial reviews/audits: February, allowing time for financial records from previous year to be included in the documents submitted. Annually, a financial review/audit shall be conducted for one fifth of the county’s 4-H units resulting in a financial review/audit being conducted for each unit at least once every five A financial review/audit shall also be conducted any time there is a change in the primary adult volunteer working with the finances of the unit. A 4-H Unit/Club Financial Review/Audit form should be completed, signed and maintained for each club/unit (as conducted) in a file in the Extension Office. Financial reviews/audits may be conducted by an individual or committee selected by the local 4-H policy group (i.e., 4-H Council). Under no circumstances should the committee members be related to the adult volunteer who is a signatory on the account.
  7. Keep on file in the Extension Office copies of correspondence to each 4-H unit in the county requesting the unit’s financial information and activity records; financial reports; financial review/audit forms; and recommended actions for each 4-H unit/club.
  8. Review and approve 4-H Unit/Club fund raising activities prior to their implementation, to assure they are in line with state and federal policy (including the use of the 4-H Name and Emblem).

10.1.4 4-H Unit responsibilities

Every 4-H unit (council, club, committee, project group, etc.) shall:

  1. Maintain a record of its activities (meetings, workshops, & other events involving 4-H members). This record may be in a form such as the sample included in the financial policies forms section, a calendar of events, or some other resource that details the activities of the unit. Activities of the unit are to be reported to the Extension Office prior to the time they are held.
  2. Maintain a record of the contributions it has received and expenses incurred; prepare and keep on file a record of its financial transactions; file all necessary state & federal forms, and submit an annual report to the Extension Educator responsible for the county 4-H program. A current financial report shall be made at each of the unit’s meetings to keep members of the unit updated on the unit’s finances.
  3. File an IRS Form 990 return annually, by May 15th. Please see additional instructions under the “IRS Filing and Reporting Requirements” heading later in this section.
  4. Due to the size of the accounts for most 4-H Affiliates, it is strongly recommended that the 4-H Affiliate secure the services of a professional tax preparer and/or financial accountant to help manage the financial aspects of the organization. An annual audit conducted by a professional accountant is highly recommended.
  5. If fund raising is conducted, submit all fundraising opportunities to the 4-H Extension Educator for review and approval prior to the implementation of the fund raiser.

 

10.2 Fund Raising in 4-H

The purpose of having a treasury in a 4-H club or organization is to provide funds to support the activities of members and adult volunteers in their pursuit of educational and community service goals. Funds raised/donated in support of the 4-H name and program are in public trust and therefore should be carefully managed in order to safeguard the positive image of the organization for future generations.

Fund raising should not be a 4-H unit’s major objective. Funds should be raised for specific purposes that may include community service and assisting youth who do not have the resources to participate without financial assistance.

Any fundraising program using the 4-H name or emblem must be conducted in compliance with federal guidelines.

Any use of the 4-H Club Name or Emblem is forbidden if it exploits the 4-H program, its volunteers or 4-H participants, the United States Department of Agriculture, the Cooperative Extension Service, or the land grant institution and its employees. Fund raising programs using the 4-H Name or Emblem may be carried out for specific educational purposes. Such fund raising activities should be approved by the appropriate entity as follows: 

  1. Approval by the County Extension Service (either County Extension Director or 4-H Youth Development Extension Educator) if the fund raising activity is to be carried out in a single county.
  1. Approval by the Director of Extension if the activity is to be carried out on a multi-county level or state wide.

Under no circumstances may the 4-H Name or Emblem be used for fund raising purposes in any games of chance including bingo. A game of chance is defined as risking money or other property for gain, contingent in whole or in part upon lot, chance, or the operation of a gambling device. It is the responsibility of the 4-H Youth Educator to inform 4-H organizations of this policy.

4-H units are discouraged from using Online fund raising/electronic payment sites (e.g. “GoFundMe”, “Ziggedy”, “GiveForward.com”, “NetworkForGood”, “AmazonSmile”, Paypal, Venmo, etc.) due to the inability to authorize their use of the 4-H Name and Emblem and because these types of sites are often targets of fraudulent activity. Further, we are unable to guarantee that 4-H families’ personal information will be protected when their information is shared with third parties.

10.3 Authority to use 4-H Name and Emblem

Each organization should be able to show proof of its authorization to use the 4-H name and emblem.

