Sex Abuse Claims Will Not Bankrupt Boy Scouts of America

People sometimes ask me if it will “bankrupt” the Boy Scouts of America to allow men (and sometimes women) who were sexually molested as children by their Scoutmasters to sue the BSA. The answer is simple – no, absolutely not.

The BSA is a billion dollar corporation. Actually, according to the most recent tax return and financial statements of the BSA, the national Boy Scout corporation has assets totaling just over $1.15 billion.

Allowing victims to seek compensation for the wrongs done to them will not put a dent in the BSA’s financial situation. Consider the following financial information, all found in the most recent BSA Treasurer’s Report:

• The BSA has a reserve fund just shy of $85 million set aside for all liability claims, including sex abuse claims. The BSA also has insurance for itself and its state Councils.  This $85 million claims fund only kicks in if the insurance does not cover a claim.

• Each year, the BSA’s largest source of income is the sale of branded merchandise, including Scout Handbooks, uniforms, sportswear, camping equipment, gift items, and novelty goods. In 2011, gross sales of “Scout Stuff” totaled just under $137 million.

• The BSA has approximately $668 million invested in liquid assets, mostly stocks and mutual funds.  The BSA has earmarked another $306 million in investments as an “Endowment” ($234 million of which is “unrestricted”).

• The National Scouting Museum in Irving, Texas, possesses a collection of fine art appraised in March 2012 at approximately $60 million.

• The BSA owns real estate – mostly donated – with a reported value of approximately $228 million.  This figure significantly under-represents the actual value of the real estate because it is based on the market value of the property as of the date it was donated.  For example, 127,395 acres of beautiful, mountainous New Mexico known as the Philmont Scout Ranch is on the BSA’s books at the value of the land back when Waite Phillips donated it in the late 1930s.

Don’t just take my word for it.  The BSA acknowledges in its Treasurer’s Report that it faces lawsuits for sexual abuse of children by Scout volunteers and that additional lawsuits are threatened. According to BSA, the reserve fund and insurance described above is “sufficient to provide for the resolution of these lawsuits and, where not covered by insurance, . . . the total amount of payments in resolution of those lawsuits will not be material to the financial position or results of operations” of the BSA.

There you have it – paying damages to Scouts who were sexually molested by Scout volunteers is immaterial to the BSA’s bottom line.