Yesterday I woke up to the news that the National Scouting Council had filed for Chapter 11 Bankruptcy also known as restructuring. There are basically two types of bankruptcy options (although technically there are more but for a simplistic nature we will say two) for business entities and that is a liquidation of all assets and closing the business to pay back creditors and debts or a restructuring which outlines a continuity plan and payment plan for debts, although it still may require the liquidation of some assets. The latter was chosen by the National Council.
I will forewarn you, this blog may get a little dark and provide a dim view on the future of the organization and will be purely speculation on the future of the organization. To use a phrase that I often used during my time as Scoutmaster, there is a train wreck coming. The question is, do we prevent it or let it happen? Will those involved learned more from the failure than if we step in and rescue it? Just recently several of my Scouts commented to me how they noticed I often would let mistakes and "train wrecks" occur and they told me they learned more when it happened.
Back in October of 2019 I wrote a letter to the National Committee of concerns that basically lay out what I called a "Path of Destruction" in which I analyzed passed decisions and milestones that the organization had made since about 2000 and what it's long term affects would be on the local programs. I find often that in most organizations, the corporate headquarters is quite far removed from the reality of what is going on in the field or front lines. Heck, they are why we had reality shows such as "Undercover Boss". I had forecasted several possible future events during that letter. One of which was an increase to membership dues caused by the declining membership and mass exodus of the LDS church which equated to almost half the membership of the organization. A week later, the organization announced that it would be considering an increase and did not announce it until later which was about DOUBLE the current dues rate! This would become a financial barrier for many multi-sibling families. There was a time that people didn't have to worry about the cost of Scouting, now every time they turn around there is money needed for this or that. Additionally, the propaganda will say that Scouting is a good value for its cost, which I agree, compared to the average cost of other programs. From a business standpoint, they have under-priced themselves from their competitors (youth programs/activities) and I would not be surprised if they continue to increase membership dues over time. After all, it is the knee-jerk reaction of a membership based organization to increase the fees on existing members in order to maintain current expenditures rather than looking at value added programs that would draw new members or re-capture former members.
The next event I had forecasted came to fruition yesterday with the announcement of the bankruptcy filing. So far, I have been pretty accurate for a lowly former volunteer. I did not get involved in the politics of the Districts and Council and I know it made me a rogue element because I had seen through their velvet curtain that many of them had lost true sight of what the Scouting program was and was not. Everything had become about money and membership rather than value added programs and having a true outreach to youth. But I digress, you can read more in my book when it is published.
So, let's break this down from the propaganda that the PR machines are spinning in the news and tell you how I believe that this is THE BEGINNING OF THE END for Scouting. The inspiration to even write this blog came from a conversation that I had last night with a former Scout who is now in college. He was asking me what this means. So, I told him what I believed to be the truth.
First, for several years since the membership standards had changed (defining who and who can not join scouting; i.e. girl, boy, trans, or sexual orientation) the organization has been shifting more and more liability to the chartered organizations and local councils. What I mean is this, if someone wanted to join Scouts (for example a gay youth) that met the membership standards of the B.S.A. but did not for the chartered organization (let's say a church) and were denied (because the chartered organization must approve the membership application since they "own" the unit) then essentially the chartered organization would be liable for lawsuits and not the B.S.A. Keep this in mind as I will revisit this later.
As part of the Chapter 11 bankruptcy a fund will be established to equitably compensate victims of sexual abuse in the organization. And they will partner with a group called 1:6 to continue to provide support and resources. Okay, so remember, these statements that are produced by the PR team hired by the organization spend lots of time on proper terminology that steers away from any negative verbiage connotations before releasing them to the public. So I will breakdown what I believe they mean by using the word equitable based upon what I know about financial restructuring in bankruptcy.
A third party firm, typically appointed by the court, will collect all outstanding debts or expected debts and then will total those up. Then they will work with the Scouting Organization on an amicable payment plan/structure to pay those debts or lawsuits. Next, the court appointed or hired firm will distribute those funds based on a Pro Rata amount. Breaking that down even further here is an example; Total sexual abuse lawsuits amount to $1M. Johnny Tentpeg's suit is for $100k of that $1M total. Scouting pays a structured payment of $200k for all those lawsuits. That means that because Johnny Tentpeg's lawsuit equates to 10% of the total debt he will receive 10% of the structured payment equaling $20k. NOT the $100k he sued and received judgement for.
That is what I believe is meant by the term "Equitable" compensation they are using in conjunction with the bankruptcy strategy. And yes, I called it a strategy because that is what it is. Check the history of major lawsuits against corporations. Victims sue and a jury awards an astronomical amount in damages, the company then files bankruptcy and the victims get cheated out of their share and the company goes on.
Now they also used the term "encouraging victims to come forward" which is good and positive. However, I also believe this to mean that there is going to be a so called "end point" in which the organization will no longer accept claims that would be paid from this fund that will be setup. Now I am unclear exactly how this would work legally as I am not a lawyer however what I suspect is, as I mentioned in the earlier paragraph, is that they will shift that liability to the local Councils and Chartered Organizations. I have seen in lawsuits before where an organization or entity was able to remove themselves as a named defendant for different reasons, again, shifting responsibilities.
