booster club set ups and NCAA eligibility

[gymgal]

OK, so there is a side discussion popping up in another thread about gym expenses regarding booster clubs and NCAA eligibility.

I am now getting a little concerns that our BC may not be set up properly and may cause problems for some girls in the future.

Our BC is NOT a non-profit. All money raised goes through the booster club, but (and here is where I am worried), the money gets distributed to the girls in several ways depending on the type of fundraiser: some are split evenly among all the girls in the booster club, regardless of their participation, some are split evenly only among the girls who participated, and some are very specific to how much the girls brought in (example: we are selling candles. The girls get a certain % of each item they sell. The ones who sell more, get more money). Now, all the money stays in the booster club account but the money is allocated to individual girls on spreadsheets kept by the treasurer. Parents can request funds from their "account" to pay for team fees (leos, bags, comp fees, travel expenses, camps) but cannot use it for tuition or private lessons.

OK - so for those "in-the-know", are we setting up a violation for our girls according to the NCAA? Should we look into this further with an expert? And if so, where should we look?

The BC was set up this way because there was such a disparity among parents in terms of participation. This way, each parent gets to decide how much (and which events) they want to participate.

thanks for input....

 

[Deleted member D3987]

as long as the money goes to the parents there is no problem. and as long as the funds are going to pay for some of the things you have listed above there is no problem. that's all.

 

[Gymdad2]

I think dunno is right, but I have only dealt with a non-profit booster club, and considering the importance of being on the right side of the NCAA, I would suggest that you consult either a tax attorney or lawyer who is familiar with NCAA rules and regulations. The NCAA can be awfully picky and you can't afford to be wrong. Good luck.

 

[gymgal]

thanks! Any ideas on where I would find an attorney with experience? Not necessarily a name but just what type of attorney might help.

 

[AGM78910]

The only way to make things fair for the Booster club, is for the gym owner and head coach to make it a requirement for team that parents participate in fundraising and work meets. The work gets divided up evenly and the funds are spent only on the girls for coaches fees, travel, meet expenses etc. Parents can buy out if they like instead of participating, but it is not cheap. The rules are made clear to any prospective team member and his/her parents and the parents sign a contract. New parents really like this system because it is very fair and they were tired of pulling all the weight at their former gyms.

 

[Deleted member D3987]

I think dunno is right, but I have only dealt with a non-profit booster club, and considering the importance of being on the right side of the NCAA, I would suggest that you consult either a tax attorney or lawyer who is familiar with NCAA rules and regulations. The NCAA can be awfully picky and you can't afford to be wrong. Good luck.

believe this...the only entity you can consult IS the NCAA. a capricious and arbitrary organization. so, my suggestion would be to leave it alone. this is precisely how people get innocently in trouble with the NCAA.

 

[bribri514]

If anyone would like to help, I am going to try to make up a FAQ about all the different aspects of NCAA gymnastics and post it as a sticky in the NCAA forum. I'm hoping one of those threads will be all about eligibility including booster clubs. Just PM if you'd like to add some input, I hope that will be able to assist everyone with these questions (since we definitely all have them!)

 

[LemonLime]

You are mixing up a bunch of different concepts.

NCAA eligibility rules have to do with - in part - gymnasts earning money from their gymnastics. If the girls host a flip-for-a-buck marathon and the money goes to an organization that distributes the cash to them dollar-for-dollar based on earnings in their personal account, then it's an NCAA violation. If the girls sell banners and the money goes to an organization that distributes the cash to them dollar-for-dollar in their personal account, then it's NOT a NCAA violation.

The booster may be a non-profit, even if it's not a 501(c)(3) tax exempt organization pursuant to the IRS. "Non Profit" is simply an organizational structure that you file under based on individual state law. 501(c)(3) can accept tax-deductible donations and can distribute its donations tax free. At all times, however, there cannot be a straight distribution to the members based on what they "earn" from booster activities. If that happened, whether it's a 501(c)(3), non-profit or "for profit," that's income tax evasion and possibly sales tax evasion. The officers of the booster would be individually liable for the violations as would the individual tax payers.

 

[3rd_time_around]

Oh my, this is very confusing! What about sponsors that donate money right to the escrow account that is then used only for meet fees and related fees? What about a fund raiser that only the participating girls benefit from, but it is divided up evenly to the escrow accounts for meet fees? We were told donations could be made as long as they were not given to the gymnast or parents, but were put into their escrow accounts. (info was from a college coach). We don't have a booster club, but we rely on fundraising and sponsors or we'd be done.

 

[Tumblequeensmom]

Just a coincidental story: There was a mom at my DD's gym (before she quit last month), who refused to participate in ANY type of fundraising because it would make her DD ineligible for any college scholarship!!! Totally not true, but you couldn't convince her otherwise!! Anyway, we just decided to leave her alone and let her pay out all her meet fees and coach's expenses out of pocket... more to spread around to everyone else!!!

I think people are so afraid of violating the NCAA rules, that they're over thinking this... the bottom line.... if money paid directly to the gymnast? That's a violation.... Is it paid to a booster club for the benefit of (in theory) all gymnasts? Perfectly legal.