  1. For a 4-H Unit/Club, a 4-H charter signed by State Extension Officials indicating the group is organized in accordance with 4-H program objectives is sufficient. (See Section 7.5)
  2. For a 4-H Affiliate, a current signed Memorandum of Understanding with the county Extension Office is evidence of a group’s authorization to use the 4-H name and emblem.

 

10.4 Ownership and oversight of 4-H funds

4-H is a public organization; therefore, all funds raised in the name of 4-H (e.g., dues, fundraising, and other sources) are 4-H property intended for the benefit of all members. No single member, volunteer, committee or other group of individuals owns these monies.

As part of its responsibility as a Land Grant Institution to operate the 4-H Program for Indiana, Purdue University has oversight over all 4-H Funds.

 

10.5 Distribution of funds after dissolution of 4-H entity

In the event of termination or revocation of a charter for, or dissolution of, a 4-H Club or other 4-H Entity, all of the principal, income, and assets shall be transferred and assigned to the Purdue Cooperative Extension Service Office in that County. These funds will be held to support future 4-H educational program efforts, including the formation of new 4-H Clubs.

 

10.6 Handling of funds

Funds should be deposited promptly after they have been received. Official, written receipts should include the source of funds (e.g., car wash, candy sales), the date, and if possible, the name of the person from whom the funds were obtained. The receipts are the back-up documentation for bank deposits and they become a part of the group’s records.

 

10.7 Use of debit cards 

4-H groups may use debit cards to make financial transactions under the following conditions:

  • Written documentation is provided authorizing each transaction from at least two people in the organization (e.g., approval of transaction documented in meeting minutes, co-signature of entity president on the receipts/statements).
  • A record of each electronic transaction is maintained in the 4-H group’s financial records.
  • The debit cards are kept and utilized by 4-H Club Treasurers and/or by approved 4-H Adult Volunteers who are appointed by the County 4-H Extension Educator to handle funds for the 4-H group.

 

10.8 Receipts for donations

The individual, business, or group that donates to the 4-H organization may be eligible to deduct the contributions (bequests, legacies, devises, transfers, gifts) to these 4-H organizations on the donors’ federal tax returns according to the IRS code, pending the advice of the donors’ tax preparers (and assuming the 4-H unit has maintained its federal tax exempt status).

Dated receipts should be provided to donors. A template for an appropriate receipt is provided in the Financial Management Forms section.

 

10.9 Budgeting

A budget is a written plan approved by the members of the group to determine how money will be obtained and spent. Once a budget has been approved by the group, approval for payment of individual items is not required if the items appear in the budget. If a group does not have a budget or an item is not part of an approved budget, the item in question needs to be presented to the group for approval before payment. This assures that expenditures are made with approval of the group. It is also a great way for members to learn how money flows into and out of the organization’s treasury.

No investment of 4-H funds is permitted without the expressed written approval of the State 4-H Program Leader.

 

10.10 4-H program payment policy

Payment/Cancellation/Late Fee/Refund Policy
Career Development Events

Team and individual registration for state qualifying competitive events is submitted by the area contest coordinator. Team and individual registration for non-qualifying state competitive events is submitted by the coach at least two weeks prior to the contest, using a registration system and instructions provided by the contest coordinator.

Contest registration fees are outlined in the state ag judging handbook. The state contest coordinator will provide a registration confirmation to coaches as soon as possible following the registration deadline or last area qualifying event, along with a deadline to submit changes or cancellations. After this time, substitutions will be allowed day of contest as outlined in the state ag judging handbook and payment in full will be required for all registered participants.

Checks are made payable to Purdue University. Payment is expected day of contest. A school purchase order can be presented or notification that check is coming will suffice. A $25.00 late fee will be assessed to any school or 4-H club failing to submit full payment within 30 days following the contest. Any school or 4-H club with an outstanding balance due 60 days after the contest will not be allowed to register for any further state career development events until their outstanding balance has been paid in full.

Refund requests must be submitted in writing to the contest coordinator and will be considered on a case-by-case situation. Any refund must be approved by the state ag judging committee officers.

Purdue Extension staff working with county or area contests are encouraged to implement a similar policy.

 4-H Online Enrollment Program Fee 

Indiana 4-H program fee payment is expected when annually enrolling in the 4-H youth development program. Payment can be made by cash delivered to the county Purdue Extension office, check mailed or delivered to the county Purdue Extension office, or electronically through 4-H Online. The program fee is non-refundable once the enrollment has been processed and in active status.

