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You are here: Experts > Real Estate > Tax Planning: U.S. > Nonprofit Law > Soccer Booster Club
Expert: Harvey Mechanic
Date: 7/15/2008
Subject: Soccer Booster Club
Question
I am in the process of setting a booster club to support my daughter's club soccer team through fundraising events.
After reviewing the IRS definition of inurement/private benefit, my question is whether we can use the proceeds of fundraising events to offest travel costs and the club dues.
Would using these funds to pay for my daughter's dues and travel costs to tournaments (hotel, food, etc.) be considered inurement since she is my child?
Thanks,
Answer
If you obtain 501(c)(3) organization status from the IRS for the booster organization you should have a Board of Directors comprised of at least 3 unrelated persons and that Board could reasonably decide to fund the expenses of the soccer team members (but not just the expenses of the members of your booster organization). The Directors may all have children on the soccer team but that would not be considered inurement. The 501(c)(3) organization that is a booster organization is not for the parents or youth to fund-raise and have their efforts benefit individuals excluding other individuals in the sport who do not participate in the booster club as much. That would simply be a way to get tax deductions for payments that would, otherwise, not be deductible as when there is no booster club and parents simply pay a gym directly. For example, parents who pay tuition to the university for their child do not get a tax deductible donation for those payments. Parents need to be only thinking about the benefits for all of the youth who are similarly engaged in the sporting or cultural activity that the booster club is properly set up to support. I have been told that one of the main purposes of youth sporting activities is to teach youth fair play. We would expect, therefore, that parents would want to be fair and act in booster clubs according to IRS regulations.
I am not sure whether you have read my standard basic information for booster organizations that I have given to many questions about booster organizations, so I will give you that here:
The main principle of funding by a IRS 501(c)(3) nonprofit booster organizations is that the organizations may not discriminate in making grants to youth or college students on the basis of their family's membership in, or funding to, the booster organizations, or the family's fund-raising or time put into booster organization activities. A good discussion of that instruction is found at:
http://jkn.com/View?j=842129.169787694498
All funds solicited on behalf of the booster organization in fundraisers (sales) must go into the general fund of the booster organization and not directly into individual accounts of the booster fundraiser.
If the 501(c)(3) booster organizations has "individual accounts" make sure that the people know that funds that are earmarked by relatives or friends who are giving their own funds to the 501(c)(3) organization and which are going into the family's individual account are not deductible donations. The funding from the parents and other family members or friends for the individual account are considered pass-through funding and not grants by the organization when given for the use of the particular family member. These would be treated like tuition payments by family members to a university for the use of the family member.
If you want more details, I suggest you read my summary of some booster organizations' rules that you find at
http://viewer.zoho.com/embed.jsp?f=aDebbe
Harvey Mechanic
Attorney At Law
Harvey108@hotmail.com
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