 

[Deleted member D3987]

that ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

 

[skschlag]

I have to admit, I am glad that our booster club is optional. We are considering joining, but the requirements are that both parents work 1 weekend (friday and saturday night) of bingo. We did the math, and it is a wash for us with childcare for our kids. That and being out late on Saturdays! There is just no way fro us to do it.

That being said, the kids whose parents are members get the benefits of meet fees paid, uniforms paid, coaches and travel fees and usually camp paid. It is a great program. They do other fundraisers throughout the year that benefits the gym (visiting coaches, judges, etc.)

 

[LemonLime]

Oh my, this is very confusing! What about sponsors that donate money right to the escrow account that is then used only for meet fees and related fees? What about a fund raiser that only the participating girls benefit from, but it is divided up evenly to the escrow accounts for meet fees? We were told donations could be made as long as they were not given to the gymnast or parents, but were put into their escrow accounts. (info was from a college coach). We don't have a booster club, but we rely on fundraising and sponsors or we'd be done.

If the booster is a 501(c)(3), the officers of the corporation can accept the donation tax free and then vote the donation to any deserving beneficiary of the charity. They could vote the entire amount to anything that serves the charitable purpose of the entity or split it up to fulfill many charitable purposes. Meaning, they could vote to give every gymnast one hundred dollars toward their meet fees or whatever.

If the entity is a 501(c)(3), it is NOT ok to ONLY distribute to members who participated in a particular fundraiser. A 501(c)(3) is a charity, cannot force people to join it, and must distribute money to those affiliated with its charitable purpose without a bias toward those who actually worked a fundraiser. That smacks of a sham.

If there is no corporate entity, then it matters both how the money goes in and how the money goes out. If the money is from a fundraiser, pooled, then distributed, the distributees owe personal income tax and may have violated NCAA rules if they earned the fundraising money from gymnastics (cookie dough or whatever would be fine for NCAA).

 

[LemonLime]

In the most common, simple example . . .

Gymnastics is expensive! Parents need a way to fundraise. They open a pooled account and hope that the signatory to the account does not embezzle the money (no joke).

They work together and sell cookie dough. They raise one thousand dollars which is put in the pooled account. That money pays for the meet fees of the gymnasts whose parents sold cookie dough. A check is written straight from the escrow account to the entity that's entering the kids in the meet (gym or something else). That's FINE for NCAA.

However, the parents selling cookie dough are actually operating a business, right? How is it different if you are pooling your efforts vs. working on your own or different from operating a business outside of gymnastics? There is no difference. If you sell something, you owe sales tax (depending on the state, but in most states). If you sell something and make a profit, you owe individual income tax.

 

[Deleted member D3987]

yet another way. the families pay an assessment fee in advance to cover all expenses for the upcoming season...say in the amount of $1,000. the booster club goes about the business to raise the funds necessary to cover that expense for ALL the families. or, $1,000 per family. so then, there are 50 families. the booster club raises $50,000. at a pre-determined time set down by the booster board, and let's say it's july 1st, the booster club 'reimburses' each family their $1,000 fee. at the end, the booster club has $0 left. no tax consequence to the IRS if they have the records to show it was an 'even steven'. and no tax consequence or NCAA rules violation because each family received the equal amount paid to other families paid to them. they are simply reimbursed for funds paid in advance. this is the simplest way to go about it. and different levels may have different assessments based on what those financial requirements are for fees at that level. in other words, a level 10 may pay $1000 and the level 5 $500. at the end, whether it's a percentage or a full reimbursement paid out, as long as it is 'even steven' there is no problem. in other words, the level 10 gets their $1,000 and the level 5 gets their $500.00.

the other 2 ways are this:

1. the booster club collects the $1,000 from each family of 50 totaling $50,000. they raise 60. they don't want to reimburse or maybe 'donate' new equipment to the gym or donate to a charitable organization, etc; this booster club is left with a $60,000 profit and a tax event.

2. the club/business is their own booster club. the owner controls the account. and the above takes place. the gym business now has a tax event.

bottom line, you can't give johnny $1.00. then susie $3.00. and alice $5.00. and alex $2.00 and so forth. the amounts reimbursed must be equal to what they put in by percentage, full amount or none at all. and no personal accounts can be kept by parents where they can use these accounts sheltered for their own personal use. not only an IRS problem but one that it is a clear problem with the NCAA.

and to combat the embezzle part...have it set up so that there this is more than 1 signatory to the account. in other words, any checks being cut require more that 1 signature upon them. and, have a board (roberts rules...a treasurer, secretary, vice and prez, etc; and 1 that is transparent where all booster business is published for everyone to see.

and small clarification to the last paragraph of Lemonlime. if you are a 501c3, you may not be required to pay sales tax on those cookies in your 'state'. this is why i consistently post that these issues are complex state to state when it has to do with a 'state' non-profit status. some may require it and some not. depends on what state you live in. federal is clear. they don't require that sales tax be paid to them.

