Nonprofit Law/student accounts


I have read and read and tried to show our members but we face questions that I need clarified.

We are a non profit, we are also exempt because we support a public school.  We are not a school booster but a separate organization which the school has no control over, unlike cheer/football.

We have members who say that because we support a public education school we CAN have student accounts and give parents credit for working an event.  They keep telling us that all the information we see out there only applies to organizations that support non public.  Please set the record straight.

Our understanding is that we cannot apply credit to a student account for money they raise with say cookie dough fundraiser.  But we see conflicting info that says we actually can if the amount is only a minor amount of the actual funds raised and we should be very careful to make sure it is only minor amount and it is only used for specific band related things.

Our understanding is that we cannot apply credit to a student account for any funds raised by a parent for working a concession stand or bingo.  This constitutes earnings and is subject to taxes.

We have parents who want us to allow student account but make sure it is only minor amount of rasied funds.  Example: 10% of raised funds to student account and 90% to general fund.
IS THIS OK? or does it violate our non profit/exempt status?

We will NOT allow parents credit for working an event as it constitutes earnings and is not allowed by IRS.

Thanks again.

Your organization is still considered a "booster" organization by the IRS even though it is not controlled by the school and is independent. The IRS rulings as to private student accounts apply also to students who attend public schools.  I see nothing to the contrary. was issued in 2011 and refers to such student accounts.

See which seems to refer to schools "Henry Clay" and "Lafayette".

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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