4-H Youth Development Program
4-H Youth Development Program
4-H Youth Development Program
University of California
4-H Youth Development Program

Chapter 9: Financial Management

Policy Homepage | Forms & Support Documents

I. INTRODUCTION

The California 4-H Youth Development Program (4-H YDP) is a major educational effort that is central to the mission of the University of California Cooperative Extension (UCCE) system. This means that the University of California, Division of Agriculture and Natural Resources (UC ANR), has overall responsibility for development, efficiency and effectiveness of the 4-H YDP in California. Funds for support of 4-H YDP work come from the United States Department of Agriculture (USDA), UC, the California 4-H Foundation, private donors and various other sources.

II. AUTHORIZATION

  1. Scope
    1. 4-H units and volunteer management organizations (VMOs; e.g., councils), when authorized by the issuance of a 4-H charter, are granted certain privileges and responsibilities related to financial activities. 
    2. UC ANR expects 4-H units and VMOs to raise and manage all 4-H YDP funds in accordance with generally accepted accounting principles and within the policies and procedures specified in this Handbook.
    3. 4-H units and VMOs are authorized by the 4-H charter to carry out a program of youth development activities using the 4-H name and emblem. This authorization also gives them the authority to organize, account and manage the operational and fiscal concerns of the 4-H YDP, projects and units under their jurisdiction. 
    4. This policy extends to funds generated in the name of 4-H by the adult volunteers, parents/guardians and members of all 4-H units and VMOs.
  2. Responsibility
    Authorization to use the 4-H name and emblem is the responsibility of the statewide 4-H YDP director, working in cooperation with each county director or designee. See  , Authorization_to_Use_the_4-H_Name_and_Emblem_Flow_Chart and For Staff for more information. Using the 4-H Name and Emblem
    1. The county director or designee is responsible for authorizing the use of the 4-H name and emblem within her or his jurisdiction. See Application to Use 4-H Name and Emblem Single or Multiple County Use.
    2. The State 4-H YDP Director is responsible for authorizing the use of the 4-H name and emblem for statewide or multi-county (not under the authority of one county director) use. See Application to Use 4-H Name and Emblem Statewide or Multiple County Use.

III. THE CONCEPT OF INTERNAL CONTROLS

  1. Control System
    A successful organization must have an "internal control system" to coincide with privileges and responsibilities. This concept is recognized by all enterprises, both public and private, as the framework for good management. An internal control system consists of the policies and procedures designed to provide management with reasonable assurance that the goals and objectives it believes important to the entity will be met. Internal accounting controls are established to ensure that only authorized transactions are processed and recorded, to allow for the preparation of appropriate financial statements and to ensure that access to, and use of, assets is appropriate. Administrative controls provide the environment in which accounting procedures occur. This environment is characterized by three major factors.
    1. Awareness:  Communication of what is expected.
    2. Attitude:  Incentive to exercise control.
    3. Discipline:  Assurance that activities are controlled.
  2. Control Environment
    The internal control system set forth in this section is designed to help 4-H YDP staff and adult volunteers create an appropriate control environment and a system of sound accounting procedures for the financial operations of all California 4-HYDP activities.  The objective is to provide a framework of internal controls for 4-H activities that gives reasonable assurance regarding the following:
    1. Accomplishment of established 4-H YDP goals and objectives.
    2. Efficient and effective use of 4-H YDP resources.
    3. Safeguarding of all 4-H YDP assets.
    4. Reliability and integrity of 4-H YDP financial reports and other information.
    5. Compliance with all policies, plans, procedures, laws and regulations applicable to 4-H YDP activities and programs.

