Non-profit boosters and deposits

[gymmama43]

Boy, I am learning a LOT from this forum! Many thanks to everyone who replied to my last question about managing a booster club.

I now know that a non-profit booster club cannot require fundraising AND must split funds equally among all gymnasts. With that being said, is it legal to require an upfront membership fee for joining?

 

[MaryA]

We just set up a booster club this year and were told that we could have no required "dues," no required participation, basically no required anything to be a non-profit.

 

[wallinbl]

You don't have to split funds equally, you just can't base it on contribution amount or fundraising participation. If, for example, the booster club paid for meet and travel expenses for gymnasts to go to Nationals if they qualified, you couldn't tell a gymnast who didn't raise funds or contribute much that you weren't paying for them. You'd have to pay for the non-contributors as well. Doesn't mean each kid in the gym gets an equal benefit. There's no (legal) problem with doling out based on gymnastics merit.

 

[GymBee97]

No they can not require a membership fee to join IF they are a non-profit booster club and are going to be tax-exempt. If they are not a non-profit and plan on paying taxes on their income then they can do what they want. Yes boosters have to file taxes every year too on their income The form we used was a form 990 EZ because we made under a certain amount.

Just a clarification too splitting the funds equally doesn't always mean that the dollar value is equal. It could mean too that the benifits received are equal. For example if the boosters pay for the highest level of competion in all levels that would mean that the L4 - L6 get states paid for the L8 gets Regionals Paid for, and the L9 and L10 get the Nationals paid for. There is a dollar valule difference in these fees but the benifit is the same the highest competion meet is paid for.

Or if there is a judges clinic for a judge to come in and evaluate each level usually it has been my experience that the charge for the compulsory levels has been cheaper than the Optional levels. So again the actual cost is different but the benifit is equal.

Our boosters were a mess too and in the past year finally organized and are awaiting our 501 C3 non-profit certification so we can go for grant money. (very long process) We hired a company to help us get the by-laws, parent handbook, reimbursment forms, the state non-profit applications, and the 501c3 application completed for us.

And that was where we learned the $ amount doesn't have to be equal but the benifits should be similar. It can also be the dollar value is the same for some expenses that are just different. For example the optional girls we purchased all new grips (about $400) the compulsory girls don't get grips so they got their state flowers and a pizza after the meet to celebrate that cost a total of about ($400).

It can also mean for example any gymnast that makes it to regionals or nationals will have those meet fees paid by the boosters. Now this means in reality that L8 - L10 are getting those meet fees paid but the compulsories don't get any meet fees paid. It becomes sort of a if you stay with gymnastics to that level then you will get that same benifit at that time. So that benifit is available to all gymnast when they hit that level.

This document from the IRS is a great read. It talks about being tax exempt - if you go to page 3 or 4 in part 3 they have examples of 2 booster clubs that sound similar but one will be tax exempt where the other can not be.

http://www.boosterrules.sebengriffin.com/docs/eotopica93.pdf

There is a site too called Parent Boosters USA Parent Booster USA - Parent Booster USA
It has ALOT of info on the right way to run a booster club. You can join them to use their 501c3 but when we looked into it, it made more sense for us to get our own.

These documents from them make good reading for boosters operations

Parent Booster USA - Basic Booster Club Guidelines

Parent Booster USA - *NEW* Get Legal and Get Legal, Stay Legal Memberships

http://www.parentbooster.org/Resources/Documents/Guidelines and Financial Practices[Web site public version].pdf

 

[Natasha]

THanks GymBee for the great info! You are a wealth of information! A couple of questions...
We are a tax exempt booster club. We have always charged a $50 "assessment fee," basically a membership fee. I did not know we could not do this. However, this fee covers the activities during the year (parties, banquet, Christmas gift, state meet gift, etc). It is broken out to show exactly how the $50 goes to pay for each of these things for their child. None of the fundraising goes towards these things. So, if we change the fee to call it an "activity fee" or even just a charge for each activity but paid all at once in the fall, would this be legal? We do state that participation in the activities are only open to those that have paid. I see it the same as paying the meet fees- you only attend the meet if you pay for it.

Our fundraising we do goes towards paying the coaches travel expenses for meets and and the team entry fees for meets. So if we designate certain fundraisers to go towards the coaches expenses for a particular meet, then that is legal, correct?

THanks for the help!

 

[GymBee97]

THanks GymBee for the great info! You are a wealth of information! A couple of questions...
We are a tax exempt booster club. We have always charged a $50 "assessment fee," basically a membership fee. I did not know we could not do this. However, this fee covers the activities during the year (parties, banquet, Christmas gift, state meet gift, etc). It is broken out to show exactly how the $50 goes to pay for each of these things for their child. None of the fundraising goes towards these things. So, if we change the fee to call it an "activity fee" or even just a charge for each activity but paid all at once in the fall, would this be legal? We do state that participation in the activities are only open to those that have paid. I see it the same as paying the meet fees- you only attend the meet if you pay for it.

Our fundraising we do goes towards paying the coaches travel expenses for meets and and the team entry fees for meets. So if we designate certain fundraisers to go towards the coaches expenses for a particular meet, then that is legal, correct?

THanks for the help!

Ok first question you can't mandate any fee to be paid no matter what you call it. You can accept "Donations" but can't require them. So any payments you are requiring of the parents won't be legal. Fundraising should really be done to cover the booster expenses.

Each fundraise doesn't have to be for a particular event or item. It all goes into the general fund which pays for those items you have made a budget for for the upcoming year.

