20/20 Toolbox: Every Child Should Have a Chance to Go to Camp — Besides, I Have a Vacancy That Could Be Filled . . .

Don Cheley

The title of this article makes sense to me — and why not?

Let’s start by considering some basic business principles. It does not matter if you are a nonprofit or a private independent camp, you still have to cover your cost to open the doors. So where does that money come from? Call it fees or contributions. Should donated dollars only go to nonprofit or agency camps? This is an opportunity to extend the camp experience to include children who cannot normally afford to attend, and it enriches the experience for all campers. Not to mention, independent camps have a need to ensure that all beds are full, as well.

If you are a nonprofit and you have already passed the IRS’s test to be a 50l(c)(3), you can develop a scholarship program. If you are a for-profit camp, it is not that easy. You can ask people to donate to your camp’s scholarship fund, but they will not get any tax benefit. There are those who are willing to give money so that a child can have the experience, regardless of the tax benefit. However, the majority of donors would like to get the tax advantage.

Is Starting a Nonprofit for You?

If you are a for-profit, private, independent camp, starting a nonprofit may have some real benefits for you. You will be able to serve more campers from more backgrounds and, at the same time, receive more tax-deductible contributions. Your program and community become enriched by serving children from other ethnic or economic backgrounds.

In my opinion, it makes sense for every camp to either have a nonprofit organization, by doing the due diligence to get something like that set up, or work with the American Camp Association’s Camper Scholarship Program. If you decide to start a nonprofit, it’s good to have a reason or a cause.

Also, when somebody sets up a 501(c)(3), it’s nice to name it after the founder or a key staff member. That way, if the founder or a longtime staff member passes away, there is already a place for people to contribute for memorial donations. For example, a longtime staff member of Cheley Colorado Camps recently passed away, and he gave to the John Austin Cheley Foundation as part of his estate and requested donations to the foundation in lieu of flowers at his funeral. Having a foundation already set up made the process of honoring this staff person’s life easy and meaningful.

How Do You Receive Tax-Deductible Dollars to Help a Child Attend Camp?

The easiest way is to have your donors contribute to the American Camp Association (ACA) Send a Child to Camp Fund. However, if your camp has established its own fund with ACA, the donor can give to your camp through ACA. These funds are available to your camp. All donations to this fund incur a 7.5 percent administrative fee. This is the simplest way to direct funds to a scholarship program without setting up your own foundation. Over sixty-five ACA camps are taking advantage of this.

I realize that many independent camps are that way for a reason — we like independence and authority. The IRS frowns on for-profit entities raising tax-free money for personal benefit, so it is mandatory to substantiate that your scholarship program does, in fact, serve the recipients and not the camp. To do this, you can partner with several other camps with a similar goal or philosophy. Or you could support a local agency camp. Your fundraising efforts cannot be only for the benefit of your camp.

How Do You Set Up a Nonprofit Scholarship Foundation?

First, make sure you have a solid group of people who believe enough in what you are providing that they are willing to commit to a labor of love. The John Austin Cheley Foundation functioned totally on volunteer efforts for over twenty years before we hired a part-time staff person to help. It took three years before the foundation was able to send its first child to camp. In the summer of 2011, the foundation sent eighty children to five camps. The goal is to get children in camp, not support the infrastructure of the foundation. Second, you need to make sure you have a good accountant and tax attorney. Know that the IRS will keep you under a fine microscope for at least the first three years.

Questions That Require Consideration

While some of the answers to the following questions will depend solely on the nature and preference of your camp, I have provided answers as a guide.

