4-H Insurance and Finances

1. 4-H Insurance and Finances 4-H Youth Staff Development Skills Café February 2012, STEW 214D

2. Disclaimer • The information provided in this presentation is NOT designed to be widely distributed to 4-H Volunteer audiences. Rather, it should serve as a resource to help Extension Educators better understand the basics of 4-H Insurance and Financial issues as they provide guidance to local 4-H entities.

3. 4-H Insurance Guidelines • Note: Purdue University Extension Educators are not insurance professionals. A local insurance professional should be consulted for specific insurance issues. Policies which are purchased should be reviewed by someone in the purchasing entity to be certain they include desired coverage. It is recommended that each entity complete an insurance audit with an insurance professional at least annually. Your insurance professional is your ally in loss control and risk financing.

4. Limited Accident/Injury Insurance American Income Life Insurance http://www.americanincomelife.com/

5. Description • Supplemental insurance for Extension participant’s accident or injury. • Participant’s personal or family health insurance will be primary.

6. Annual policy • $1/year for 4-H members and volunteers ($2/year for Horse & Pony members and volunteers) • Provides limited, supplemental coverage for accidents or injuries incurred by 4-H participants during a 4-H activity/event. Illnesses are NOT covered by this policy. • Statewide blanket policy purchased annually with funds from the State 4-H Program Fee for: • Each 4-H Member • Each 4-H Volunteer (who is registered in ED) • Each Mini/Exploring/CloverbudMember (Grades K-2)

7. Annual policy • Coverage includes: • Up to $2,500 for medical/surgical treatment, x-rays, hospital stay, ambulance • Up to $500 for dental services • Up to $5,000 for loss of life (within 100 days of accident) • Up to $10,000 for loss of hands, feet, sight (within 100 days of accident) • Coverage exclusions: • Illness that may occur during the event that is not the result of an accident/injury – that coverage IS provided by the Special Events policy described below • Eyeglass replacement, dentures, suicide, hernia, skiing/sledding injuries, air travel

8. Special events policy • Secured by a 4-H Club or County for… • Any overnight event • Any event that is held outside of the county • Any event that involves non-4-H participants in what could be perceived as a risky activity (e.g., open shows, tack sales, enrollment nights, pool parties, etc.)

9. Special events policy • Option C recommended: $.30/person/day; provides higher levels of coverage. Each event has an $8 minimum payment. • Up to $5,000 for medical/surgical treatment, x-rays, hospital stay, ambulance • Up to $1,000 for dental services • Up to $1,500 for medical and hospital expenses related to ILLNESS while policy is in force • Up to $5,000 for loss of life (within 100 days of accident) • Up to $10,000 for loss of hands, feet, sight (within 100 days of accident)

10. Special events policy • Illness examples: heat exhaustion, appendicitis, allergic reaction…that could cause an emergency situation when youth are away from home. • The $1/year plan covers localized events where youth could return home if ill.

11. Special events policy • Area policies for area-wide events such as CDE’s, Share-the-Fun, Camps, Jr. Leader Retreats, etc. • State policies for state-wide events such as 4-H Congress, Science Workshops, Round-Up, State 4-H Jr. Leader Conference, Indiana State Fair Youth Leadership Conference, etc. • County Extension Offices may also secure Special Events policies for any/all Extension activities, including Extension Homemaker and Master Gardener functions.

12. Claims • Explain that this is a supplemental insurance policy; family’s health insurance will be primary and should be provided initially to medical provider. • Complete a claim form within 48 hours of the incident (http://www.americanincomelife.com/wp-content/themes/ailspecialrisk/documents/ClaimForm.pdf)

13. 4-H Entities’ Risks and Insurance

14. Types of liability • General liability • protects entity from bodily injury and property damage to others associated with entity’s negligence. • Auto liability • provides coverage for bodily injury and property damage for liability associated with the use of vehicles. • coverage generally does not apply to vehicles belonging to individuals who volunteer for, or are employed by, the organization. Individuals are always responsible for their personal vehicles.

15. Types of liability • Directors and officers • coverage for a broad spectrum of liability for wrongful acts to which the entity and its officers may become liable. • Property renter and building owner • physical damage coverage to contents and buildings owned by the entity. Coverage can be purchased at depreciated value or at replacement cost. An insurance agent can explain the differences.

16. Types of liability • Workers compensation and employer liability • protects entity against liability associated with employee injuries on the job. • does NOT apply to 4-H Volunteers • Employee dishonesty • protects entity from theft by employees and other dishonest acts that are generally excluded in a basic property policy.