IV. BANK ACCOUNTS

    1. Authorization
      1. All 4-H units and VMOs must be chartered to use the 4-H name and emblem to raise, allocate and disperse funds in support of the 4-H YDP, projects and groups. See also. Using the 4-H Name and Emblem
      2. Authorization to establish one business checking and one savings account is obtained from the county director* or designee upon approval of the unit’s charter by the State 4-H YDP Director.
      3. Additional accounts require further approval from the county director* or designee.
        1. 4-H VMOs with approval from the county director* may work with the California 4-H Foundation to establish an interest bearing fund functioning as an endowment with the UC Regents that can be used to support an annual budget. Fund minimums to establish and withdrawal restrictions apply.
    2. Establishment of Accounts
      Each 4-H YDP unit and council that manages cash is required to:
      1. Have an Internal Revenue Service (IRS) Employer Identification Number (EIN).
      2. The UCCE county office must be the address of record for all county 4-H units and VMOs.
      3. The State 4-H Office should be the address of record for the state VMO.
      4. Establish at a financial institution its own checking and/or savings account with at least two (2) signatures.
    3. Signatories
      1. The signatures must be from two (2) unrelated individuals, of whom one can be a 4-H member and the other an adult volunteer. The signer may not be the same person as the payee. If the bank does not allow youth members to sign, then there should be two adult volunteers.
      2. Although many banks do not allow an account to require two (2) signatures, all 4-H YDP accounts should be set up so that two signatures are required by the 4-H unit or VMO to expend or withdraw funds.
      3. No UCCE or 4-H YDP staff are permitted to be signatories on 4-H unit or VMO bank accounts.
    4. Use of ATM and Deposit Cards
      1. 4-H units and VMOs are not allowed to apply for or use automatic withdrawal or credit cards.  On-line banking transmissions are not permissible.
      2. Deposit cards that allow for deposit only may be used with the approval of the county director* or designee.  See Deposit_Cards_Electronic_Banking_FAQ.
    5. Review of Monthly Statements
      1. Adult volunteer and youth treasurers are responsible for maintaining and reconciling the bank statements for each account on a monthly basis. These constitute a record of deposits, withdrawals, fees paid and interest earned on a monthly basis. See Treasurer's Manual (2014)
      2. The county director* or designee must review all the monthly 4-H YDP unit and VMO bank statements for any discrepancies. See Establishment_of_UCCE_County_Office_Banking_Procedures_Flowchart and Reviewing_4-H Unit and VMO_Monthly_Statements_Checklist.
        1. The bank account statement cycle date must reflect the period of the first day of the month through the last day of the month (e.g., July 1 – July 31).
        2. Monthly statements should be immediately copied and forwarded to the 4-H unit or VMO treasurer.
        3. Upon completion of the monthly review, all statements should be initialed and filed in UCCE office*. See Monthly_4-H_Bank_Statement_Verification_Form.
        4. Any discrepancies identified in the monthly bank statement review must be reported immediately to the county director*.
        5. The county director* will investigate any discrepancies, with assistance from the State 4-H Office and (if needed) from the ANR Controller’s office. If discrepancies are identified, and depending on their nature, they may result in the removal of 4-H adult volunteer signatories from the account or closure of the account and transfer of the funds to the 4-H VMO to be held in escrow for up to three (3) years. 
    6. Failure to follow the above policies can result in the revoking of the 4-H YDP unit or VMO charter. See the 4-H_Banking_Policy_FAQ, Establishment_of_UCCE_County_Office_Banking_Procedures_Flowchart and Staff Resources for more information.
    7. Revocation and Dissolution of a Charter
      1. Handling of 4-H Unit Assets in a Dissolution
        In the event a charted 4-H unit is disbanded, all assets (including equipment, property, bank accounts, etc.) shall be transferred to the county 4-H VMO to be held in escrow for three (3) years pending re-establishment of the unit before distributing the assets in support of the  county 4-H YDP. County 4-H YDP staff will submit a Notification_of_4-H_VMO/Unit_Dissolution_Form to the State 4-H Office at the time the 4-H Unit votes to disband.
      2. Handling of County 4-H VMO Assets in a Dissolution
        In the event a county 4-H VMO is dissolved, all assets (including equipment, property, bank accounts, etc.) are the responsibility of the University of California and shall be transferred to the county director or designee. The county director or designee will hold any unrestricted assets in escrow for up to three (3) years pending re-establishment of the county 4-H VMO before distributing the assets for support of the county 4-H YDP. Restricted assets would continue to be dispersed according to donor designations under the oversight of the county director or designee. The county 4-H VMO President/Chair will notify the county 4-H YDP staff who will submit a Notification_of_4-H_VMO/Unit_Dissolution_Form to the State 4-H Office at the time the 4-H VMO votes to dissolve.
      3. Handling of State 4-H VMO Assets in a Dissolution
        In the event a state 4-H VMO is dissolved, all assets (including equipment, property, bank accounts, etc.) are the responsibility of the University of California and shall be transferred to the State 4-H YDP Director. The State 4-H YDP will hold the assets in escrow for up to three (3) years pending re-establishment of the state 4-H VMO before distributing the assets for support of the 4-H YDP in the state, as appropriate. Restricted assets would continue to be dispersed according to donor designations under the oversight of the State 4-H YDP Director. The state 4-H VMO President/Chair will notify the State 4-H Office staff liaison who will submit a Notification_of_4-H_VMO/Unit_Dissolution_Form to the State 4-H Office at the time the state 4-H VMO votes to dissolve.
    8. Federal Employer Identification Numbers (EIN)
      1. Upon review of the charter application, the State 4-H Office will assign the EIN# to the newly chartered 4-H unit or VMO. When a unit or VMO is chartered, the IRS letter granting the new EIN# will be provided to 4-H YDP staff. The UCCE county office* must maintain a record of all EIN numbers in the county. See IRS 4-H EIN FAQ.
      2. No account held in the name of any 4-H unit or VMO may use the name of a member or adult volunteer, and a social security number of an individual must not be used in lieu of the appropriate EIN.
      3. Each 4-H unit and VMO must have their own EIN. 
      4. The UCCE county office* address must be the office of record for all 4-H units and VMOs. 