as always, consult a tax accountant or tax attorney in your state. if all their rules and laws are complied with, it's near impossible to have a NCAA violation. in fact, i can't think of one at the moment that i know of. usually the NCAA is looking at the potential event i spoke of earlier in this thread. the gymnast does a toothpaste commercial and smiles and gets paid for doing so. this is NOT a NCAA rules violation. but another smiles and does a round off flic flac back tuck and gets paid for doing so. ooops...you suffer an NCAA violation. you see, you're not an amateur anymore...you were paid to do gymnastics and benefitted from that. same goes with movies...(remember the movie, stick it?) a gymnast can be in a movie. they can talk, sing, dance, pass gas, burp & smile. but God forbid that they do a forward roll and are paid for the very sport they compete in in the NCAA. bad girl...bad boy...you got paid $100 for your effort to cover your time and gasoline and you are now ineligible. pishaw...

now don't even get me started on modeling, commercials and such. if they're right side up and not in some kind of pose that the NCAA determines is not "similar or a mirror event of gymnastics" well then, you can get paid. but if you go upside down in a 'handstand' and you are paid for that...well then...you're out of luck you 'professional bad boy/girl, you".

 

[LemonLime]

Just a coincidental story: There was a mom at my DD's gym (before she quit last month), who refused to participate in ANY type of fundraising because it would make her DD ineligible for any college scholarship!!! Totally not true, but you couldn't convince her otherwise!! Anyway, we just decided to leave her alone and let her pay out all her meet fees and coach's expenses out of pocket... more to spread around to everyone else!!!

I think people are so afraid of violating the NCAA rules, that they're over thinking this... the bottom line.... if money paid directly to the gymnast? That's a violation.... Is it paid to a booster club for the benefit of (in theory) all gymnasts? Perfectly legal.

I don't disagree with your approach. Of course it makes sense for people not to be afraid and in most cases nothing will happen. Pooling money in an escrow account, however, does not cleanse the transactions unless there is another legal layer such as a non-profit or 501(c)(3). "Sharing" money (whether raised or donated) doesn't cure the issues. It's how the money is raised and how it is shared that can protect kids and families from NCAA and tax consequences.

The reality is that many (most?) gym teams will not survive without fundraising and pooling efforts. The biggest problem with fundraising probably is not potential NCAA and tax consequences, but the drama that can surround the good work that goes into them to keep the kids in the sport.

 

[Deleted member D3987]

I don't disagree with your approach. Of course it makes sense for people not to be afraid and in most cases nothing will happen. Pooling money in an escrow account, however, does not cleanse the transactions unless there is another legal layer such as a non-profit or 501(c)(3). "Sharing" money (whether raised or donated) doesn't cure the issues. It's how the money is raised and how it is shared that can protect kids and families from NCAA and tax consequences.

The reality is that many (most?) gym teams will not survive without fundraising and pooling efforts. The biggest problem with fundraising probably is not potential NCAA and tax consequences, but the drama that can surround the good work that goes into them to keep the kids in the sport.

well stated. ^^^

 

[bookworm]

I guess I'm kind of puzzled as to why a gym team NEEDS fundraising to survive...we have been in a few gyms, both with and without fundraising, and I can tell you that by far the more pleasant of the experiences have been those without the fundraising...they tell you what you owe and you pay it, period...no drama over who sold more candles/cookie dough etc and "should" get more as everyone pays the same amount (for their level) of assessment and these teams survive. The monies can be paid over time so it's not like they asked for $1000 on Day 1 and it just seems to run smoother.

I guess it's how one defines "fundraising" ...it can either be through selling stuff to the same friends and family ( and I cringe at having to do that so I don't and I cringe when people ask me to buy stuff) or by one just writing a check for such funds. Writing the check eliminates the whole "question of NCAA violation" thing too (for those that think it's an issue)...

 

[gymmomtoo]

I guess I'm kind of puzzled as to why a gym team NEEDS fundraising to survive...we have been in a few gyms, both with and without fundraising, and I can tell you that by far the more pleasant of the experiences have been those without the fundraising...they tell you what you owe and you pay it, period...no drama over who sold more candles/cookie dough etc and "should" get more as everyone pays the same amount (for their level) of assessment and these teams survive. The monies can be paid over time so it's not like they asked for $1000 on Day 1 and it just seems to run smoother.

I guess it's how one defines "fundraising" ...it can either be through selling stuff to the same friends and family ( and I cringe at having to do that so I don't and I cringe when people ask me to buy stuff) or by one just writing a check for such funds. Writing the check eliminates the whole "question of NCAA violation" thing too (for those that think it's an issue)...

But if you limit it to those who can afford to just write that check, you will cut out a lot of excellent gymnasts. My own daughter(s) would never be team gymnasts if we didn't have a good booster club and fund raise. There is just no way I could afford it! I'm happy for those who can though!

 

[bookworm]

But if you limit it to those who can afford to just write that check, you will cut out a lot of excellent gymnasts. My own daughter(s) would never be team gymnasts if we didn't have a good booster club and fund raise. There is just no way I could afford it! I'm happy for those who can though!

That's an interesting comment because the gyms that we have been in that did not have fundraising did not have a booster club either...