Anon Fundraising

[Anonymous (4a3f)]

We are currently a booster club non profit….and would like to start to do fundraising and ear marking it to that individual gymnast account. Has anyone dropped their non profit status before or have any pros or cons to this?

 

[Anonymous (445e)]

Legally, dont do it and try and keep your NFP status. In practice, I have been part of gyms that have done this in gross violation of IRS regs (the gym owner was actually on the NFP board making spending decisions!), but the truth of the matter is that the amounts you are generally talking about fly under the IRS scrutiny radar so many gyms scoff at following the regulations. The practice of fundraising for individuals and having the NFP administer individual accounts just gets complicated if you start having more than a few gymnasts participating besides the moral quandaries of if it is in line with NFP intent. I would recommend the gym administer donations in the name of X gymnast and apply it to their account.

 

[Anonymous (cdb7)]

I’m super curious about this also. Many parents on our team getting getting frustrated when some raise $1,000+ and others raise $0 and yet it all goes to everyone on the team.

 

[Anonymous (445e)]

I’m super curious about this also. Many parents on our team getting getting frustrated when some raise $1,000+ and others raise $0 and yet it all goes to everyone on the team.

That's the whole point of a NFP organized as a 501c3 or charitable organization. The purpose of the organization is to exist for "charitable purposes" that benefit a community. The IRS has a category of charitable organizations under ameture sports. But the IRS regs specifically state "none of its earnings may inure to any private shareholder or individual." So regardless if one family raises 1k and another 0 the organization is supposed to support ALL members of the community for that sport. Otherwise the organization is NOT a 501c3.

 

[Anonymous (cdb7)]

Right I understand that, I was just trying to say that many parents are starting to wonder why they don’t just fundraise on their own vs doing it for the group.

 

[Anonymous (445e)]

Ya I get that, conceptually it is a logical conclusion for many to make. But once you start looking at the different pieces it is maybe less so. The biggest part is the tax deduction of donations. As an individual you cant offer that, then the potential liability or headache of "I gave Susie $$ but it looks like her parents arent spending it for its intended purpose". Plus its harder to go into a business and ask if they would like to donate to my daughters gymnastic expenses, versus support your local club. The best that I have seen is organizing as a social club or 501c4 which keeps the organizations tax free status but eliminates the tax deduction for donations. But as a social club you can charge membership dues and that can take the form of fundraising X amount or inkind work contribution (working a meet, etc). There is a little more overhead in reporting for this type of organization, but you in theory have more flexibility to allow families to fundraise for their own child versus the group. I know a lot of high school bands booster organizations are organized like this.
But again, the practicality of this is that the amounts we are talking about generally don't reach scrutiny level, so many "clubs" just do what they want despite what the regulations say.