V.  RESPONSIBILITIES OF 4-H YDP STAFF

The purpose of this section is to describe the roles and responsibilities of the 4-H YDP staff in overseeing the management of funds for 4-H units and VMOs.  The 4-H YDP staff is responsible for creating an environment that encourages proper internal controls.

      1. Training Member and Adult Volunteer Treasurers
        1. The 4-H YDP staff is responsible for training the member treasurers and officer/treasurer advisor for each unit and the adult volunteer treasurers for each VMO in financial management policies, procedures and principles as appropriate to 4-H YDP operations. 
        2. At a minimum, trainings must be conducted annually and attendance is required in order to hold the position of treasurer and manage unit or VMO banking accounts.
      2. Maintenance of Records
        The 4-HYDP staff is responsible for collecting and maintaining copies of the following:
        1. Annual budgets, including proposed fundraising activities for the 4-H units and VMOs.
        2. EIN records.
        3. Bank statements and their signatories.
        4. Annual financial statements from each 4-H unit or VMO
        5. Annual inventory reports.
        6. Annual audit and/or peer review reports.

VI. 4-H UNIT AND VMO TREASURER RESPONSIBILITIES

      1. Authorization
        1. 4-H units and VMOs (e.g., councils) are responsible to UC and are obligated to follow UC policies and procedures established to document financial activity in accordance with laws and regulations. 
        2. 4-H units and VMOs must demonstrate an ability to handle funds properly.  The administration of all 4-H units and VMOs is to be in accordance with the group's constitution, bylaws or other enabling documents and is to be controlled by a duly constituted governing body.
        3. The 4-H unit or VMO treasurer has the primary responsibility of handling the organization's funds. Failure to comply with these policies may result in withdrawal of the 4-H charter and disbanding of the 4-H unit or VMO. The UCCE county office* will be the legal mailing address for all 4-H units and VMOs.
        4. The accounting procedures outlined here are generally applicable to all 4-H units and VMOs. All individual 4-H units operate under the authority and jurisdiction of their respective 4-H VMO. Additional or customized reporting procedures may be established by a 4-H VMO for the 4-H units under its jurisdiction, as approved by the county director* or designee. 
      2. Responsibilities
        The 4-H unit orVMO treasurer is responsible for:
        1. Keeping accurate financial records (copies of invoices, bills, etc.) related to the funds and property of the 4-H unit or VMO, and accounting fully for all receipts and expenditures.
        2. Receiving, recording and depositing all funds in an account established for the particular 4-H unit or VMO.
        3. Paying bills or making other authorized expenditures appropriated in the budget or otherwise approved by the 4-H unit or VMO membership.
        4. Furnishing annual financial reports at year-end, or September 15, and at such times as required by the 4-H VMO and/or the county director* or designee.
        5. All 4-H units and VMOs authorized to use the 4-H name and emblem are required to prepare an annual financial statement which includes details on income and expenditures. Financial reports should include a balance sheet and a statement of revenues and expenses (income statement).
        6. Acting as custodian of all funds and personal property of the 4-H unit or VMO and keeping a current list of such property.  The 4-H unit or VMO secretary or other designated member or adult volunteer may also carry out this function.
        7. Preparing all financial records for an annual audit or peer review, and participating periodically as a peer review team member during the financial review of 4-H units or VMOs.
        8. All separately incorporated 4-H units will prepare and file all reports required by federal, state and local governmental agencies, including the Internal Revenue Service, California State Franchise Tax Board and the State Board of Equalization, where and when applicable. All 4-H units, regardless of incorporation status, are to file reports with the State Attorney General where and when applicable.
        9. Participating in annual training of 4-H unit and VMO treasurers that teaches how to assume responsibility for preparation of budgets, raising funds and maintaining their individual 4-H unit or VMO accounting records.

VII. PLANNING AND FUNDRAISING

The purpose of this section is to describe the responsibilities and procedures related to planning and fundraising.

