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Nonprofit Law/Non profit Booster for all star cheerleading


QUESTION: The cheerleading academy is starting a non profit Booster club. They are saying it is to help with items the gym needs and to pay for the cost for the coaches fees to the competitions. I didn't think a non profit could give to a profit didn't .Not really sure i have never been apart of anything like this before. Also there saying we will do fund raisers and the children do not benefit from this.They said they went to the Bank and started this. Please help me understand.Also the man who made himself presadent is on bartering terms with the he the one who should be over this? Please Help me.

ANSWER: My summary of IRS regulations relating to 501c3 booster organizations is at -- you may be interested to read that.

See starting on pages 11 "Private Facility Owners" which discusses prohibited private benefit and excessive control of the booster organization by such private facility owners.

It appears that the private, for-profit gym, may be trying to use a 501(c)(3) organization to pay for items that the gym needs and that might give private benefit to the gym, for example, they would own the assets and/or use them for non-youth activities.

A 501(c)(3) organization may give to a for-profit entity, but only under a contract for services to the charitable beneficiaries.  For example a 501(c)(3) private school may contract with a for-profit bus company to provide transportation for students.

Note, though, as you wrote that "they went to the Bank and started this" that the organization may not be properly organized as a 501(c)(3) organization and, therefore, the IRS would not treat it as such.  The organization must have certain IRS-mandated clauses in the organizational document. See, starting in the middle column of page 26 of
Publication 557  under "Organizational Test". Samples
start on page 77 and the IRS discusses some of the
textual requirements for the organizational document
starting in the middle of page 26 of their Publication
557 and going through the paragraphs under the heading
"Dedication and Distribution of Assets" on page 27.

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.    

---------- FOLLOW-UP ----------

QUESTION: I'm sorry i just still don't understand. Can you give this to me in normal terminology? I'm just trying to figure out what i can say at the next meeting.

Ok.  First, as you wrote that the booster club was supposed to be a "nonprofit", you would want to request at the next meeting a copy of their organizational document, which would need to be, according to the IRS, a charitable trust, a nonprofit corporation filed with the state or an unincorporated nonprofit association and they would need to have the required clauses for 501(c)(3) organizations.  If they provide you with that, then you can send me a copy and I will reply further. That organization would have at least 3 directors, with control of the board not in persons related by blood, marriage or other business.

If they pass that operational test, then we would next go to the organizational test, which would be that all of the funds of the 501(c)(3) organization must go directly to benefit the youth (and not to assets of the for-profit, like equipment).

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


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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