Parents Booster 501c3 Question

[BrittanyS]

Hi I am new here and have a question about booster clubs, 501c3. Our booster club has recently made some changes and is now requiring parents who wish to be members to volunteer 25 hours and participate in 50% of fundraisers, or be non members and pay $700. If we don't do all the volunteer hours we will owe $20 a hour. I am concerned this is not how the booster is designed to be run. Also they want a form to be signed and notorized stating our preference, to be in or out of the booster club. I don't understand why the form must be notorized. Can I get in trouble if the booster isn't run properly and I willingly participate? Thanks, this is such a big change and I am not on the board.

 

[Muddlethru]

I believe your booster is in violation of the IRS guidelines for a 501(c)3 not for profit organization. It is suppose to be a charitable organization that benefits the whole.

"The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction."

 

[suebee]

Can I add on a similar question here? I'm fairly confident that dd's gym's booster club is also in violation of the 501(c)3 rules. It is part of the reason I did not join (it's optional). But my question is what penalty is there if someone (whoever the someone is) discovers the violations? Is there danger to the participants, many of whom, I suspect, have no idea that the booster club is being run improperly? Or just the board members? Would participants potentially have to pay taxes in the future if it was discovered that the booster was not following 501(c)3 rules?

 

[skschlag]

Our booster is working with a lawyer right now to make sure we are in compliance with IRS and NCAA. It has been interesting. One thing we have learned is that some board members have to be people that do not benefit at all from any decisions made. THe 2nd piece is that the money raised cannot be solely used for members of the club. I think that 20% has to benefit others that are not in the club.

It has been eye opening, and we are starting to make changes. Not going to be easy though..

 

[suebee]

THe 2nd piece is that the money raised cannot be solely used for members of the club. I think that 20% has to benefit others that are not in the club.

Do you mean the gymnastics club or the booster club?

Is that true for all 501(c)3 booster clubs?

 

[skschlag]

the booster club. It si 501c3 rules that we are looking at

 

[Val]

There are some guidelines on USAG website.

 

[suebee]

I thought that booster club money couldn't be just for members of the booster club anyway, because then you're essentially raising money for yourself. I thought the booster had to raise money for the team?

The booster club at dd's gym is optional to join but money only goes to those in the booster club who meet their requirements of fundraising. I thought that was one things they were doing that was not allowed. Am I wrong?

 

[Seeker]

I thought that booster club money couldn't be just for members of the booster club anyway, because then you're essentially raising money for yourself. I thought the booster had to raise money for the team?

The booster club at dd's gym is optional to join but money only goes to those in the booster club who meet their requirements of fundraising. I thought that was one things they were doing that was not allowed. Am I wrong?

No, you're not wrong. That is not allowed.

 

[skschlag]

I thought that booster club money couldn't be just for members of the booster club anyway, because then you're essentially raising money for yourself. I thought the booster had to raise money for the team?

The booster club at dd's gym is optional to join but money only goes to those in the booster club who meet their requirements of fundraising. I thought that was one things they were doing that was not allowed. Am I wrong?

So....even if the booster club is raising money for the team, if it is made up of all team members, that is not allowed. So, if joining the club is required, or a part of the gym, and all the money goes back to the same people raising the money, then that is a problem. we are learning that a certain amount of money has to go to something else. I don't completely understand it yet, because no booster clubs work this way, but that is waht the lawyers are saying....

 

[Val]

https://usagym.org/PDFs/Member Services/webinars/dec14.pdf

 

[Gymmommy71]

IMO pay the $700 and run! I really hate how our gym has a 501c booster and would definitely pay that much to not have to participate in mine - especially if that includes your meet assessments and you don't have to give them any additional money besides for tuition and maybe apparel.

 

[gasrgoose]

I've said this before but in my experience booster clubs are a bad idea, they are very popular but many aren't run legally (out of ignorance not malice). Also at a former gym the booster club co-presidents were sued by a gymnast's parent. Ugly, ugly situation. The gym owner should be the one exposed to the risk not the customer. I've never understood why people are so willing to take on the risk and huge workload that comes with booster clubs. Most could get a part time job and generate more money with zero risk.

 

[wgagym]

In information I got from an attorney that works with booster clubs my understanding that a booster club as a non profit cannot require participation but also cannot just give funds to those who did participate and fundraise.

The way it was explained to me was: what if this non profit was used to raise money for kids hunger but then required kids or their kids parents to volunteer or pay a fee in order to receive benefits from the organization. That is illegal and is for any non profit which includes sports clubs. So if a booster club did a fundraiser for new Leo's then Leo's would go to ALL members without charge regardless if they participated in the fundraiser or not.