      1. Budget
        1. Chartered 4-H units and VMOs are authorized to use the 4-H name and emblem for educational or informational uses that are in the best interest of 4-H. Thus, they are responsible for helping to plan and implement an educational program in their community.
        2. All 4-H units and VMOs will prepare an annual program budget to establish allocation of financial resources to fulfill program needs. The proposed budget needs to be approved by the 4-H unit or VMO membership.
        3. Approved budgets must be submitted to the UCCE county office* for review by the county director* or designee.
        4. Budget management is a primary responsibility of 4-H unit and VMO officers. Thus, officers are responsible for ensuring that members are kept abreast of the budget targets as compared to the actual expenditures. If there are deviations from the planned budget, officers are obligated to inform the members to ensure that there is full agreement, support and approval on any changes.
        5. The method of fundraising and intended use of funds must be included in the annual budget proposal, and reviewed and approved by the county director* or designee.
        6. Raising funds with no specific associated 4-H YDP purpose is not allowed.
      2. Revenue
        The classification of income should follow the general categories of income typically used by non-profit organizations.  For example, IRS Form 990 contains such classifications.  If needed, subcategories can be created to better identify sources of funds.
      3. Authorization for 4-H YDP Fundraising
        1. Any 4-H unit or VMO that uses the 4-H name and emblem and raises, allocates and disburses funds must be chartered. 
        2. All proposed fundraising activities must be approved via an adopted budget or by an affirmative vote of the membership.
        3. All proposed fundraising activities of 4-H units and VMOs must be submitted to the UCCE county office* for approval by the county director* or designee using Form 8.7 Fundraising Approval. The county director* or designee is responsible for assuring fundraising activities are in compliance with applicable policies. See Using the 4-H Name and Emblem.
        4. Units and VMOs have the authority to receive private money to support the operating expenses of 4-H. All funds for these purposes, regardless of the source, should be accurately accounted for and managed. 
      4. Fundraising Guidelines
        1. Allmethodsoffundraising by 4-HunitsandVMOsmustcomplywithUC’s general fund development guidelines given below.  The regulations apply to those activities involving the solicitation and use of goods and services for 4-HYDP, as well as the solicitation of funds.
          1. Any raising or use of funds by a 4-H unit or VMO must be for the purpose of furthering the research and education goals of the  4-H YDP.
        2. All fundraising activities in support of the 4-H YDP must comply with the following:
          1. Federal law regarding the use of the 4-H name applies in these activities.  See Public_Law_772.
          2. Pertinent federal rules and regulations governing must also be followed.  Also see Fundraising: Private Support for the 4-H ProgramUsing the 4-H Name and Emblem.
          3. The 4-H name and emblem shall not be used to imply endorsement of commercial firms, products or services.  See Fundraising: Sponsorships and Promotions.
          4. In connection with 4-H fundraising purposes, the following disclaimer statement must be used on products or services offered for sale: “A portion of the sales price of this product or service will be used to promote 4-H educational programs. No endorsement of the product or service by 4-H is implied or intended.”
          5. Public, non-profit agencies, such as the 4-H YDP are not to conduct lotteries, raffles, bingo, and other games of chance.  See Raffles, Lotteries, Gaming and 4-H.
        3. All fundraising activities conducted on behalf of outside groups or organizations must additionally comply with the following:
          1. 4-H members may participate in fundraising activities in support of outside groups and organizations as part of a service learning activity. See Guidelines for Fundraising to Benefit Groups or Organizations by 4-H Units and VMOs and Fundraising to Benefit Groups or Organizations by 4-H Units and VMOs FAQ.
          2. 4-H groups may collect non-cash items.
          3. 4-H groups may collect cash contributions (i.e., cash or checks) to purchase supplies and materials to carry out their service learning activity.
            1. All money received must be processed and dispersed according to the policies outlined in this chapter.
          4. 4-H groups may not give cash contributions (i.e., cash or checks) to any group or organization outside of 4-H.
          5. Any use of the 4-H name and emblem is forbidden if it exploits the 4-H YDP, adult volunteers, members, USDA, Cooperative Extension, land-grant institutions or their employees.
      5. Fund Sources
        The following criteria should be used in determining the acceptance and administration of funds.  For more information, refer to the ANR Administrative  Handbook Section 206-Gifts.
        1. The 4-H unit or VMOs may manage other funds, such as proceeds from sales or donations.  The 4-H units or VMOs must manage the funds in accordance with UC policies and with the 4-H units or VMOs’ constitution and bylaws.
        2. 4-H units or VMOs should be aware that all funds received from any source must be accounted for as public funds.
      6. Contracts and Grants
        Adult volunteers, members, units and VMOs may not apply for or receive contracts and grants.
      7. Gifts to 4-HUnitsandVMOs
        1. The 4-H units or VMOs may receive funds by virtue of their own fundraising efforts from individuals, organizations or businesses. Funds donated directly to a 4-H unit or VMO by private individuals, groups, agencies or foundations are to be managed in accordance with the procedures outlined in this Handbook and must be reported in the 4-H unit’s or VMO’s annual financial report.
        2. Any proposals of significant gifts, (e.g., those in the amount of $1,000 (one thousand dollars and no cents) or greater), that are given with or without restrictions; gifts of real estate; or gifts proposed as endowments must be reviewed and approved prior to acceptance by the county director*, in coordination with the ANR Development Services Director.
          1. Donations include gifts of both money and things (a.k.a. “in-kind donations”).
          2. 4-H adult volunteers should refer all potential donors to the county director*, for further action.
          3. In accordance with UC policy, the ways in which the 4-HYDP staff may acknowledge gifts are limited as follows:
            1. Recognition of gifts may be made by listing the donor’s name in printed material, on banners or other signage.
            2. Gifts may not be acknowledged by displaying corporate logos, marketing materials, web links or other forms of promotion and/or endorsement.
            3. The specific amount of the gift may not be stated, however, donors may be broadly categorized by gift amount (e.g., $100 to $1,000, $1,001 to $10,000, and so on).
        3. The UC EIN should be provided to donors or other entities requesting an EIN for tax exempt purposes. The 4-H unit or VMO EIN cannot be used. 
        4. Donations must be acknowledged in writing. 4-H units or VMOs may provide a 4-H Donation Receipt to those who have donated cash or non-cash items to the 4-H YDP. If items are donated for auctions the 4-H_Donation_Receipt_for_Auctions should be used. The 4-H_Donation_Receipt_Template_Letter is also available to 4-H units and VMOs for donation acknowledgment. See IRS Publication 1771: Charitable Contributions – Substantiation and Disclosure Requirements.
      8. Raffles and Games of Chance
        1. Public, non-profit agencies such as the 4-H YDP are not to conduct lotteries, raffles, bingo and other games of chance. See Games_of_Chance and the 4-H_YDP_FAQ.
        2. The USDA and the 4-H YDP have a long-standing policy discouraging fundraising activities involving raffles, lotteries or other games of chance.
          1. Federal regulations for the Granting Authorization to use the 4-H  Name and Emblem require that fundraising programs using the 4-H name and emblem should be carried out for specific educational purposes.
          2. Private support monies should be a) given and used for priority educational purposes, and b) accounted for efficiently.  See National 4-H Headquarters Fact Sheet, Raffles, Lotteries, Gaming and 4-H.
        3. The 4-H name and emblem may not be used on or associated with products and services sold in connection with 4-H YDP fundraising programs where an endorsement of a commercial firm, product, or service is either intended or effected.