17. Risks Associated with Property Ownership or Use • Injuries on owned premises from third parties (slips and falls) • Property damage to 4-H entity-owned property from natural hazards (fire, wind, hail, etc.) as well as human element hazards like theft and vandalism. • Other liabilities associated with hosting events on the premises (lack of supervision, premises maintenance, or crowd control) • Contractual liability

18. Other General Risks • Employment related risk • An employee sues alleging wrongful termination • Employee dishonesty • An employee embezzles money or property from the entity • Personal and advertising injury • Someone from your organization harms the reputation of someone else • Contractual liability risk • A contract you or your entity enters into may require you to take on certain liabilities • Event host liability risk • You or your entity may be found liable for the actions of others you invite to an event you host

19. Other general risks • Negligent supervision • You neglect to provide adequate supervision • Child molestation accusations • Actions by directors and officers • Negligent actions of directors and officers • Property damage to the property of others • You damage someone else’s property in your care and control • Auto liability • Your entity owns or uses non-owned vehicles (i.e., borrowed trucks, tractors)

20. Insurance policy tips • Review insurance needs at least annually with insurance agent • Inform agent of all lease/rental agreements and any new events in the coming year • Require proof of insurance from vendors, carnivals, etc. – name 4-H entity, Purdue, Trustees of Purdue, County Commissioners, CES, as additional insureds

21. Insurance policy tips • Coverage types and limits depend upon size of organization and exposure to risks • $1 million coverage/occurrence is likely the minimum • Purdue provides liability coverage for 4-H or Extension-sponsored educational events and coverage for 4-H volunteers acting within the scopes of their responsibilities

22. Insurance policy tips • Read all policies carefully and look for exclusions for events such as carnivals or fairs • Read all contracts carefully; ask for attorney to review • Avoid assuming responsibility for risks which you do not directly control

23. Other insurance-related issues

24. Directors & officers (D&O) • Provides protection for wrongful acts associated with the decisions and actions of the board, its directors, and officers. • Review this potential exposure with your local insurance professional. • Covers agreements and or contracts for services that have no direct bearing on the 4-H educational mission/purpose of the organization. • Examples of such agreements include, but are not limited to, carnivals, entertainment, food vendors, buildings, rental space/facilities, etc.

25. Directors & officers (D&O) • Directors may be held liable for the nonperformance of the organization. • Directors and officers may be held liable for claims made against the council at meetings and with the fair functions. • Board decisions may be seen as being made in a biased or unfair manner.   • All directors and officers can be held personally liable for the actions of any one person acting outside of his/her duty of care to the organization. • Ignorance is not a defense in many cases when someone (like a new member) isn’t aware of any wrongdoing.

26. Bonding Treasurers • Individuals who serve as the treasurer for county organizations such as 4-H Fair Boards or 4-H Councils should be bonded. • Protects the organization from loss due to dishonesty and fiscal malfeasance. • Bonds may be purchased from a variety of bonding underwriters. • Address this issue and exposure with your local insurance professional to assess your organization’s exposure.

27. Coverage for 4-H livestock • There is no Purdue coverage for individuals whose animals injure someone else or whose animals are injured. • Individuals are responsible for the actions of their own animals (e.g., if your dog was to bite someone, you would be responsible for the damages caused).

28. Certificate of insurance • A property owner may request proof of Purdue’s liability coverage if you are using a non-4-H owned facility to hold a 4-H sponsored event. • A certificate of insurance only needs to be issued when one is requested by the premises owner. • COI is proof of insurance for any liability which may result from your group’s actions ( i.e. injury to, or damage to property of, a third party).

29. Certificate of insurance • A COI typically will NOT be issued to a private homeowner (who may be asked to host a 4-H pool party, for example). In those instances, the homeowner’s personal insurance policy would be in effect. • COI also will NOT be issued for individuals who choose to house animals that belong to other families/4-H members. • COI request form (RMO2) is available at: http://www.purdue.edu/Risk_MGMT/.

30. 4-H financial Guidelines • NOTE 1: 4-H Extension Educators are NOT trained financial advisors. Therefore, contact a professional financial advisor (Certified Public Accountant, tax advisor, etc.) to address specific financial issues. • NOTE 2: If a County 4-H Council or 4-H Fair Board does NOT have a professional tax/financial advisor, is it in their best interests to find one! Extension staff members and 4-H Volunteers are NOT expected to be up-to-date with all tax laws and financial accounting procedures. We are, however, expected to ensure that the process is completed. Hence, the use of a professional!!

31. General financial guidelines

32. 4-h club/unit financial checklist • Checklist found in 4-H Policies & Procedures, Financial Management Forms Section. • Checking/savings accounts do not have personal Social Security numbers on them. • Each account should be opened with a unique Employer Identification Number. • Banks may ask the individual opening the account for a SSN to verify that the person is who they say they are; however, that SSN should NOT be tied to the bank account.

