Parents Booster

[Gymmom1980]

Hello,
I’ve recently started the role of treasurer for our booster club. It was looking at being dissolved for lack of volunteers to run it. This is a parent run, strictly volunteer, booster. I’ve been trying to learn what practices are legal and what need changed.
If the booster club (501c3) is paying the meet fees for girls attending the meet, is it ok for the gym, for profit, to pay them and the booster reimburse the gym owner? Same to be said for any coaches fees for meets, ie travel expenses, and session fees.
The way I read it is it’s best for the booster to pay the hosting gym directly, but we’re getting a lot of pushback from the gym to filter payments through them.

 

[gym_dad32608]

My advice would be to let the booster club be dissolved. They really are more trouble than they are worth. I know of only 1 or 2 very functional booster clubs that do it the right way. There are definite rules booster clubs that are organized as 501(c)3s must and should follow, but the logic goes something like this "we only raise like 20K so the IRS would never give us any trouble so who cares?". You may already know, 501(c)3s are designated not for profit organizations by the IRS and as such, some donations may be tax deductible. The reason why the IRS views these organizations as tax exempt is because they are supposed to be providing a benefit to the community (town you live in) around some specific purpose (gymnastics) NOT providing a benefit for a specific business (gym) that is most likely for profit.

Given that, the guidelines or recommendations are the gym owners should be completely separated from the management and decisions of a booster club. Otherwise the IRS would view a FP business taking advantage of a NFP organization for its benefit. Also booster clubs as NFP should not have any membership requirements, especially the popular "you must contribute so many hours to get support" since that can be view as benefiting a specific population versus the community.

Now, in my research on the topic (if you cant tell I have been in your shoes lol) I only found 2 or 3 extreme examples of the IRS taking action. I think one gym in NC that had a booster club that was taking in something like 500k or some other insane amount, but was also controlled by the gym owners. They had a decent fine. But that's about it, so ya, ultimately, while there are rules and guidelines, most gym booster clubs do what they want.

Technically, how to avoid that? Drop the 501(c)3 designation. You lose the tax benefit, and gain some additional tax filing reporting responsibilities, but then it does allow you to have participation requirements, and other things that would otherwise in theory be subject to scrutiny. Or just dissolve the booster club.....

 

[GymnastMomX2]

Our booster club gives money to the gym, which credits all the parents accounts equally to lower meet/coaches fees. We have a contract with the gym saying what the funds will be used for.

 

[Gymmom1980]

My advice would be to let the booster club be dissolved. They really are more trouble than they are worth. I know of only 1 or 2 very functional booster clubs that do it the right way. There are definite rules booster clubs that are organized as 501(c)3s must and should follow, but the logic goes something like this "we only raise like 20K so the IRS would never give us any trouble so who cares?". You may already know, 501(c)3s are designated not for profit organizations by the IRS and as such, some donations may be tax deductible. The reason why the IRS views these organizations as tax exempt is because they are supposed to be providing a benefit to the community (town you live in) around some specific purpose (gymnastics) NOT providing a benefit for a specific business (gym) that is most likely for profit.

Given that, the guidelines or recommendations are the gym owners should be completely separated from the management and decisions of a booster club. Otherwise the IRS would view a FP business taking advantage of a NFP organization for its benefit. Also booster clubs as NFP should not have any membership requirements, especially the popular "you must contribute so many hours to get support" since that can be view as benefiting a specific population versus the community.

Now, in my research on the topic (if you cant tell I have been in your shoes lol) I only found 2 or 3 extreme examples of the IRS taking action. I think one gym in NC that had a booster club that was taking in something like 500k or some other insane amount, but was also controlled by the gym owners. They had a decent fine. But that's about it, so ya, ultimately, while there are rules and guidelines, most gym booster clubs do what they want.

Technically, how to avoid that? Drop the 501(c)3 designation. You lose the tax benefit, and gain some additional tax filing reporting responsibilities, but then it does allow you to have participation requirements, and other things that would otherwise in theory be subject to scrutiny. Or just dissolve the booster club.....

Thanks!
At this point if it was up to me that's what would happen. Unfortunately no one else is on board with that idea yet.

 

[Gymmom1980]

Our booster club gives money to the gym, which credits all the parents accounts equally to lower meet/coaches fees. We have a contract with the gym saying what the funds will be used for.

Do they give you detailed receipts after money is spent through them to prove where the money actually went? I just worry that seeing essentially all the clubs money going to a for profit gym would flag us and we'd have to deal with an audit. I have no desire to deal with that!

 

[GymnastMomX2]

Do they give you detailed receipts after money is spent through them to prove where the money actually went? I just worry that seeing essentially all the clubs money going to a for profit gym would flag us and we'd have to deal with an audit. I have no desire to deal with that!

Nope, we don’t get any detailed breakdown, we’ve been doing it for years this way and so far no issues.

 

[skschlag]

Hello,
I’ve recently started the role of treasurer for our booster club. It was looking at being dissolved for lack of volunteers to run it. This is a parent run, strictly volunteer, booster. I’ve been trying to learn what practices are legal and what need changed.
If the booster club (501c3) is paying the meet fees for girls attending the meet, is it ok for the gym, for profit, to pay them and the booster reimburse the gym owner? Same to be said for any coaches fees for meets, ie travel expenses, and session fees.
The way I read it is it’s best for the booster to pay the hosting gym directly, but we’re getting a lot of pushback from the gym to filter payments through them.

Yes. We get a detailed invoice from the gym, and pay them directly. Then they pay the fees.