Ohio State University Fact Sheet

State 4-H Office

2120 Fyffe Rd., Columbus, OH 43210-1084

Finances and Fund Raising

4H-005-99

Deborah K. Lewis
Extension Agent, 4-H Youth Development, Lorain County

Money management is not on the top of everyone's "Things I love to do" list. However, managing 4-H funds by the "shoe box method" is not a good habit to get into. This fact sheet contains helpful information about money management, tax exempt status, and fund raising, for 4-H clubs, committees, councils, and other groups.

4-H Treasury Guidelines

1. If money is to be raised, your club should have a reason to raise it. Do not raise money for the sake of raising money. The reason should be voted on by the club members. 4-H groups are encouraged to establish a budget each year.
2. Only a small carry over should remain in the treasury from year to year. Members who helped raise the funds should spend them.
3. The treasurer should keep accurate records using the Ohio 4-H Treasurer's Record Book, Circular 935. A treasurer's report should be given at each meeting. The minutes should accurately reflect actions taken on finances. Three or four signatories should be provided for each account, with two signatures required on all checks.
4. Detailed deposit records should be kept with the source and amount of all income. Collecting and depositing funds should involve at least two persons.
5. An audit committee, appointed by the president, consisting of people not directly associated with the treasurer, should perform an audit on the club treasury annually.
6. Money should be deposited in a checking account at a local bank. Withdrawal and/or payment of bills should be approved of the members or executive committee.
7. An Employer Identification Number (E.I.N.) is required to open a bank account. DO NOT USE ANYONE'S SOCIAL SECURITY NUMBER ON 4-H ACCOUNTS. Clubs need to apply for their own number by completing an SS-4 form. This form is simple to fill out and is available through any social security office or from the IRS (the county Extension office may have a sample copy of how to complete this form). Keep a copy of the letter from the IRS with the E.I.N. as a permanent record.
8. If the club disbands, the club treasury should be given to a worthy cause. If possible, the group should decide on the cause (i.e. 4-H Committee, another 4-H related cause, or other charity).
   If a club votes to divide, the treasury should be divided based upon membership with equal shares per member going to the respective club treasury.
   If a club is divided without mutual agreement and cannot decide on division of the treasury, the problem should be referred to the extension agent.
9. If the treasury has gross receipts exceeding $25,000 during the year, the IRS requires Form 990 be filed. If the club falls into this category, call the extension agent for further instruction.

Tax Exempt Status

According to USDA Program Aid #1282, Tax Exempt Status of 4-H Organizations Authorized to Use the 4-H Name and Emblem, 4-H clubs are exempt from paying sales tax on items they purchase because the club falls under a "Blanket Exemption" that is provided for 501(c)(3) nonprofit organizations. Sales tax exemption does not apply to individual 4-H members or volunteers, but rather to the 4-H club as a whole.

When making purchases for the club, fill out a "blanket certificate of exemption" for each vendor. This form exempts the club from paying sales tax on items purchased for club use. However, the purchaser may be asked to pay cash or use a club check. A vendor may ask for a vendor identification number to put on this form. An Employer Identification Number may be given in place of a vendor identification number if one is not available. Under no circumstances should a club or committee use the university number assigned to the county Extension office.

Ohio Sales Tax and 4-H Fund Raising

4-H is exempt from paying sales tax on items purchased. However, 4-H groups are required to collect and remit sales tax on taxable items which are resold. This rule applies only if the group holds more than six days of taxable item fund raising sales during the calendar year. If the club sells taxable items for less than six days during the year, or if it sells only nontaxable items, no sales tax needs to be collected. If the club holds more than six days of taxable item sales, it will need to apply for a vendor's license. The county auditor's office provides these forms.

Examples of taxable items which 4-H groups might sell include plants, clothing, crafts, cookbooks. Basically, taxable items include tangible property that will change hands for a price. Food consumed off the premises where prepared (i.e. bake sale) is not subject to sales tax. In Ohio, car washing is a service that is subject to sales tax unless a donation is requested for the service instead of a set price.

Ideas for Fund Raisers

Following is a list of fund raising ideas for 4-H groups:

• Sales, bazaars, auctions, or roadside stands for selling products made by 4-H members.
• Serving dinners, box suppers, ice cream or box socials, refreshment stands at fairs or activities. Check with the county health department about local laws and follow safe food handling practices.
• Amateur entertainment festivals, such as community square dances, plays, skits, and pageants.
• Community forest or Christmas tree plot, Christmas greens, or wreaths.
• Recycling drives.
• Selling candy, popcorn, potato chips, or frozen food. Deal with a reputable company.
• Collect recipes from 4-H members, their friends and families and compile them into a cookbook to sell.

The Extension Agent may have a file of other fund-raising ideas. Some counties may have county wide fund raisers in which 4-H clubs or groups may participate.

References

Ohio 4-H Agent's Program Book, 3rd Edition. (1994). Columbus, OH. The Ohio State University.

Ohio Sales and Use Tax Guide. (1994). Columbus, OH. Ohio Department of Taxation.

Program Aid # 1282 Tax Exempt Status of 4-H Organizations Authorized to Use the 4-H Name and Emblem. Washington, D.C. United States Department of Agriculture.