  1. Who will raise the money and manage it?
    The John Austin Cheley Foundation raises and manages the money on its own, but Cheley Colorado Camps does support its efforts. For example, we allow the foundation to set up tables at our camp’s opening or closing events. But it’s important to note that our camp cannot raise money for the foundation or manage the funds.
  2. Who will select the campers?
    The foundation selects the campers. Our camp can forward names of interested individuals to the foundation. When we have people contact camp for a discount or a scholarship, we simply refer them to the foundation. This process takes camper selection out of our hands, which allows us to focus on camp instead of making judgment calls on who gets scholarship money and who doesn’t.
  3. What will the criteria be?
    The criteria for your scholarships will depend on your bylaws and how you want to set it up. The person interested in obtaining a scholarship should fill out an application. One consideration might include family income. Other considerations might be similar to those of college scholarships.
  4. Do you want to build an endowment or spend the money every year?
    The John Austin Cheley Foundation uses both methods. They are building an endowment, and there is a possibility for an endowed camper scholarship. Endowments take a bit of the pressure off a scholarship program because there will be guaranteed money for children (although maybe just a few) to go to camp. When scholarship money will be used up each year, it’s critical to have successful fundraising every year so that children can attend camp on scholarship dollars. If you decide you want to build something for the future, look into starting an endowment.
  5. What will be covered — just fees or all expenses, including equipment and travel?
    The John Austin Cheley Foundation covers everything — including transportation and equipment. We also seek donations in the form of credit card “travel miles,” which is effective if you have campers from all over the country. Some camps pay only the camp tuition, which is a large chunk of the cost. It’s up to you what you will cover with your scholarships.
  6. Do you want to fund the same camper for multiple years?
    We’ve found that repeat campers benefit greatly from the camp experience. We like to create scenarios where a camper on scholarship does not have to think: “This is my one and only camp experience.” We’ve had campers come for four or five years on scholarship. Again, this is up to you.
  7. Will you provide partial scholarships?
    We offer partial scholarships, and we find that it works well. We feel that if campers and families “have some skin in the game,” and they pay half and we pay half, for example, their financial investment makes the camper more invested in a positive experience as well. So, if we can encourage families to apply for partial scholarship, we do. It also allows us to serve more children.
  8. If I sell the camp, is the scholarship endowment an asset that goes along with it?
    The answer to that is no — it is not. The scholarship organization needs to be completely separate from the private camp business. If the camp sells to a buyer who continues to operate it with similar values, mission, etc., the scholarship organization can continue to contribute to that camp.
  9. What if a donor wants his child or grandchild to be eligible for the scholarship?
    Absolutely not. The IRS would look at that as being self-serving. It would appear as though the donor was just dodging taxes by being able to write off the camp experience for their relative.
  10. Can you use the money in the fund for other camp needs?
    No. You cannot. The reason that a camper scholarship works is that it’s serving the good of other people. The money cannot be used for your new dishwasher or bus! That would not meet the IRS’s test of serving the public, which is what a 501(c)(3) is meant to do.
  11. Do you let others know who the scholarship campers are?
    We do not. We try to level the playing field among campers and make them all feel equal. The campers themselves may share this information with friends at camp, but that is their choice.
  12. Do I intend to balance (diversify) my camp community with these funds?
    By supporting attendance of campers from all different economic backgrounds, you are definitely diversifying. Think about other ways you can reach out to diverse audiences. For example, Camp for All Kids is a 501(c) (3) organization that promotes and facilitates racial diversity by sending kids from underserved communities to overnight summer camp. (Camp for All Kids currently has campers that come from elementary and middle schools in St. Louis and Chicago. Visit www.campforallkids.org for more information.) Camp is meant for every child, and that’s why you’ve established a scholarship program!
  13. Can I use these funds to pay me for what I am already giving away?
    No. If a family asks you about scholarships and you refer them to the scholarship organization, and then that child comes to your camp through scholarship money, that’s a different matter. But if you have a staff member’s child coming for free, you can’t bill the foundation for that. A lot of this depends on how the charter is written for the foundation.
  14. Should I ask my current parents and staff to contribute?
    Yes. Many of the current parents — and especially grandparents — see the value of a camp experience and want to contribute. We allow our staff to contribute part of their pay check. It’s good to let them contribute if they want. And matching programs can greatly benefit staff contributions. Our staff of 210 donated $5,000, and after members of my family matched that donation, along with my daughter-in-law and son-in-law’s companies, which each have matching programs, we ended up with $35,000!
  15. Once I have the tax status, can I request grants from other foundations?
    As a 501(c)(3), you can request grants from other foundations. Sometimes, our parents have family foundations and request grants for our cause. It has opened huge doors. We have a family with a trust, and each of the children gets to pick a cause to contribute to each year. The daughter, a young camper who had such a good time at camp that she wanted other kids to have that experience, gave to the John Austin Cheley Foundation. That little girl’s gift was $10,000. You never know where donations will come from, but it’s good to be open to all kinds of scenarios.
  16. If I go out of business, can I keep the scholarship dollars?
    Definitely not. You can either continue to support other camps or give to a similar nonprofit organization — that is, the 501(c)(3) money must be transferred to another 501(c)(3) (for example, the American Camping Foundation).
  17. At some time in the future, can I convert my camp to a nonprofit?
    Yes. Many camps are doing this if a family-owned camp has no one left who wants to run it within the family. You can set up a board which can run the camp — and the camp can continue in the same spirit it always has, even if a family member is not at the helm.

There may be more, and the above questions may seem like “no brainers,” but all these factors must be considered in order to create a foundation.

This information should be enough to get you started. You can see why you need a capable accountant and tax attorney and a very dedicated group of believers to do the work. It is not and should not be something that you add to your existing office staff’s to-do list, as it requires a great deal of planning, effort, and ongoing commitment and support.

The bottom line is that it can be done and has been done — and many more children are getting to go to camp because of the creation of scholarship foundations. Children are benefitting from this priceless experience, and camps are able to provide this experience with costs covered.

Additional Resources

 

Cheley Colorado Camps

Located in Estes Park, Colorado, Cheley Colorado Camps has been under the leadership of the Cheley family for over 85 years. In 1921, Frank Cheley started a camp with the belief that youth learn best through firsthand experiences, particularly when those experiences come under the direction of dedicated adult leaders. These basic principles are still the foundation for Cheley today as it serves campers through residential summer camp programs and spring and fall outdoor education programs.

 

Don Cheley has been a director of Cheley Colorado Camps since 1969. He is a former ACA national president and serves as the chair of the American Camping Foundation.
 

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