Now those activities that the boosters organize can have an admission fee and you charge that fee for the event for those that want to attend again you can't force any parent to attend but if they don't buy a ticket for the event then they don't go.

You can ask for the total amount of the admission fee IF they are going to the event to be paid in the fall but you can't require they pay the total amount if they are only going to one event and not the others. For parties, banquets various gifts etc you can organize the event without giving money from the boosters to pay for it. The event becomes the "fundraiser" where tickets are sold to attend the event. Usually the gymnast goes for free but parent, aunts, uncles, grandparents etc pay for a ticket. The ticket sales are the fundraiser for the event. Then only those that purchase the tickets can attend and "get the benifit".

Gifts for gymnasts can come from booster income but not gifts for coaches. For coaches gifts the parents would do a seperate collection if they wanted to do a coach gift and then it wouldn't be a booster gift and only those who donated to the cause would be listed on the card or whatever. The funds never go through the booster accounts.

you can raise funds to pay for coaches expenses for a particular meet as they are required for the girls to compete, but from my perspective I would question how many coaches NEED to go to the event If you only have 4 kids going do you really need 2 or more coaches to go? If not then why pay for them. Our boosters gave a travel allowance for this. For example To get reimbursed they have to provide receipts from the hotel etc not a bill from the gym (you have to have that paper trail of all monies you pay for) and you gave an allowance for each required coach of $300 total for the weekend.

I will send you a copy of what we put together for a budget for our boosters so you can see what I mean.

 

[Natasha]

THanks Gymbee. Right now our fundraisers are very minimal, so we use them to pay the coaches travel expenses and team meet entry fees so then our goal is that the families only have to pay the meet fee. Our head coach/owner is very good about only sending necessary coaches and making sure that they carpool, share rooms when possible. He also doesn't charge us for any of his travel expenses, only the other coaches.
Really the only reason we collect the "activity fee" at the beginning of the year is to simplify things so that we aren't constantly collecting money for the events during the year. Our banquet is like you described though, the gymnast is paid for (along with trophy and awards) through the activity fee that we charge at the beginning of the year and then the family members buy tickets.

In the past our BC essentially just handled all the meet fees (as in families pay the BC and the BC pays the host gym) and then held the various activities during the year which the fee at the beginning of the year covered. We have just started doing fundraisers in the past 2 years, so I want to make sure we do it right.

 

[GymBee97]

Its all in the wording as to if its "right" or not. Yes you can charge an admission fee to an event but you can't collect a required activity fee or dues to pay for that event.

So you could have if they pay it all up front the price is cheaper so the $50 for all events paid in the fall is cheaper than paying as you go.

 

[MaryA]

We were told we couldn't even use the nonprofit for parties, which is annoying. I really can't imagine that is something that would ever be enforced, but it's what our accountant told us. We ended up setting up two separate accounts. One is a "for profit" account and that's where all of our individual fundraising $$ go. We have to charge tax and we have to pay tax. We also route all of our fees (meet fees, coach fees, etc.) through this fund. So far, our parties have been mostly free potluck events, but I would imagine that if we start having bigger, grander events, the money for this would have to come out of this fund as well. Our group fundraising $$ go into the non-profit account. Our hope is that eventually we'll be pulling enough money into this account to offset parent expenses (like pay the coaches fees, or something), but we're not there yet.

 

[GymBee97]

We were told the same thing Mary about parties but you can have a team spirit or team bonding event just can't call it a party but an event that will strengthen the bond of the team member and give them a stronger sense of "team" or team recognition events is allowed! Again its all in the wording. The only thing that can't be reworded would be buying equipment for the gym etc.

 

[gymgal]

For small boosters, what would be the benefit of filing for 501 status. Seems like a lot of excess regulations. I understand large boosters b/c you could end up paying a lot in taxes and you wouldnt have the benefit of grants but for smaller boosters, this really isn't an issue.

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[MaryA]

There are a lot of great fundraisers you can ONLY take part in if you're a non-profit. Chick-fil-A offers fundraising nights, a local gas station/convenience store offers these excellent coupon books, local grocery stores allow you to sell gift cards to their stores, etc. and you have to provide your tax exempt number to take part in any of them. Those are just a few I know about locally, but I'm sure there are more.

 

[gymgal]

There are a lot of great fundraisers you can ONLY take part in if you're a non-profit. Chick-fil-A offers fundraising nights, a local gas station/convenience store offers these excellent coupon books, local grocery stores allow you to sell gift cards to their stores, etc. and you have to provide your tax exempt number to take part in any of them. Those are just a few I know about locally, but I'm sure there are more.

We have done some of these types without tax exempt status. Er have found the companies to br very loose on their policies. Maybe we have just been lucky. Or maybe southern hospitality has its perks.

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[GymBee97]

You can go for grant money with a 501c3 that you can't do iwthout it also if you have $5000 or more in GROSS income (before expenses) the IRS requires you to do it.

 

[gymgal]

You can go for grant money with a 501c3 that you can't do iwthout it also if you have $5000 or more in GROSS income (before expenses) the IRS requires you to do it.

Actually, the IRS requires you to file IF you want to stay in non-profit status but if you are operating a for-profit booster, this doesn't apply.

 

[GymBee97]

Correct a 501 c 3 is for non-profit. I am assumning that the question on why do boosters if they are small get the 501c3 was a non-profit booster since that seems to be what most of the discussion goes to.

That $5000 in gross revenue doesn't take much to get to either lots of smaller boosters do that amount.