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Legal Concerns Regarding the Boy Scouts of America, Learning for Life and The National Boy Scouts of America Foundation

March 6, 2006


The Boy Scouts of America (BSA) created the Learning for Life program in 1991. The BSA claims that Learning for Life is a separate corporation that operates completely apart from the Traditional Scouting Program. Close inspection of IRS documents and other public records shows this is not the case. In fact, the majority of revenue generated by Learning for Life flows directly into accounts of the National Council of the BSA. These revenues accounted for more than 60% of the revenue supporting the Traditional Scouting Program in 2003.

Learning for Life was chartered as a nonprofit organization. Its stated purpose is to benefit the Boy Scouts of America. It does this by offering the highly successful Learning for Life program for use in improving the lives of inner city youth. The program is sponsored by a variety of federal and state agencies, school boards, charitable foundations and United Way agencies. While Learning for Life lists a portion of the revenue from this program in its IRS reports, the majority is channeled directly into the coffers of the Boy Scouts of America where it is labeled as 'membership fees and assessments' on IRS reports filed by the National Council BSA. A close inspection of the Articles of Incorporation for Learning for Life shows that the organization may not even qualify as a charitable nonprofit organization according to IRS requirements.

The Boy Scouts of America also incorporated the National Boy Scouts of America Foundation. The purpose of the foundation is to financially support the Boy Scouts of America and Scouting organizations around the world. The stated purpose of the foundation does not qualify the Foundation as a nonprofit charity according to IRS requirements. In addition, the IRS does not allow an organization to incorporate a foundation for its own benefit. (Material obtained from


In 1991 the National Council of the Boy Scouts of America (BSA) created the Learning for Life program. The program is a curriculum supplement to be used in a classroom setting and is to be taught by teachers and teachers' aides. Professional and volunteer members of the BSA are not involved in delivering the program. The program is aimed at improving the scholastic performance and life skills of inner city and underprivileged youth in kindergarten, grade school and high school. The objective of the program is '…to enable young people to become responsible individuals by teaching positive character traits, career development, leadership, and life skills so that they can make moral choices and achieve their full potential.' (Material obtained from

Learning for Life (L4L) was incorporated in Washington, DC on February 15, 1991. The BSA retained control of L4L. As noted in the Articles of Incorporation (Attachment A), the Board of Directors is comprised of five BSA officials. Article Four further specifies that 'the corporation is organized and operated exclusively for the benefit of and to further the purposes of the BSA.' In other words, the BSA regards L4L as an organization that will benefit the BSA and not serve as a specific vehicle for charity to the community. Learning for Life is registered as a 501(c)(3) non-profit organization as specified in the Articles of Incorporation. At the time of incorporation the registered office was located at 1025 Vermont Avenue, NW, Washington, DC. In 1992, L4L registered its headquarters address as 1325 West Walnut Hill Lane, Irving, Texas (same address as the National Council, Boy Scouts of America). Learning for Life is offered through 300 local Council offices throughout the country. These Councils are agents of the National Council of the Boy Scouts of America to which they are chartered. They are not agents of Learning for Life, however, and the use of these facilities to solicit business for Learning for Life is an expediency that further illustrates the commingling of BSA and L4L business dealings.

The BSA modified the original L4L in 1998 when it added the Exploring program to the Learning for Life program. Exploring is a program targeting high school age men and women. This program provides an introduction to twelve potential career areas. Professionals in these career areas deliver the program, serving as adult advisors. The BSA saw this as a natural complement to the Learning for Life program since it deals with career development. Learning for Life, Inc. thus consists of the Learning for Life program and the Exploring program. (Material obtained from )

L4L is the largest curriculum supplement program for inner city and underprivileged youth in the United States. It represents a single integrated program with grade-specific material available for kindergarten through high school youth. It has grown from a program serving 600,000 in 1991 when it was founded to a program serving 1.7 million in 2004. (Statistics taken from

Funding Sources

L4L has a broad base of support. A variety of federal government agencies have supplied grant funding for L4L programs. Attachment B is an example wherein the Fund for the Improvement of Education (a federal agency) supplied a grant of $198,820 to support a L4L project serving 18,000 youth in 24 counties in central Oklahoma. State Departments of Education are frequent sponsors of L4L. In Attachment C, we note one such grant for $400,000 from the Florida Department of Education to support a L4L program for the time frame of July 1, 2005 through June 30, 2006. The Hawk Mountain Council, BSA provided a L4L program for 1200 youth in the City of Reading, Pennsylvania during the 2003-2004 school year, as outlined in Attachment D. Jamie Reed of the Pennsylvania Neighborhood Assistance Program told us that the program cost their agency $50,000, inclusive of all program materials. Since the program covered 1200 students, the cost is $50/student. In 2003 there were 1.6M youth involved in L4L, according to the membership statistics cited below. If the charge per student were $50, the program would generate $80M in revenue per year.