33. 4-h club/unit financial checklist • Checking account has two signatures (unrelated persons). • For the protection of the volunteers, club, and 4-H Program. • If a child of a 4-H Volunteer is elected Treasurer, the 4-H Volunteer should remove his/her name from the account for the time their child is Treasurer. • Some banks are now charging for having two signatures on an account. If that is the case, have the second signature put on the Memo line. • Some banks no longer allow for individuals under 18 to be listed as a signatory. That should NOT prohibit 4-H members from serving as Treasurer…they can still prepare Treasurer’s reports, write the checks (but not sign them), keep the checkbook balanced, etc.

34. 4-h club/unit financial checklist • Checking account is a duplicate check system. • Provides a physical record of each check that was written. • List of receipts and expenses is maintained. • Original receipts for purchases are maintained. • Treasurer’s report is presented at each meeting.

35. 4-h club/unit financial checklist • An official receipt for donations is provided to donors. • Sample receipt master is provided in Financial Management Forms section (will be revised once we have the new Purdue Group Exemption Number in place) • The annual 4-H Club/Unit Financial Report is completed and submitted to the Extension Office in a timely manner.

36. Financial reporting requirements

37. Annual financial report • Filed each year by each 4-H group (Clubs, Affiliates, others) • Template report form in 4-H Policies & Procedures – Financial Management Forms section • Sample letter to request report also provided

38. Annual financial report • Information currently requested on this report includes: • EIN included on the account, basic demographic information • Beginning and ending balances for checking and savings accounts • Total receipts/expenses for the year (Jan 1 – Dec 31 accounting year) • Additional information may be requested based on the new PU GEN…specifics will be announced when they become available. • Keep financial reports submitted by entities on file for 7 years. If there are any accounts that experience “issues” or have special circumstances, then they should be held longer.

39. Audits/financial reviews • Conducted on 1/5 of the 4-H units (clubs, affiliates, other) on an annual basis. • If the leaders/treasurers of additional units change, those units should be added to the audit list. • Template for Financial Review/Audit is included in 4-H Policies & Procedures – Financial Management Forms section. • Sample letter to notify unit they will be reviewed/audited is included in the same section. It is recommended that these notification letters be sent early in the year so the unit has time to gather the necessary information.

40. Audits/financial reviews • Information requested: • Financial Checklist • 1 year of bank statements • Checkbook and/or savings account registers • Lists of receipts and expenses • Copies of receipts • Treasurer’s reports • List of tangible assets (property, equipment, etc.)

41. Audits/financial reviews • 4-H Club reviews completed by 4-H Council committee. • Professional accountant should be hired to conduct annual audit of 4-H Council or Fair Board. • Educational opportunity for volunteers and treasurers; not punitive or disciplinary.

42. Unit activity report • Found in 4-H Policies & Procedures, Financial Management Forms Section. • Lists date, name of activity, attendance, accomplishments of each event held by the unit during a year. • Submitted prior to the first event being held in a year. • Updated throughout the year; a final report can be submitted after the last activity has been held. • Enables the Extension Office to know about the activities before they happen and to verify the activity is a 4-H-sponsored event, should questions arise.

43. Handling Delinquent reports • Part of initial volunteer orientation: • 4-H funds are public funds • Financial reporting is required as a part of volunteer role • Review reports and share tips on how to complete them • May be delegated to other volunteers as needed

44. Handling Delinquent reports • Communicate early and often • By letter, email, in person • Follow-up initial communication • Offer assistance as needed • Remind of responsibilities as a volunteer (from annual ABE)

45. Handling delinquent reports • Inability to provide reports may eventually lead to dismissal of volunteer. • Missing funds from account can be retrieved by filing criminal charges through local law enforcement.

46. Tax reporting requirements

47. definitions • Gross Receipts – a total of all income received by an entity during a fiscal year • Federal tax exemption – exempt from paying federal taxes on income received during the year; enables donors to make tax-deductible donations to the organization • State sales tax exemption – exempt from paying state sales tax on purchases • NOTE: 4-H Clubs are NOT exempt from paying states sales tax

48. Irs 990 E-postcards • 4-H entities earning annual gross receipts of $50,000 or less • Filed by May 15th for previous tax year (Jan 1 – Dec 31) • Information requested: EIN, contact name, verification that the entity earned $50,000 or less in gross receipts in the previous tax year

49. Irs 990 series form • 4-H entities earning annual gross receipts of over $50,000 • Filed by May 15th for previous tax year (Jan 1 – Dec 31) • Preparation and submission of this form should be completed by a professional tax preparer. Staff and volunteers should NOT attempt to file these forms on behalf of the organization.

50. State tax reporting • 4-H Councils or 4-H Fair Boards that have applied to be exempt from paying Indiana Sales tax with the Indiana Department of Revenue complete the NP-20 State Form by May 15th. • Those who wish to be exempt from State Sales Tax may submit a NP-20A application form. Visit with tax professional prior to submitting this application. • Forms are available at: http://www.in.gov/dor/3506.htm.