VIII. ANIMALS AS GIFTS IN THE 4-H YDP PROGRAM

The 4-H YDP does not accept animals as gifts or donations.  4-H units or VMOs and county/state 4-H YDP offices cannot accept title or ownership of animals.  Any such gifts should be made directly to individuals.  (It should be understood, however, that gifts to individuals are not deductible as charitable contributions for federal or state income tax purposes.) Proceeds from the sales of animals at livestock sales, auctions or similar events are not a charitable contribution to the 4-H organization and are not tax deductible for the purchaser. See Livestock Sales, Auctions and Similar Events for more information.

IX. GUNS AND FIREARMS AS GIFTS IN THE 4-H YDP PROGRAM

The 4-H YDP does not accept guns or firearms as gifts or donations.  4-H units or VMOs and county/state 4-H YDP offices cannot accept title or ownership of guns or firearms.  See Chapter 7, XV. 4-H YDP Shooting Sports.

X. MANAGEMENT OF EXCESS FUNDS

  1. Retention of Excess Funds
    The goal of fundraising should be to increase the total amount of funds available to support and grow the 4-H YDP. The retention of excess funds by a 4-H YDP unit or VMO is strongly discouraged and must be approved by the county director* or designee.
  2. Investment of Excess Funds
    Any investment of excess funds should be carefully considered and approved by the 4-H unit or VMO and county director*. County directors* must approve the amount of annual carry forward funds for 4-H units and VMOs as well as determining the investment of those funds.

