Regardless of the source, all 4‐H funds must be used for 4-H Youth Development educational programs. All 4-H funds are public funds and must be publicly accountable. This includes compliance with federal and state laws as well as University, National, and Wisconsin 4-H Youth Development policies. 4-H Clubs and Groups must practice financial policies that retain their nonprofit status and prevents them from accidently falling into private foundation status.
Financial Management Overview
: A 4-H Charter indicates the 4-H Club or Group is organized in accordance with objectives of the 4-H program. The University of Wisconsin-Extension, Cooperative Extension grants 4-H Charters which formally authorizes the 4-H Club or Group to use the 4-H Name and Emblem for educational purposes in accordance with laws and regulations established by Congress and the U.S. Department of Agriculture.
- The purpose of the 4-H Charter is education, communication and accountability.
- All 4-H Clubs must be chartered.
- All 4-H Groups (including committees, boards or other organizations) that hold any financial accounts must be chartered. If a 4-H Group does not hold financial accounts, it must be formally recognized and accountable to the County 4-H Leaders Organization.
- The 4-H Charter allows the Club or Group to qualify for federal tax exempt status under the UW-Extension General Exemption Number (GEN) for Wisconsin 4-H Clubs and Groups.
- Additional information and links to the 4-H Charter Application and 4-H Charter Annual Renewal Packet are located on the home page of 4-H Community Club Central.
4-H Money is public funds. As with all public funds, there are specific rules and regulations that must be followed to ensure proper use and minimal risk. The Wisconsin 4-H Youth Development Policies provide the guidelines for all 4-H finances. 4-H Clubs and Groups must follow all state and federal laws.
- UW-Extension is asking all 4-H Groups, Committees, and Clubs to use a cash accounting method. 4-H Clubs and groups are expected to be raising money for the next fiscal year, while spending money that was raised in the previous fiscal year. This means that a 4-H Club and Group may have obligations to pay for expenses that have not been fulfilled, while it is taking in cash receipts for fundraising.
- All 4-H Clubs and Groups must complete the 4-H Club or Group Annual Financial Report. This report is part of the 4-H Charter Annual Renewal Packet.
- The 4-H fiscal year is July 1 through June 30.
Wisconsin 4-H Clubs and Groups may have this year’s projected expenditures and one additional year’s expenditures in their accounts OR $1,000 whichever is greater. The Excess Funds and 5-Year Plan (43 KB) Explanations document will assist 4-H Clubs and Groups in determining the ceiling for excess funds and developing a needed 5-Year Plan.
If a 4-H Club or Group is consider a major expenditure (over $500), purchasing capital equipment (an asset which has a useful life of more than one year), or accepting a capital equipment gift, the 4-H Club or Group must secure approval from the 4-H Youth Development Educators prior to the purchase or acceptance of the item. The Considering Expenditures of over $500, Capital Equipment and Gifts guide and decision tree will assist in this process.
Under certain circumstances and with UW-Extension approval, chartered 4-H Clubs and Groups may place excess 4-H funds in an approved 4-H foundation or endowment fund other than the Wisconsin 4-H Foundation. This is Option E of the financial policies of the Wisconsin 4-H Youth Development Policies . This includes all current local 4-H foundations, endowments, trusts or long term investment accounts. All new accounts must be approved before any contracts are signed or financial accounts are open. The Application for Review and Approval of Local 4-H Foundations and Endowments (20KB) starts the approval process. They are due to the 4-H Youth Development Program Director and Director of Budget and Fiscal Operations. This is PDF of the application may be useful. Application for Review and Approval of Local 4-H Foundations and Endowments (122 KB) The System for Submitting and Storage of Applications for Local Endowments, Foundations and Long Term Investment Accounts (76 KB) provides critical information for requesting the review and approval.
4-H Clubs and Groups that are paying a volunteer beyond reimbursable expenses must be aware of the legal issues that accompany this practice. See Paying Volunteers Frequently Asked Questions located with the Agreement for Personal Service template located on the Risk Management Web Page.
