Parents Association Question

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We have our nonprofit paperwork and have been working under bylaws which we sent to the IRS prior to our approval as a nonprofit 501(c)3 group. An accidental discovery of information on line has led to much discussion and disent about whether we are compliant or not.

Our association keeps a point system, our association requires that parents participate in a minimum number of fundraisers per year, our association has a general fund and also keeps an "individual fund" for each member family. The funds in the individual account are part of the general fund but are earmarked for use by that member family for purchase of items like grips, leotards, meet fees, etc. The bigger general fund pot of money is used for paying associaton insurance, coaches fees for specific travel, gymnastics camp fees for member families, etc.

I am hearing a lot from both sides of this - one side says all of the above is 100% not allowed and that we are in grave danger of being fined & loosing our nonprofit status and the other side says that when the bylaws were written these were the rules and that every other gym in our part of the state uses the same rules so we must be ok. (I checked & they all do actually use these same rules.)

Do you have any idea on this?
 
Both gyms we have been associated with have the "individual account" set up. There are not really accounts with a child's name on it as the OP said---just a certain amount of money that the child(family really) has earned through group fundraisers. Money can be taken out for gymnastics related only expenses. We have to fill out a form and attach the receipt to get a reimbursed.

This is fairly common and I don't see how it would get you in trouble with the IRS---the point system OTOH is frowned upon and forcing anyone to participate in fundraising can be walking a fine line also.
 
Both gyms we have been associated with have the "individual account" set up. There are not really accounts with a child's name on it as the OP said---just a certain amount of money that the child(family really) has earned through group fundraisers. Money can be taken out for gymnastics related only expenses. We have to fill out a form and attach the receipt to get a reimbursed.

This is fairly common and I don't see how it would get you in trouble with the IRS---the point system OTOH is frowned upon and forcing anyone to participate in fundraising can be walking a fine line also.

I'm not an expert (certainly not from the legal side of things) but this is indeed pretty common. It's not clear to me whether the gym in the OP's case is dividing money or what, but one of the risks you run with that is jeopardizing NCAA eligibility, because money funneled into an individual account that is not directly related to family fundraising can essentially be considered the "pay for play" that the NCAA system forbids. Any organization that is involved with financing and amateur athletes needs to be aware of those rules as well.
 
We used to have a similar system whereby money earned by a family would be earmarked for their use, but our booster club did decide that this was not permissible and eliminated it.
 
our club was faced with the same issue - how to get all of the parents to take part in fund-raising. We also came up with some kind of point system to allocate the money to the families that did the fundraising, but we were told by the accountant who did our taxes that as a non-profit the IRS would not allow us to do this. All income had to be shared equally. Our solution was to drop the standard carwash cookie dough type fundraisers and concetrate on putting on a meet. As soon as our meet was on the schedule we announced to all the parents to save xxx weekend as you will be required to work at least one session, plus either setup or teardown. It took a few seasons to get the meet well-established and attended, but now our home meet and a state meet if we can get one are our principal fundraisers and we get excellent participation.
 
To get right down to it in layman's terms.

"What you do for one must be done for all." All fundrasied money must be used as a team.

Hypothetically... You have a team of twenty kids. You have fundrasied money for uniforms all year but only 10 of the families actually actively fundraised. The funds raised need to be split evenly by the members of the team regardless if they actively fundraised.

There are no individual accounts other than ones the parents put their cash money into. Also, the money cannot be used for anything other than to boost the teams involvement in the sport.

Most boosters I have been involved with are operating on the edge of being legal.

I worked for a YMCA and our accounts were watched VERY carefully. YMCAs in the US were under a magnifying glass there for a few years. There were absolutely no way we could have individual accounts.

Everything in your general account sounds legit. The individual account on the other hand...hhhmmmm...not so much!

"There are no individuals in TEAM."
 

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