Parents Booster Club questions

[bluesugar]

Hi, I've read through some of the past threads and I know it's a touchy subject but I have some questions about DD's booster club which is a 501c3, hoping someone can shed some light for me ...

1. Can the gym require all team parents to join the booster club?
2. Can the booster club require dues and participation in fundraising events?
3. Can the booster club stop a gymnast from competing for the gym because dues were not paid to the club?
4. Can the booster club split fundraising profit with the gym?
5. Can the majority of the fees/fundraising profit be used to reimburse the coaches for traveling to meets?

TIA!

 

[gymgal]

Hopefully others will weigh in because I am in no way a lawyer or accountant, but from all that's been posted here and from what I have read about non-profits (bc's specifically) -

Given your bc is designated as a non-profit, then I believe it is 'no' to all but the last.

#1-3: the non-profit must be organized to benefit all equally, regardless of participation in dues or events. And the workings of the bc and gym should not intertwine, so a gymnast shouldn't be held out of meet due to something happening in the bc.
#4 is generally 'no' but it could potentially happen if the event was set up correctly. For instance - if you are co-sponsoring a meet with the gym, meet fees profits may go to the gym because they are sponsoring it and holding it in their gym, but concessions, shirts, etc could go to the bc because they have organized that portion. The gym could also charge the bc for the use of the gym and recognized name. That might appear like "profit" to an outsider but is actually a contractual fee that is getting paid. The important thing is that it is organized so that the listed fees and profits are specific and separate. The bc shouldn't just do the entire event and then cut a check to the gym for half the profits without specifying why/where they came from.

#5 Coaches can get reimbursed for travel expenses - whether the majority of it is used I supposed depends on the amount of travel expenses compared to what has been raised. It would also have to be stipulated that the gymnasts are responsible for paying the coach travel fees. Otherwise, it could potentially be taken by the IRS that the bc is simply providing funds to the coach that the gym would have normally paid for.

 

[ZJsMom]

Number 4 is the problematic one. Assuming the booster club is a non profit and the gym is for profit, funds raised by the booster club can not benefit the gym. Gymnastics booster clubs have been audited by the IRS. Not only could the booster club lose its non profit status, the members could be liable for back taxes.

 

[Muddlethru]

Many non-profit organizations 501c3 are not fully aware of the rules or they are aware, but they think they will not get caught for not following IRS regulations. The smaller non-profit organizations usually don't get caught, but there have been incidents that even small organizations are caught because of a whistle blower, or sheer (bad) luck of the draw.

1-3 Is definitely a no. 501c3 corporations are "charitable" non-profit organizations and must benefit the whole not any one individual or private "shareholders". I'd like to say however, that booster clubs if ran well can be a big source of help for all gymnast involved. If you can afford to participate, it is a good idea to contribute and help with the cause. If you cannot afford it, then it is wise to speak with the board. They should allow you to benefit as it is what makes it a non-profit organization and it is part of the required IRS rules. However, there are some people that can afford it but don't want to contribute time and money but just want to benefit. I just don't support this mentality. If there are some issues with the booster club, perhaps lack of transparency, accountability, etc., then I would definitely bring up my concerns.

4 It would depend on where the gym will use the funds. But the gym and booster have to operate independently of each other and the gym must not have any big influence on the booster club.

5. Yes

If you care to read and want more detailed information, I've attached a link that I took from the USAG website and that was put together specifically for gymnastics non-profit organizations by lawyers.

http://webcache.googleusercontent.com/search?q=cache:4NB8s1DSOBQJ:https://usagym.org/PDFs/Member%20Services/webinars/dec14.pdf+&cd=1&hl=en&ct=clnk&gl=us

 

[bluesugar]

Thank you all for your replies and for the link above! I did read through it and there's a lot of really great info in there. I'm still on the fence about #5 though because the presentation says it's ok as long as it isn't the primary purpose of the bc and I feel that since more than half of the funds are going towards this cause, it becomes the primary purpose. But I really appreciate your thoughts, it does help to know that I am not completely misinterpreting the rules as I have read them!

 

[GymnastMomX2]

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[GymnastMomX2]

Sorry haven't been back to update. DD was sent home Friday, was super upset saying the coaches didn't want her there, was upset they were disappointed in her etc. I told her not to be so hard on herself and talked her into going to practice Saturday(she really wanted to skip and stay home), and wouldn't you know she did the darn bhs. She said they kept her on beam for 2 rotations but she finally did it. (And did them again yesterday). So maybe they do know what they are doing.

I never did talk to the coaches about, if it happens again sometime soon I might have a conversation about it, but otherwise I'll just leave it alone.

I think it's possible she was so worked up/upset over it on Friday they sent her home to calm down? I asked her if they send kids home a lot, and she said it happens occasionally, but not all the time.

 

[Muddlethru]

Thank you all for your replies and for the link above! I did read through it and there's a lot of really great info in there. I'm still on the fence about #5 though because the presentation says it's ok as long as it isn't the primary purpose of the bc and I feel that since more than half of the funds are going towards this cause, it becomes the primary purpose. But I really appreciate your thoughts, it does help to know that I am not completely misinterpreting the rules as I have read them!

I think you may be misreading the article. I pulled direct quotes from the article. Is this what you are referring to?

"Using Booster Club Funds to Collectively Pay for Meet Fees, Uniforms,
Coaches Fees is Permissible if Incidental to Primary Purpose"

Using majority of the "raised" funds to pay meet fees, coaches fees, etc., are all incidental to its primary purpose and permissible, acceptable and in fact the reason these non-profit organizations are formed. As long as the primary purpose of your booster club is to raise funds exclusively for charitable purposes such as to foster and support qualified amateur sports, then it is not in violation of any rules. Is this the primary purpose of your booster club? How much of the booster club's activity is dedicated to fundraising? If none of its activity is dedicated to fund raising, and all they are doing is disbursing funds received from parents, then they are in violation. See quote below:

"A Booster Club is not prohibited from acting as a conduit or
clearinghouse to collect and pay competition costs and coaches’
expenses as long as that is not its primary activity"

While a Booster Club is not prohibited from acting as a conduit or clearinghouse to collect and pay competition costs and coaches expenses, it cannot be its primary activity. It's primary activity has to be fundraising for charitable causes. The primary activity being referred to above is the administrative activity of assembling funds in a centralized place and then forwarding for the coaches fees, meet fees, uniforms, etc. and not necessarily the appropriation of funds. For instance, if all your booster club does is collect money from the parents and then forwards the money to the coaches, meet competitions and other vendors, then they are in violation of the IRS rules because all they are doing is serving as a conduit. But if they still do all that (i.e., collects the money from parents and then forwards the money to coaches, meet competitions and other vendors) but still devote most of their time raising funds, then it is all good. Hence, the quote below,


▪" The administrative component must not be the Booster Club’s primary
purpose, which must remain fundraising exclusively for charitable
purposes"

What are you trying to figure out? Is there some controversy in your booster club on where money should be spent and how much? The key to 501(c)(3) is has to be charitable and covers everyone.