XI. FINANCIAL PROCESSING PROCEDURES

  1. Accountability
    Officers of the 4-H units and VMOs, as well as the adult volunteers involved are accountable for all funds raised.  Accountability includes responsibility for how funds are used and protected from misappropriation.  This includes monitoring adult volunteer and youth treasurers’ responsibilities.  The Treasurer's Manual (2014) provides more detailed information.
  2. Handling Money
    The 4-H unit or VMO treasurer has the responsibility for recording, disbursing, depositing and properly accounting for and classifying the 4-H unit or VMO funds.  Individual accountability for cash must be maintained throughout all cashiering operations.  4-H funds must not be combined with other funds, such as private, business or other institutional funds. See also Banking_Electronic_Check_Conversion_FAQ.
  3. Receiving Money
    1. The 4-H unit or VMO must have a record for all cash and checks received.
    2. A receipt should be issued for each individual collection of cash and checks.  Pre-numbered receipts are preferred. The receipts must be turned over to the 4-H unit or VMO treasurer as soon as possible. 
    3. In some cases, it might not be practical to issue a receipt.  In these cases, collection of funds must be documented by Form 8.8 Monthly Statement of Cash Collections to be filled out daily.  The completed Form 8.8 Monthly Statement of Cash Collections should indicate the name of the individual who collected the money, the total money collected (attach cash register tape) and the name of the banking institution where funds will be deposited.
    4. Two individuals, one being an unrelated adult, must sign the Form 8.8 Monthly Statement of Cash Collections.
  4. Depositing Money
    1. If practical, to ensure the safe handling of currency and to protect the individuals handling cash, funds should be deposited daily or turned over each day to the 4-H unit or VMO treasurer.
    2. Checks must be made out to the 4-H unit or VMO and not to an individual.  Checks, currency, cashier’s checks and money orders must be endorsed by someone authorized to do so within the 4-H unit or VMO.
    3. The 4-H unit or VMO treasurer must deposit all funds in the 4-H unit’s or VMO's account.  Treasurers are required to deposit funds received within one (1) week and are encouraged to make daily deposits.  If, under certain circumstances, deposits cannot be made daily, a receipt must be written and kept in a secure place overnight.
    4. When Form 8.8 Monthly Statement of Cash Collections is used, the deposit receipt should be attached.
    5. A deposit receipt must be obtained from the bank and filed with the checkbook.  A deposit entry should be made in the checkbook or passbook.  The date, amount and source of income for each individual amount received must be entered in the ledger.
  5. Ledgers
    The ledgers will allow separate entries for receipts and disbursements.  Entries should be made in the calendar year in which they occur.  Headings for funds should be established, as appropriate, in order to separately account for funds from different sources and for expenses by different categories or for different purposes.  4-H units and VMOs with procedures in conformance with the Treasurer's Manual (2014) will meet these requirements.
  6. Other Necessary and Supporting Records
    Other documentation to be retained on file include bills, receipts, canceled checks and written authorization for disbursement not covered in 4-H unit or VMO approved budgets or minutes of meetings in which budget changes or special non-budgeted items were approved.
  7. Petty Cash Fund
    On rare occasions, a petty cash fund may be needed for miscellaneous items.  However, the use of petty cash is not encouraged and it should not be used as a substitute for sound planning and budgeting.  Petty cash should be reconciled, at a minimum, on a monthly basis.  In petty cash allotments, the cash plus the cash receipts for expenditures should equal the initial authorized amount.  All petty cash allotments should be entered in the general ledger as petty cash along with the person's name to which the cash is issued.
  8. Change Funds
    A change fund may be necessary to support substantial cash sales activities.  The purpose of a change fund is to provide a reserve of small denomination currency and coins to make change.  The change fund is not a petty cash fund and is not to be used to pay expenses.  A change fund is established by writing a check for the balance to be kept in the change fund and obtaining the equivalent small denomination currency and coins.
  9. Cash Advances
    In general, cash advances may not be made from the 4-H unit or VMO checking or savings account.  On rare occasions, it may be necessary to provide cash in advance of an expense being incurred.  The advance must be approved by the unit or VMO for a specific purpose and the amount of the advance should be no greater than anticipated costs.  The recipient of the advance must provide receipts for expenses incurred and return that portion of the advance not used.  The persons approving the advance and signing the check must be different from the person receiving the advance.
  10. Theft or Mismanagement of Funds
    If 4-H funds are stolen or mismanaged or if there is suspicion of other financial abuse, the incident must be reported immediately upon discovery to the county director*.
  11. Handling Funds for Project Groups
    Project groups should plan the total cost of project materials and supplies for the year. Project groups within 4-H units or VMOs may raise funds for special events, such as field days, project trips or community service activities. All monies received to support project groups including costs paid by members are to be deposited in the 4-H unit or VMO treasury. The 4-H unit or VMO treasurer should set up separate project accounts in the general ledger for each project group so that separate accountability can be maintained over funds and expenditures. The 4-H unit or VMO treasurer may also set up separate project accounts in the general ledger for each special event controlled by a project group so that separate accountability can be maintained over these funds and expenditures. All expenditures to support project groups must be made from established 4-H unit or VMO accounts.
  12. Mileage Reimbursement
    4-H adult volunteers will be reimbursed at the rate of $.20 per mile, when the mileage reimbursement is paid with funds held in a UC Regents account. Other rates may be set when the funds for reimbursement are paid from an externally held account by the 4-H unit or VMO.