A wide variety of other funding sources is also used. These include United Way agencies, school boards, individual contributors and charitable foundations.

As large non-profit corporations, both the BSA and L4L must file financial reports with the Internal Revenue Service using Form 990. Once filed, these forms are matters of public record. They can be obtained free-of-charge from corporate research organizations such as Guide Star ( These forms contain membership statistics. Membership data for youth and adults in the BSA can also be found in BSA Annual Reports ( Overall tabulations showing historical statistics for both the BSA and L4L are also available ( The most recent year for which Form 990's were available from Guide Star is 2003. Consequently, we focused our analysis on 2002 and 2003. The above resources show that there were 3.3M boys in the BSA in 2002, 1.7M youth in L4L in 2002 and 1.2M adult leaders in the BSA in 2002. For 2003, there were 3.2M boys in the BSA, 1.6M youth in L4L and 1.2M adult leaders in the BSA.

Membership Fees and Assessments

A convenient listing of membership fees levied by the BSA in 2002 and 2003 was found in Smoke Signals, vol. 65, no. 5, June-July, 2002. The Otetiana Council publishes this newsletter, and it is available online at . According to this reference, the BSA charged $7/year for youth and adult leaders as membership fees in 2002. Membership fees for L4L were $5/year. In 2003, membership fees increased to $10/year for youth and adult leaders in the BSA. Those in the Exploring program were charged $7/year while those in the Learning for Life program saw their fees unchanged at $5/year. In addition to the direct membership fees, the Learning for Life program charged a $250/year licensing fee for each class that used the program according to a report filed on

Discrepancies Found on 2003 Form 990's

Membership fees and assessments are to be recorded on line 3 of Form 990. The number quoted on the BSA National Council Form 990 for youth and adult leaders in the BSA was $114.4M in 2003. The number quoted on line 3 of L4L Form 990 was '0.0'. According to the above two paragraphs, the membership fees for youth and adult leaders in the BSA were $44M; membership fees for L4L should be more than $8M. We assert that revenue from L4L has been commingled with revenue reported by the BSA National Council and reported as 'membership fees.' Subtracting the calculated membership fees for youth and adult leaders in the BSA ($44M) from the reported figure ($114.4M) gave imputed revenue of $70.4M for L4L. Adding this revenue to the 'total revenue' quoted on line 12 of the L4L Form 990 ($9M) gave a true 'total revenue' of $79.4M for L4L. (This is surprisingly close to the revenue estimate calculated from an L4L quote for a program in Reading, Pennsylvania noted earlier.) The total expenses quoted for L4L on line 17 of Form 990 were $8.4M. Subtracting the total expenses from the true total revenue gave a 'profit' of $71M. Expressed on a 'per participant' basis, revenue was $49.63/person and profit was $44.38/person. The return on revenue was ($71M/$79.4M) x100 = 89.4%.

Discrepancies Found on 2002 Form 990's
We investigated the Form 990's for 2002 and carried out the same analysis using membership fees and membership numbers for 2002. We found similar discrepancies. The corrected 'true total revenue' for L4L in 2002 was $88.1M. Using the total expenses quoted on line17 of Form 990 for L4L, the 'profit' in 2002 was $78.8M. Expressed on a 'per participant' basis, revenue was $51.82/person and profit was $46.35/person. The return on revenue was again 89.4%.

Curriculum Supplement Programs Available from Commercial Vendors

In order to determine whether or not what the L4L charges for its program is 'reasonable,' we found curriculum supplement programs offered by commercial vendors and compared prices that were charged by these vendors to the per-participant revenues generated by L4L. Perhaps the most comparable product was 'Social Responsibility Training' (SRT) offered by Character Development, L.L.C. (detailed description available at SRT is a classroom program led by a trained instructor. It consists of a number of exercises outlined in a handbook. There is a separate handbook for each grade. The course costs $47 per year for each student. This cost covers the handbook and makes allowance for instructor training. An alternative course, 'Life Skills Online School,' is offered by Phillip Roy ( . This course is also a classroom program led by an instructor. It consists of a series of lessons on CD. There is an online component as well. The course costs about $21 per year for each student. This fee covers a license to use the course, an original set of CD's and access to the online exercises. It includes no allowance for materials, although the instructor is permitted to reproduce the CD's for use by additional students at no cost.