 

[Gymmommy71]

I've said this before but in my experience booster clubs are a bad idea, they are very popular but many aren't run legally (out of ignorance not malice). Also at a former gym the booster club co-presidents were sued by a gymnast's parent. Ugly, ugly situation. The gym owner should be the one exposed to the risk not the customer. I've never understood why people are so willing to take on the risk and huge workload that comes with booster clubs. Most could get a part time job and generate more money with zero risk.

Yes! to the above - and it always seems like the gym owners are the ones pushing them on the families w/ the promise of tax free fundraising and lower out of pocket expenses - when my experience is the opposite happens! Higher out of pocket expenses and then on top of that hours and hours of work doing menial tasks that most of the members would never do otherwise (most of the work is hard labor and not good for the bodies of some of the parents over a certain age and/or have health conditions). Maybe the whole point of it is related to risk though - a parent gets hurt working the meets, they sue the booster and not the owner? Hmm.... Free labor for running a meet to promote and garner "status" for your gym, w/o all of the hassle of having to worry about workers comp or liability, or even if its profitable. I wonder who is responsible if an athlete gets hurt because of something like an equipment problem during a meet and sues at a meet hosted by the booster org?

I know parents at almost dozen local gyms and I can attest that around me the gyms that have boosters are much more expensive than those that don't. By a signifcant amount too. It's a well known thing that around here the booster org = more expensive and a lot of work, non booster org = a lot less money and hassles.

Another pattern though is that gyms with boosters do tend to have better equipment and larger facilities - which is that a cause or an effect, not sure? Also, gyms with boosters also tend to have a lot more CGPs - which I think is definitely a symptom of the booster - parents dedicate so much more of their time and money that they get very wrapped up in things and turn CGP.

Lol - again - if given a choice between paying $700 or being part of a 501c3, it would be a no-brainer to pick the $700.

 

[gymdoc]

Our gym got bought out by new owners last year, and the new owners have "required" that we start a booster club. Currently the booster club does fundraisers (mostly parent run open gyms), and sets up some team building events like helping out a local charity, lectures on health topics by local doctors, and watching the Olympics together at a local theater. They used the fundraiser money for a banquet last year. The gym owners/coaches would not have done any off those things, so I feel the booster club definitely helped team morale

Now, the gym owner is "requiring" the booster club to file for 501c3 status because she wants to host a meet. It is advantageous for the gym owner to get all the marketing and publicity from the meet and take none of the financial or liability risk. She also wants them to do more fundraisers because parents are telling her they need help with covering meet fees, etc. I'm not happy with the direction it is going, but it is what the gym owner wants

Right now there are no membership fees, volunteer requirements, and all fundraising benefits all gymnasts equally so I think it is 501c3 compliant and low stress for the parents. Not sure how it will change with more fundraising though

 

[profmom]

I think most people know this, but please be aware that if you want to have a booster club that does NOT have tax-exempt status, you can have that and distribute benefits only to members. The things to attend to there are that 1) people donating money to the club must be made aware that they may not write off donations as charitable contribution, 2) if you are getting a significant payout from your booster club profits, you must report this as income, and 3) you should pay close attention to the NCAA rules on fundraising to be sure you don't cross any lines. If you do not have a club organized as a 501c3, in some states it may be more difficult/expensive to access public spaces if your club is going to host a meet.

My personal opinion is that starting up a 501c3 booster club probably only makes sense if you have a few parents who are in tax law and/or accounting and are willing to donate their labor to ensure that everything is above board.

 

[gymdoc]

If you do not have a club organized as a 501c3, in some states it may be more difficult/expensive to access public spaces if your club is going to host a meet.

Ahh, this may be why our gym owner is pushing so hard. Our meet will definitely be offsite

people donating money to the club must be made aware that they may not write off donations as charitable contribution

We found most places wouldn't let us do a Spirit Night unless we were non-profit so it really limited what we could do for fundraising.

I am curious about the perception that gyms with boosters are more expensive? Tuition goes to the gym, so that shouldn't matter. Leos, warm ups, coach fees and meet fees might be siphoned through the booster, but not sure why it would be more than if just the gym was managing it? I would think any fundraising would offset at least some of those costs.

 

[profmom]

I think it may be a reversal of cause and effect. A gym with an active and successful booster club may feel freer to do more travel meets, order more expensive leos, send more coaches to meets, etc. because they presume that their athletes' families will have more of a financial cushion to absorb these costs.

 

[berrisweetness]

Has anyone looked into 501c4 instead. I dont know all the ins and outs but It is based on parents paying their own money. It cannot be used as a tax write off and donations/fundraisers can only be 35%. This is because your personal money is already taxed.