Federal Tax Information
Currently federal tax exempt status of 4-H groups is provided through the General Exemption number (GEN) 2704 held by 4-H National Headquarters. This Internal Revenue Service (IRS) determination formally recognizes all chartered 4-H Clubs and affiliated 4-H organizations nationwide under the control of Cooperative Extension for inclusion as a subsidiary of the national 4-H special exemption from federal income tax under the provisions which correspond to section 501(c)(3) of the IRS Code. This means that formally authorized 4-H groups are exempt from paying federal income tax on funds raised on behalf of 4‑H, or to support educational programs; and donors may deduct contributions to 4-H clubs and affiliated 4‑H organizations such as bequests, legacies, devises, transfers, or gifts as applicable under the IRS Code.
- The Pension Reform Act of 2006 made significant changes in IRS laws and guidelines. As a result, the GEN number held through 4-H National Headquarters will be eliminated. All states have been directed to secure tax-exempt status for 4-H groups.
- All 4-H groups are accountable to Cooperative Extension for their activities and finances. Their continuing existence is dependent on Cooperative Extension’s authorization and oversight. The relationship is outlined in the document: Relationship of Cooperative Extension and 4-H Youth Development.
- Following the transition in tax exempt status, the University of Wisconsin-Extension will hold the GEN to extend federal tax exempt status to Wisconsin 4-H Clubs and Groups. This includes the rights and privileges that accompany this status as well as responsibilities for accountability. This transition will change some of the reporting requirements for Wisconsin 4-H clubs and groups and responsibilities for 4‑H Youth Development Educators.
- Regardless of the source, all 4‐H funds must be used for 4-H Youth Development educational programs. All 4-H funds are public funds and must be publicly accountable. This includes compliance with federal and state laws as well as University and 4-H Youth Development policy.
Letters of Documentation of Tax Exempt Status: Until the transition is complete, these letters must still be generated by 4-H National Headquarters, and can only be requested by the 4-H Youth Development Program Director. Volunteers need to contact their 4-H Youth Development Educator for this request. 4-H Youth Development Educators need to send an e-mail request to Kandi O'Neil, who will prepare the letter of request for the 4-H Youth Development Program. Information needed includes the 4-H Club or Group’s official name and EIN number, Volunteer Leader’s name and purpose for the letter.
Employer Identification Number (EIN) - EIN stands for "Employer Identification Number. It is also known as a Federal Tax Identification Number, a nine-digit number the IRS assigns to business entities. 4-H clubs and other 4-H entities need an EIN number to open a bank account. Personal social security numbers should never be used for 4-H accounts. Form SS-4, Application for Employer Identification Number, is available on the IRS Website. The IRS recently changed the online tool for obtaining an EIN. The process requires a Social Security Number from the volunteer but is not used beyond the application. The online process is not recommended. Instead, groups should complete the SS-4 form, posted on the IRS website, then print and fax or mail it per the instructions for the SS-4.
Sample Form SS-4 (2 pages, 286 KB) - Sample Form SS-4 form with specific 4-H information to provide including 4-H Group Exemption Number. The form is used to obtain an Employer Identification Number for a 4-H club or other 4-H unit. Contact Kandi O'Neil if you have questions.
SS-4: Where to File or Fax (1 page, 30 KB ) - At this time, the online process is not recommended for submission of the SS-4 form.
IRS Publications and
Forms - 990 - Return of Organization Exempt for Income Tax
and 990EZ - Short Form Return of Organization Exempt from Income
Tax. While 4-H organizations are exempt from Federal income taxes,
any 4-H organization with gross receipts over $50,000 during the
tax year must file Form 990 or 990EZ.
Appropriate Use of 4-H Name and Emblem in Regards to Livestock Sales, Auctions and Similar Events - Fact Sheet located on the National 4-H Headquarters Website. The income received and the funds paid at these events are subject to Federal tax laws and Internal Revenue Service (IRS) regulations. The following FAQ is available to assist local groups: Livestock Sales and Prize Winnings Related to 4-H Programs: Taxable Income and Charitable Contributions
State Tax Information
- State Tax Facts (2 pages, 26 KB) - Document outlines Wisconsin tax exempt status for 4-H organizations.