As outlined above, L4L revenue was $49.63 per student per year in 2003. This can be broken down to $5/year for registration, $10/year for license fees (assuming 25 students in a class paying a $250 license fee) and the balance, $34.63, for materials. As noted in their Web site,, L4L offers a wide variety of materials, including lesson plans workbooks, textbooks, CD's, promotional materials and recognition materials. It seems reasonable that a school system would spend $34.63 a year on materials for each student. The cost of the L4L program is clearly in line with the cost of the SRT program. It would also be comparable to the cost of the Phillip Roy program if you assumed that a school system spent about $30 per year per student for materials needed in that program. The overall conclusion, then, is that the L4L program is competitive with commercial offerings. It is clearly not a 'charitable offering,' however.

Concern Raised Regarding the Status of Learning for Life as a Nonprofit Organization

Learning for Life (L4L) claims to be a "charitable nonprofit corporation." in its Articles of Incorporation. (Attachment A). This is not sufficient proof of purpose according to the IRS. In order to qualify for exemption under IRC 501(c)(3), the organization must pass the "organizational test." In order to do this the organization must state the precise purpose of its existence. This purpose must match one of the "acceptable purposes" listed for a charitable nonprofit organization in the code. L4L claims in Article Four that it operates "for the benefit of and to further the purposes of the Boy Scouts of America..." In other words, L4L exists to benefit the BSA, another charitable nonprofit organization. This purpose is not on the list of acceptable purposes. Consequently, L4L fails the organizational test and may not qualify as a 501(c)(3) nonprofit organization. IRC 501(c)(3) further states that 'The organization must not be organized or operated for the benefit of private interests, such as the creator…'

Concern Raised Regarding 'Excessive Compensation' of L4L Directors

According to Article Six of the Articles of Incorporation, L4L is required to show that the benefit of any officer of the corporation is limited to "reasonable compensation." L4L pays the salary of both the Secretary and Assistant Secretary in full. Those two individuals made in excess of $700,000 in 2003. That seems "excessive" especially when they are also listed on the payroll of the BSA. IRC 501(c)(3) specifically states, 'If an organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any managers agreeing to the transaction.'

The National Boy Scouts of America Foundation

The BSA incorporated the National Boy Scouts of America Foundation (the Foundation) as a charitable foundation as defined by the IRS. The stated purpose of the Foundation is "to financially support the mission, values and programs of local councils of the Boy Scouts of America and Scouting organizations throughout the world by promoting and soliciting gifts, grants, and matching funds from individuals, corporations and foundations interested in supporting Scouting both nationally and internationally." (Material obtained from In simple language, the purpose of the Foundation is to collect money from individuals and organizations and then distribute it to Scouting organizations across the country (local councils and the National Council) as well as around the world. In even simpler language, the BSA organized the Foundation to raise money for itself and for international Scouting organizations. A Board of Directors manages the Foundation. Members of the Board also sit on the Board of Directors of the BSA National Council. The Foundation provides the BSA with a personal endowment that it can use as it sees fit without outside oversight. It also provides the National Council with a vehicle whereby it can 'reward' certain local Councils for 'superior performance' (e.g. for meeting recruiting goals, for successfully promoting Learning for Life). The potential for abuse of such an unsupervised fund is very apparent.

In order to qualify as a 501(c)(3) nonprofit organization, the Foundation must pass the IRS "organization test." In order to do this, it must have a purpose for existence that appears on the IRS list of "qualifying purposes." The stated purpose of the Foundation does not appear on the list. In addition, IRC 501(c)(3) specifically states that, "The organization must not be organized or operated for the benefit of private interests, such as the creator..."

All IRS references can be found at,,id=96099,00.html .

Legal Issues Raised by These Findings

Is it permissible for two nonprofit corporations to commingle their revenues, thereby concealing the true nature of the finances of both organizations?
Is it permissible for one nonprofit corporation to incorporate a second corporation (or foundation) as a 'nonprofit corporation' (or 'nonprofit foundation') if the main purpose of the second organization is to provide tax-free revenue that supports the founding organization?
Does Learning for Life, Inc. qualify as a 501(c)(3) nonprofit corporation? Does the National Boy Scouts of America Foundation qualify as a 501(c)(3) nonprofit foundation?
Is it permissible for Learning for Life to pay the Secretary and Assistant Secretary of the Board of Directors a sum in excess of $734,000 for 'program services?' This would seem to violate Article Six of the Articles of Incorporation in that it exceeds the limit of 'reasonable compensation.' It also appears to violate IRS regulations for a 501(c)(3) nonprofit corporation.

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