4-H Online State Event Registration

Youth and adults registering to participate in a state event that does not require a registration fee are to follow instructions provided by the event coordinator to initiate and complete the event registration through 4-H Online. An event registration is not considered final until the registration status says “approved”. Only individuals with a registration status of “approved” will be allowed to participate in the event.

Youth and adults registering to participate in a state event that requires a registration fee will first contact their county Purdue Extension office indicating their desire to participate. County office staff will initiate a registration on that individual’s behalf and direct or provide them instructions to complete the online registration form. The individual must then use their 4-H Online credentials to access the system and follow the provided instructions to navigate to the event registration and complete the registration form.

Payment in full is expected within 5 business days of completing an event registration. Payment can be made by cash delivered to the county Purdue Extension office, or by check mailed or delivered to the county Purdue Extension office. Some events may allow electronic payment through 4-H Online.

An early registration fee will be applicable to any individual completing the 4-H Online registration form up to one week prior to the final registration deadline. Any individual completing the 4-H Online registration form during the last week of registration will pay the full registration fee. The state event coordinator may consider accepting registrations after the final registration deadline on a case-by-case situation and may include an additional late registration fee.

Example: State 4-H Junior Leader Conference early registration fee of $180 through May 15; full registration fee of $200 May 16-May 20; late registration fee of $225 May 20-June 1.

Cancellations must be submitted in writing to the county Purdue Extension office and event coordinator. Cancellation requests received prior to the final registration deadline will be granted a full refund. Cancellation requests received within five business days after the final registration deadline will be granted a 50% refund. Cancellation requests received six or more business days following the final registration deadline will receive no refund. Any refund must be approved by the event coordinator and State 4-H Program Leader. Cancellations due to extenuating circumstances will be determined on a case-by-case situation.

 

10.11 location of funds

All 4-H funds shall be kept in an official financial institution. Funds may not be kept in ANY individual’s personal account, home, or place of business.

All 4-H entities are required to obtain an Employer Identification Number (EIN). This is the number that shall be provided to the financial institution where the entity’s financial accounts are held (checking or savings—of any kind). Personal Social Security numbers of volunteers or youth should NEVER be used as the identifying number on a 4-H account. However, an individual’s SSN may be requested by the bank to verify the individual is who they say they are.

 

10.12 obtaining an EIN

Each 4-H unit is required to obtain a unique Employer Identification Number (EIN) from the IRS, whether or not the unit has finances. The EIN may be obtained by filing an Application for Employer Identification Number (form SS-4) with the IRS. The application may be found on-line at: www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online. A template of the SS-4 Form which 4-H groups should follow is included in the Financial Management Forms section. If not completed online, the completed form can also be mailed or faxed to:

Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax-TIN: 855-641-6935

4-H should appear within the group name on the form and on the group bank account. When completing the item that asks for “Principal Activity of Your Business,” check “other” and write either 4-H Club, 4-H Committee or appropriate 4-H name. **It is recommended that each group use the local Extension Office address (c/o NAME County Extension Office) as the group’s address.

When the EIN is received from the IRS, be sure to enter this number on all correspondence and forms submitted to the Internal Revenue Service, including the appropriate IRS Form 990. An electronic or paper copy of the IRS letter issuing the EIN should be kept in the Extension Office, with the volunteer, and at the State 4-H Office.

Since this number is issued in the name of the 4-H unit, it is important that banks be notified of any change in the address of the 4-H unit and/or treasurer. When a 4-H unit is disbanded, please notify the State 4-H Office so that the Employer Identification Number can be dissolved for the unit.

NOTE: IRS policies require that an individual (volunteer) name and Social Security Number be listed as the responsible party for the 4-H entity on lines 7a and 7b of the SS-4 Form. Purdue University and the PU Group Exemption Number are not accepted by the IRS as the responsible party.

 

10.13 Tax exempt status of 4-H Units/Clubs

  1. In August 2013, Purdue University was granted a Group Exemption Number (GEN), 5924, by the IRS which provides federal tax exemption status to the 4-H Clubs and 4-H Affiliates in Indiana which have agreed to be under Purdue University’s general supervision and control. 
  1. The IRS ruled on February 9, 1973, that 4-H Units/Clubs which are operating under the guidance and control of the Cooperative Extension Service, and which are authorized to use the 4-H name and emblem, are exempt from paying federal taxes on income received.