XII. DISBURSEMENTS

  1. Procedures
    All expenditures must be made from established 4-HunitorVMO accounts.
    1. Decisions concerning the disbursement of funds by a 4-H unit or VMO are to be made by the membership of the unit or VMO.
    2. Financial commitments and expenditures must be in accordance with the policies established in this Handbook and with the 4-H unit’s or VMO’s approved budget.
    3. If expenses are incurred for non-budgeted items, these expenses should not be paid until after the 4-H unit or VMO formally approves the non-budgeted expenditure.
    4. For budgeted items, the treasurer should make payments only with proper documentation such as a purchase order, receipt, invoice or other supporting documentation.
    5. All checks must bear the signatures of two unrelated persons authorized and designated as signatories by the unit or VMO. The signer may not be the same person as the payee.
    6. The check memo must include the purpose of payment.
  2. Records
    1. All money paid out must be entered in the check register or stub when the check is written.
    2. All disbursements are to be made by check and must be substantiated by receipted bills, canceled checks and written authorization (e.g., unit or VMO meeting minutes, the annual approved budget, etc.).
    3. Disbursements should be made only from money that has already been deposited, not from anticipated deposits or from cash in hand.
    4. Checkbook stubs must be completely filled out at the time each check is drawn or a deposit is made.
    5. At a minimum, the classification of disbursements should follow the expense accounts and definitions set up in IRS Form 990. Sub-classifications can be added to provide additional detail or clarity.

XIII. FEDERAL TAXES  

4-H units and VMOs are not required to file federal taxes since they are not separately incorporated legal entities and the activities conducted by the 4-H units and VMOs are treated as educational activities conducted by the UC. The UC will treat all 4-H unit and VMO income and expenses as UC income and expenses on its Form 990-T.

XIV. CALIFORNIA STATE INCOME TAXES

4-H units and VMOs are not required to file with the California Franchise Tax Board since they are not separately incorporated legal entities and the activities conducted by the 4-H units and VMOs are treated as educational activities conducted by the UC. UC and its affiliated organizations are considered to be part of the state of California and its instrumentalities. As such, the UC is not subject to the Revenue and Taxation Code and, by extension, is not subject to state income tax. 

XV. CALIFORNIA STATE SALES TAX

  1. Scope
    In California, sales tax applies to the sale of tangible personal property unless the sale is covered by a specific legal exemption or exclusion. In most circumstances, the 4-H YDP is exempt from charging sales tax on the items it will sell because it is considered a consumer and not the retailer of specific kinds of tangible personal property under certain conditions. Specific legal exemptions or exclusions that pertain to 4-H units and VMOs engaged in fundraising projects are set forth in Section 6361 and Regulation 1597, Revenue and Taxation Code. (Also see California State Board of Equalization Publication No. 61, Sales and Use Taxes: Exemptions and Exclusions and Publication No. 18, Tax Tips for Non-Profit Organizations.). For additional information see the California_State_Sales_Tax_FAQ. You may also consult the UC Sales Tax Manual.
  2. Items Not Taxable
    The sale of food products, nonalcoholic beverages or other tangible personal property made or produced by members of the organization are exempt from state sales tax when those sales are made on an irregular or intermittent basis and the organization’s profits from those sales are used exclusively in furtherance of the purposes of the organization. A seller’s permit is not required for the sale of these items as 4-H is considered a consumer.
  3. Taxable Items
    In general, the sale of items not made or produced by group participants such as t-shirts, wrapping paper, mugs, stuffed animals, etc. are subject to California sales tax. Thus, 4-H may not sell items that require collecting and reporting sales taxes.

XVI. WITHHOLDING TAX

4-H units and VMOs that pay California source income to nonresidents of California (i.e., payment for services) must not exceed a total amount paid of $1,500 per payee in a calendar year. This policy does not apply to services that are processed through UC as there is an established process for withholding tax and for remitting the tax withheld to the Franchise Tax Board. For further details, see accounting manual chapter D-371-77, Disbursements: Tax Withholding on Nonwage Payments Made to Nonresidents of California.

XVII. PROPERTY TAX

  1. Real Property
    1. Any real property donated to, or purchased by 4-H units or VMOs will generally be held by UC in the name of The Regents of the University of California and as such, is therefore exempt from payment of property taxes.
    2. The ANR Development Services Director, in addition to the county director*, must be consulted when 4-H units or VMOs are considering purchasing or accepting donations of real property.
  2. Other Property
    Any other property (e.g., tools, equipment, vehicles, etc.) owned by 4-H units or VMOs is exempt from property tax. 
    1. The county director* must approve the purchase of any vehicles (e.g., trailers) for use in the 4-H YDP.  If approved, the vehicle (e.g., trailer) shall be registered to The Regents of the University of California and is exempt from payment of property taxes. Such vehicles (e.g., trailers) shall be obtained for educational purposes only.  

XVIII.  FINANCIAL REPORTING AND COMPLETION

The purpose of this section is to describe the steps involved in preparing financial reports and completing the accounting and auditing processes. 4-H annual financial reporting follows the statewide 4-H YDP program year and covers the period of July 1 through June 30.   