Now, what did they use to probably fund this structured settlement and bankruptcy you might ask? I propose they used the donated asset of Philmont Scout Ranch when they mortgaged the property. The Philmont team didn't even know about it until it was done and has been questioned as to whether or not the organization even had the right to do so because of it being against the original intent of the donor. Additionally, the integrity of the organization was placed in question for not being completely honest or transparent with the Philmont group in doing so. Slowly, I believe we will see the B.S.A. continue to mortgage and sell it's assets over time and it will be quite a shame. If in doing so, I hope that private enterprises will be able to come in and continue providing the same experiences even if for the general public.
In continuing down this path and as liabilities continue to be shifted from national to the local councils and chartered organizations, I further believe we will begin seeing even more lawsuits coming. These lawsuits will be levied against the local councils, which many are actually not as financially sound as you may believe. Almost immediately following the announcement of the bankruptcy local councils begin distribution of the pre-made info-graphics stating how the bankruptcy does not affect local programs and how they are INDEPENDENT of the national organization along with the studies that prove scouting is still relevant and works today.
The word INDEPENDENT is very important as I will explain further. It surprises me how many people, especially those involved in scouting, really don't know the structure of the Scouts and how each level relates to the other. When you pay dues for your membership not a single red cent stays with your local unit, unless they inflate it. All of the that goes to National with the local Council as the intermediary. Local Councils rely on their own fundraising and Friends of Scouting Capital Campaigns to fund the salaries and resources of the professional staff. Units even have to fill out money earning applications when they do fundraising in order to ensure it doesn't interfere with a council fundraising project or donor support.
It is important to recognize this organizational structure for future reference. By putting a deadline on victims to claim abuse with the national organization, any late claimants will be forced to sue the local Councils and Chartered organization. Now, keep in mind that in all the propaganda they are publishing they are stating that the abuse claims are from 30 years ago and since then Scouting has become safer and they have implement several safeguards. Those safeguards though really only protect against those with a known criminal history. Those without any criminal history can still slip through the system unless they start conducting psychological profiles and screening on the level of FBI and Security Clearance checks from the Pentagon. What about the other preventative safeguards such as the Two-Deep leadership and no one-on-one contact? Listen, if there is a real predator they will always find a way. Unfortunately this measure will also cause a lot of good people with good intentions to be either turned off of the organization or falsely accused/implied of nefarious acts. But that takes me back on a tangent. Let's stay focused. Back on the independent councils subject.
While the current local council may not be at immediate risk for the abuse lawsuits of the past, I believe with the change of membership standards, allowing ALL youth no matter their sex and ALL adults no matter sexual orientation, combined with this Bankruptcy restructuring will present a clear and present danger to the future of Scouting. And here is why. Statistically 1 in 6 boys will experience some form of sexual abuse. You may recognize the statistic in the name of an organization mentioned earlier (the group that the B.S.A has partnered with to provide support for the victims). Additionally, 1 in 3 girls will experience the same. With the addition of females in the Scouting organization I do believe that we will see double the number of current lawsuits and they will be placed at the feet of the local councils and chartered organizations.
Many Chartered Organizations (majority are churches) that sponsor Scouting Units see them as an outreach program of their organization. However, I have observed in my interaction with many units over the years that those Chartered Organizations actually have very few of their own members that participate in the sponsored program. Therefore creating a tertiary program without a real stakeholder in the unit. From a risk management standpoint if this is the case and potential to have this kind of liability exposure I wouldn't blame them for not renewing the charters of those units. Without those renewal charters Scouting itself will again continue to decline and very well may be the end of the Scouting Movement in America in its current form and may give rise to another.
DISCLAIMER:
To be clear, I have enjoyed my experience in Scouting for 30 years. Both as a youth and as an Adult. I wouldn't trade my youth experience for nothing and yes, I am an EAGLE SCOUT. However, my adult experience showed me more behind the curtains of the organization than I could have imagined and how far removed some of the leadership are from the field work. Listen, at the end of the day, Scouting is a business guided by financial decisions in order to continue to survive. The product they peddle and sell are the values that are really dependent upon the volunteer leaders at the local level. The magic of scouting isn't in the organization. It is in the Man-Boy leader (as Baden-Powell called one of the qualities of a Scoutmaster) of the local unit The best time of my adult scouting experience was my short lived time as Scoutmaster. It may have been short lived but it certainly was epic and more was done during that time than most others could have accomplished in several decades (There is a book coming soon on my experience). I know I am just a lowly guy with my own opinions that many may not appreciate or acknowledge by some but if it means anything I think Mike Rowe's comments last year on the Tucker Carlson show helped to add some credibility to my thoughts.
Also, please note that the comments made in this blog are in no way representative of any legal advice or based on any legal documents as I am not an attorney. These are just my own opinions and speculations on the situation.
Some Points of References:
Scouting's Bankruptcy Video
Philmont Mortgage
Membership Fee Increase
LDS Exodus from Scouts
Organization Structure
Scouting Moral Bankruptcy
Scouts Canada Co-ed Failure for Membership Growth
Membership Decline