The PU GEN does not provide 4-H units/clubs with state sales tax exempt status. Thus, these groups do need to pay state sales tax on items purchased. In general, Units/Clubs should not use the County 4-H organization’s state sales tax exemption number. 

  1. Documentation of tax exempt status:
    1. At times 4-H organizations are asked to provide a copy of an IRS determination letter indicating federal tax-exempt status (e.g., grant applications). Federal tax determination letters for each 4-H Club and 4-H Affiliate which is a part of the Purdue Group Exemption Number may be requested by the 4-H Extension The Educator can send an e-mail to the State 4-H Office to make this request. Include the name of the 4-H group, its EIN, and its mailing address in the message. These letters are not to be modified or altered in any way.
    2. NOTE: requests should NOT BE MADE for those county entities (some Fair Boards and 4-H Councils) that have filed for and maintain their own separate 501(c)(3) not for profit status.

10.14 IRS Filing and Reporting Requirements

  1. Each entity with an Employer Identification Number (EIN) is required to file an annual federal tax return (IRS 990 series) by May 15th, whether or not the entity has any funds to report. Failure to report will result in the loss of federal tax exempt status.
  2. Funds exceeding disbursements in a given year are exempt from federal income taxes.
  3. There is no limit to the amount of income that can be received in a given year or carried over from year to year.
  4. If gross receipts in a tax year normally exceed $50,000 (determined by an average of the current and two prior tax years), the 4-H organization is obligated to file Form 990 (gross receipts include gifts, donations, sale of goods, fees, dues, etc., without reduction for the cost of goods or assets sold or for expenses) by May 15th, using group exemption number 5924. It is additionally recommended that entities that reach the $50,000 threshold submit their records for an annual audit and should seek the advice of a professional tax preparer to assist with the preparation and filing of the federal IRS Form 990. Note: Copies of annual financial reports, audit forms and the 990 must be maintained and on file in the Extension Office.
  5. 4-H entities whose gross receipts are under $50,000 will file an IRS 990-N, Electronic Notice (e-postcard) by May 15th. Specific filing instructions are provided to 4-H Educators to share with 4-H Volunteers in the spring of each year.

 

10.15 Responsibility of 4-H Entities to Collect Sales Tax

A new Indiana state tax law went into effect on July 1, 2022. The former 30-day limit for selling items before being required to collect sales tax was changed. The new law requires any entity that collects more than $20,000 in sales for the calendar to collect and pay sales tax.

Indiana 4-H and Purdue Tax Department are exploring the implications for this change in State Law for Indiana 4-H entities.

 

10.16 Instructions for 4-H Clubs and Affiliates which wish to join the Purdue Group Federal Tax Exemption Number

The majority of 4-H Clubs and 4-H Affiliates in Indiana completed the steps necessary to join the Purdue Group Federal Tax Exemption Number (PU GEN) in 2012. For newly-formed 4-H Clubs and 4-H Affiliates, here are the steps to complete to join the PU GEN:

4-H Clubs

  • Approve and sign the standardized 4-H Club Constitution.
  • Sign the Authorization Letter for 4-H Clubs.
  • Apply for and obtain a unique Employer Identification Number (EIN) from the IRS.

4-H Affiliates

  • Adopt the set of 5 standardized provisions into their governing document.
    • For Incorporated groups, these provisions will be included in the Articles of Incorporation and filed with the Secretary of State using Articles of Amendment Form 4161 http://www.in.gov/sos/business/2426.htm, under “Non-Profit Corporations (Domestic)”.
    • For Unincorporated groups, these provisions will be included in the Constitution.
  • Sign the Authorization Letter for 4-H Affiliates.
  • Apply for and obtain a unique Employer Identification Number (EIN) from the IRS.
  • Complete and sign a Memorandum of Understanding between the Affiliate and the County 4-H Program (Extension Office).

NOTE: Each of the forms referenced above can be found in the Financial Management Forms section.

Indiana 4-H has an annual opportunity to accept the above information and make changes to the entities included in the PU GEN with the IRS. An annual opportunity will also be provided for updates to be made to the contact names listed for the entities. Each county is asked to submit changes to their list of entities by November 1 annually.

 

10.17 Indiana Tax Codes Supporting 4-H Funding

Information Maintained by the Office of Code Revision Indiana Legislative Services Agency