Booster Club

[Ingymmom]

I was just wondering if anyone knows... can funds raised through booster club fundraisers be used towards monthly gymnastic tuition?

[LemonLime]

Quote:
Originally Posted by Ingymmom I was just wondering if anyone knows... can funds raised through booster club fundraisers be used towards monthly gymnastic tuition?

Aside from buying gym equipment, there are few prohibitions on how the money is spent. The problem generally is how the money is earned and if it is automatically going into team member accounts based on how much someone is working or fundraising.

[LemonLime]

Quote:
Originally Posted by Marge Simpson Thanks LemonLime; now I'm really interested! Is there anyone out there with booster club experience running a smaller meet, say 200 kids, willing to share profit info/tips/horror stories? Thanks!

It's all about your budget. If you have 200 kids, multiply that by a $50-$75 entry fee. Then deduct your main expenses such as judges, awards, happies, hospitality, hopefully no equipment or location rental, etc. Concessions make very little money unless you target your market directly. Gate and program also bring in money.

The main way to make money is to get gymnasts into the meet. Call and email gyms and be accomodating (e.g., don't put the one out-of-town group on Sunday late afternoon). Make sure to communicate well with your state judging chair and every one of your judges. Be kind, helpful and courteous. Arrange for hotel group discounts.

Get as much donated as possible, both in items and in volunteer hours.

[hsmomx2]

Okay, don't mean to sound stupid here, but our gym is in the process of setting up a booster club and the owner doesn't think we need to form a 501 (c) (3) and we just want to be sure we are doing what is legally correct. We have some money we already made from a previous home meet and a little fundraising and our plan is to use that money for things like welcome gifts for new team members, coaches gifts and misc items for the team girls throughout the year (like carryout items for the walkouts etc). Can we just form our club, give it a name, open a bank account and keep it very simple without getting an tax id #?
Thanks,
Cyndie

[gym law mom]

Cyndie---the basic answer is no. If you are "earning" money and using it for some purpose and have a bank account then you fall under the watchful eye of the IRS. I know there is paperwork involved in becoming a 501(c)(3) organization, but to be safe I would recommend you take that extra step. There are some restrictions on how you can use the money, but not many.

Lemon Lime who posts on here is the real expert in tax law and booster clubs. Maybe she'll offer an opinion. I'm involved with 3 such organizations(Yes, 2 too many)--marching band, figure skating and gymnastics and all are 501(c)(3) organizations.

[hsmomx2]

Thank you for the advice and that is what I thought, but the owner of the gym was insisting that it wasn't necessary to go through the process of the 501 (c)(3).

Lemon Lime, can you offer some advice??? Our first booster club meeting is next week and I would like to present them with some solid information.

Thanks again!

[Ingymmom]

hsmomx2 -

the short answer is yes, you can raise money for your team without setting up a 501(c)(3) however you can not tell anyone donating that they are donating to a not for profit.

There may be other issues regarding the ncaa & usag's bylaws if your club uses their jo program. Lemonlime does have great experience as another poster mentioned in this area. I have also found Harvey Mechanic to be incredibly helpful, here is where you can reach him.

http://en.allexperts.com/q/Nonprofit-Law-2266/

ingymmom

[hsmomx2]

ingymmom, thanks so much for your help, this seems like a tricky area and I just want to be sure we are setting it up correctly to avoid problems in the future.

Thanks again!
cyndie

[LemonLime]

Quote:
Originally Posted by hsmomx2 Thank you for the advice and that is what I thought, but the owner of the gym was insisting that it wasn't necessary to go through the process of the 501 (c)(3). Lemon Lime, can you offer some advice??? Our first booster club meeting is next week and I would like to present them with some solid information. Thanks again!

All 501(c)(3)s are non-profits, but not all non-profits are 501(c)(3)s. All boosters start their lives as non-profits, but the well-run ones take the next step and become a tax-deductible non-profit, a/k/a 501(c)(3). An organization cannot accept tax-deductible donations unless it is certified by the IRS as a 501(c)(3) organization. The application is extensive but do-able and it takes about 8 months to a year to work your way through the process.

What exactly a non-profit CAN do is HIGHLY dependent on what state you are in. California, for instance, has excessive rules on the process. The cornerstone, however, is that the non-profit cannot profit in any given year. It also may be limited in the types of activities it may engage in.

At all times, the non-profit cannot be a conduit for tax evasion. If McDonalds gives the nonprofit100 happy meal toys for its meet, McDonalds cannot deduct for that on their taxes unless the nonprofit is a 501(c)(3).

The nonprofit cannot engage in private inurement where someone works and the money raised goes into their child's account automatically because the parent would otherwise owe income tax on that money. This would apply to 501(c)(3)s as well.

The nonprofit also cannot be a conduit for a donation (tax deductible or not) to a gymnast becuase that violates NCAA rules. For instance, XYZ company gives HappyGymMom nonprofit $10,000 with the express understanding and automatic disbursement of that $10,000 to cover the cost of Janie Gymnast. That would destroy Janie's eligibility for NCAA competition. This rule would apply to 501(c)(3)s as well.

[LemonLime]

Quote:
Originally Posted by hsmomx2 Okay, don't mean to sound stupid here, but our gym is in the process of setting up a booster club and the owner doesn't think we need to form a 501 (c) (3) and we just want to be sure we are doing what is legally correct. We have some money we already made from a previous home meet and a little fundraising and our plan is to use that money for things like welcome gifts for new team members, coaches gifts and misc items for the team girls throughout the year (like carryout items for the walkouts etc). Can we just form our club, give it a name, open a bank account and keep it very simple without getting an tax id #? Thanks, Cyndie

Welllllllllll. . . .

What you are talking about is a small business. You are going to earn money and disburse it. No bank should open a bank account unless there is an entity (a nonprofit, an LLC, a corporation) formed with the Secretary of State for your state. You may owe sales tax. You may need a business license.

If this is really, really going to be a small thing for pooling money (not earning money, but pooling money), perhaps a parent will volunteer to open an account in his/her own name and manage it. Of course, the money in the account will belong to the parent and hopefully they won't embezzle it. LOL, but it happens!

Also, WATCH TAX AND PERSONAL LIABILITY CONSEQUENCES!!