  1. Annual Financial Report
    1. A Form 6.3 Annual Financial Report must be completed for each 4-H unit or VMO account annually by the 4-H treasurer.
      1. The balance at the end of the previous year as reported on the Annual Financial Report should match the account balance at start of the statewide 4-H YDP program year.   
      2. Report total monthly reconciled income and expenses and ending monthly balance.
      3. Report year totals.
  2. Inventory Report
    1. A Form 6.2 Annual Inventory Report of 4-H unit or VMO property and equipment will be made by each 4-H treasurer.
      1. Items purchased will be recorded on the current inventory listing. For items disposed of during the year record the date.
      2. Donated equipment will be posted on the inventory listing, showing the date acquired, item received and the source of the donation and its value.
      3. Items listed in the Annual Inventory Report are to have an individual purchase price or fair market value of $1,500 or more. Any similar items (e.g., three computers each worth $500) are to be recorded on the inventory report.    
  3. Financial Review Responsibilities and Requirements
    1. One of the key elements of any system of internal controls is the provision for an examination and audit of financial statements, fund balances, assets and the established accounting system. This examination should be independent of the 4-H unit or VMO treasurer or others involved with the relevant finances. Independence ensures the accuracy of information, the existence of assets and the reliability of the financial data.
    2. Each 4-H unit and VMO is responsible for having their financial statements and related books and records reviewed on an annual basis after the close of the fiscal year. The peer review committee must complete Form 8.5 Year-End Club Peer Review Report and Form 8.6 Year-End Club Peer Review Checklist and submit to the 4-H unit or VMO treasurer.
      1. The internal peer review committee should not include the 4-H unit or VMO treasurer, anyone related to the treasurer or any other adult volunteer involved in the financial matters of the VMO, such as fundraising, bookkeeping or holding signature authority.
      2. For the 4-H unit, the review committee should be comprised of two (2) adult volunteers and two (2) members.
      3. For the VMO, the peer review committee should be composed of at least three (3) adult volunteers.
    3. It is desirable to have a peer review committee that is appointed by the VMO chair or president to oversee the conducting of audits for all units that are under the jurisdiction of the VMO. At the discretion of the county director* or designee this may be requested.
    4. Under certain circumstances, a certified public accountant (CPA) must conduct an audit and/or review of a 4-H unit or VMO financial statements and related books and records. The following circumstances may indicate the need for this type of annual audit and/or review:
      1. There are suspected irregularities related to financial activities.
      2. The county director*, 4-H YDP staff, 4-H unit or VMO deems it desirable to have an independent audit and/or review by a certified public accountant of a treasurer's annual financial statements, fund balances, any other books or records and/or the accounting system.
      3. The treasurer's duties are transferred from one individual to another within the unit or VMO.
  4. 4-H Annual Financial Reporting and Certification
    1. Annual financial reporting forms will be prepared by the treasurer of the 4-H unit or VMO and forwarded to the county director* or designee at the close of the statewide 4-H YDP year (July 1-June 30) and submitted to the UCCE county office* no later than September 15th.
    2. A copy of the annual financial records shall be kept on file in the UCCE county office* for five (5) years in secure storage. See Record_Retention_Guidelines for duration required to keep copies of financial records. 
    3. Annual entry of financial reports for all 4-H units and VMOs into the 4-H Annual Financial Reporting System is required. The reporting consists of:
      1. Form 6.3 Annual Financial Report
      2. Form 6.2 Annual Inventory Report
      3. Form 8.5 Year-End Club Peer Review Report
      4. Form 8.6 Year-End Club Peer Review Checklist
    4. The 4-H YDP staff must certify 4-H annual financial reporting for each 4-H unit and VMO under their authority in the  4-H Annual Financial Reporting System by November 1 of the reporting year.
    5. Non-compliance with this policy will result in loss of the 4-H charter and dissolution of the 4-H unit or VMO.

XIX. GIFTS FROM 4-H UNITS AND VMOs

  1. 4-H units and VMOs may not give cash gifts to individuals, business or organizations.
  2. Non-cash gifts may be presented to individuals, businesses or organizations for the purposes of appreciation, recognition, incentive or sympathy if it can be demonstrated that the gift benefits the 4-H YDP or is clearly necessary to the 4-H YDPs fulfillment of its role as a good community citizen. For specific limits and additional information see Gifts to Individuals Businesses or Organizations by 4-H Units and VMOs FAQ.
  3. Any use of the 4-H name and emblem is forbidden if it exploits the 4-H YDP, adult volunteers, members, USDA, Cooperative Extension, land-grant institutions or their employees.

XX. SCHOLARSHIPS

  1. 4-H units and VMOs may provide scholarships to 4-H members.
  2. Funds for qualified educational expenses (e.g., books, tuition, other required fees) that are provided to scholarship awardees, are not taxable for the recipient.
  3. When scholarship awardees receive funds that may be used for nonqualified expenses, then the recipient is responsible for reporting to IRS the amount of funds received as taxable income.

    *When referring to the the state 4-H VMO UCCE county office and county director refer to the State 4-H Office and State 4-H YDP Director, respectively.

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Page Last Updated: January 27, 2017
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