Sales and Use Tax
- "Wisconsin Sales and Use Tax" - Streaming audio from the May 11, 2007 4-H Youth Development Program Area Wisline. Presenter:
Janet Abrams, Staff Specialist, with the Wisconsin Department of Revenue. The presentation covers Sales and Use tax as it applies to non-profit organizations and sales tax obligations as it applies to county government.
- Wisconsin Department of
Revenue - The Wisconsin Department of Revenue web site includes
helpful information regarding sales and use tax, and application
and information for sales tax exemption certificate.
Sales Tax Exemption for Nonprofit Organizations - State
of Wisconsin, Department of Revenue - Publication 206, provides
detailed information on sales tax exemption for nonprofit
organizations (8 page publication).
Wisconsin Sales and Use Tax Certificate of Exempt Status Application
(CES), Form S-103 - To assist retailers in identifying organizations that qualify for exemption from Wisconsin sales and use tax, as provided in section 77.54(9a)(f) Wis Stats, the Department of Revenue issues the organization or governmental unit a Certificate of Exempt Status (CES) number. A CES number can be obtained by submitting a completed Application for Wisconsin Sales and Use Tax Certificate of Exempt Status Application Form S-103 and the following documentation:
- Articles of incorporation or bylaws
- Statement of receipts (income) and disbursements (expenses) for their last accounting period.
- National 4-H Headquarters letter notifying the 4-H unit of inclusion under the Federal Group Exemption number.
Sales and Use Tax Information for Nonprofit Organizations - Provides information on the types of organizations that qualify for a certificate of exempt status and the application process.
Wisconsin Sales and Use Tax Information - Publication 201, provides detailed information on Wisconsin Sales and Use tax (63 page publication).
for Business Tax Registration - To obtain a seller's
permit, a nonprofit organization must complete Form BTR-101,
Application for Business Tax Registration, and mail to the
Department of Revenue. This application form may also be obtained
from any department office. Online registration is also available.
State Charitable Organization Registration and Reporting
Wisconsin Charitable Organizations Registration and Reporting
(1 page, 34 KB) - A charitable organization planning to solicit
and receive contributions in excess of $5,000 during any 12-month
calendar or the organization's fiscal year must register with
the Wisconsin Department
of Regulation and Licensing. Updated 5-2011. For 4-H Clubs and Groups, common areas are donations of equipment, land or money, bequeaths, grants, sponsorships for camps or events, corporate solicitations and donations, and Platt Book Advertising solicitation. It is better to error on the side of filing than not.
Statement - Organizations meeting the registration condition
should request a Charitable Organization Registration Statement
from the Department of Regulation & Licensing.
- Charitable Organization Annual Report - Once an organization is registered with the state, it must
prepare annual reports, using forms prescribed by the Department
of Regulation & Licensing. The annual report (Form 308) must
be submitted within six months after the close of each 12-month
calendar or fiscal year.
Fund Raising and Donations
- FundRaising: Private Support for the 4-H Program (1 page, 76 KB) - National 4-H Headquarters Fact Sheet providing an overview of critical elements of the Code of Federal Regulations and USDA Guidelines that pertain to 4-H fund raising.
- Fund Raising (2 pages, 36 KB) - Covers key points of the purpose
of fund raising, guidelines for fund raising and special considerations
in conducing raffles and using the 4-H name and emblem in fund
- Acknowledging Charitable Donations (2 pages, 48 KB) - Document outlines recommended procedures for acknowledging cash and non cash donations.
Additional Information, resources and tools on 4-H Charters and financial accountability are located at 4-H Name & Emblem Web Page and at Money Matters on 4-H Community Club Central. Volunteers should direct all questions to the 4-H Youth Development Educator in their county.