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Boy Scouts of America and Affiliates Draw Attentionfor Alleged Unethical and Illegal Business Dealings

March 8, 2006

When people think of the Boy Scouts of America (BSA), they usually picture Tiger Cubs, Cub Scouts, Boy Scouts or Venture Scouts. These groups constitute the Traditional Scouting Program operated by the National Council of the Boy Scouts of America. The BSA formed a separate corporation, Learning for Life, Inc., to operate two additional programs, the Learning for Life Program and the Exploring Program, that are quite different from the Traditional Scouting Program. The Learning for Life Program is a curriculum supplements program that is used in classrooms to improve the academic performance and life skills of inner city youth in kindergarten through high school. The Exploring Program offers career-awareness activities in twelve career areas.

Proponents of the Learning for Life Program claim that it exists to benefit disadvantaged youth. After all, it is the largest program of its type in the United States, having grown from 600,000 when it was founded in 1991 to 1,700,000 in 2004. In addition, it is widely supported by federal and state agencies, local United Way chapters and numerous charitable foundations. When you look at the Articles of Incorporation for Learning for Life, Inc. you get an entirely different picture. According to Article 4, the purpose of the organization is "to benefit the Boy Scouts of America." Learning for Life, Inc. was incorporated by representatives of the BSA as a charitable corporation subject to the restrictions of Section 501(c)(3) of the Internal Revenue Code. Since the code clearly states that a charitable corporation cannot be incorporated to benefit its creator, it is questionable whether Learning for Life, Inc. even qualifies as a charity, let alone as a charity that exists to benefit disadvantaged youth.

Learning for Life is in fact quite profitable. From enrollment figures and contracts available in public records, we concluded that Learning for Life had revenues of around $80,000,000 in 2003. Both Learning for Life, Inc., and the National Council of the BSA are registered as 501(c)(3) charitable organizations. As such, they must file copies of IRS Form 990 each year to disclose their financial dealings. Once filed, these forms are matters of public record. We obtained copies from an online research firm (Guide Star) in order to see just where these revenues were going in 2003. They certainly weren?t going into Learning for Life accounts. According to Form 990, Learning for Life had revenues of only $9,000,000 (and expenses of $8,000,000) in 2003. The National Council, on the other hand, reported $114,400,000 as revenue from "membership dues and assessments." The number of members in the BSA as well as the dues charged are matters of public record. From these, we conclude that the actual "membership dues and assessments" that the National Council should have reported was $44,000,000. The difference between these two values ($70,400,000) isalleged to be revenues diverted from Learning for Life, Inc. The sum of the revenues for Learning for Life, Inc., $79,400,000, is very close to the $80,000,000 calculated from enrollment figures and contracts noted above. The return-on-revenue, 100 x [revenue ? expenses]/[revenue], for Learning for Life is nearly 90%, making it a very profitable venture indeed. It?s much easier to be profitable when your profits are tax-free and when you can even accept donations and grants from individuals and government agencies. We reviewed the finances for 2001 and 2002 and drew similar conclusions.

Why would the BSA go to such lengths to conceal the fact that Learning for Life, Inc. was actually supporting the National Council by providing nearly 70% of the revenue sustaining the Traditional Scouting Program? The answer is quite simple. The BSA has repeatedly stated that the Traditional Scouting Program (which bars homosexuals and atheists from membership) is totally separate from the Learning for Life Program (which does not practice discrimination in enrolling participants). If Learning for Life, Inc. had simply granted its profits to the National Council, this would have shown up on Form 990?s for both organizations, and it would be obvious that Learning for Life existed exclusively to earn money for the BSA. The hypocrisy of practicing discrimination in some BSA programs while banning discrimination in others would have also come to light.

If you check out the list of occupants at the National Headquarters of the BSA in Irving, Texas, you find that the National Council BSA, Learning for Life, Inc. and a third affiliate, the National Boy Scouts of America Foundation (the Foundation) share this address. They share much more than an address, however. Various members of the National Executive Board of the National Council sit on the Board of Directors for the Learning for Life, Inc. and the Foundation. When we investigated the Foundation further, we found that its purpose was to financially support the Boy Scouts of America and Scouting organizations around the world. The foundation is incorporated as a 501(c)(3) charitable foundation. As such, it can accept tax-deductible donations from individuals, corporations and foundations. It can also disperse funds to Scouting organizations in the US and abroad without oversight of an independent Board of Directors. According to IRC 501(c)(3) a charitable foundation cannot be organized to benefit its creator. We assert that the Foundation may not qualify as a charitable foundation.

Sir Walter Scott once said, "O what a tangled web we weave when first we practice to deceive." No truer words could be said in the case of the BSA and its affiliates, Learning for Life, Inc. and the Foundation. The details of this complaint have been presented to federal agencies and selected members of the media for further investigation.




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