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Nonprofit Law/Volunteer Incentives


QUESTION: What is the current IRS position on the following:  A local Michigan High School Booster orgaization (501(c)3 under the blanket of the high school) had been having problems getting people to volunteer at the games, Booster sponsored events, concessions,program sales,etc.  So the booster club decided to assign points to various volunteer opportunities. For example, 1-pt for selling programs at a game, 2-pts for working concessions (1-hr), 4-pts working a 4-hour fundraiser.  At the end of the season the points are tallyed for each individual who "volunteered", and those who earned (lets say 10 points) receive a free ticket($25.00 value) to the annual sports banquet

ANSWER: I don't know what you mean by "blanket".  I am assuming that the booster organization, as a 501(c)(3) organization, must be a separate entity and it may have some contractual relationship with the school board.

See --  "Volunteers" who were promised gifts - taxable income Oregon case
which is a newspaper story describing a situation when the State determined that organizations that promised "volunteers" gifts over the value of $50 per quarter were subject to state wage regulations for employees. That was an Oregon case but other state laws are similar. That case was about a sports foundation's "volunteers" being promised a season pass if they work roughly two dozen days helping put on races at the ski area.

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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QUESTION: The booster club has a set of bylaws and falls under the school district.  It does not have its own 501(c)3 designation

It appears then that the booster organization is not an entity separate from the school district and it is not usually, then a "501(c)(3) organization".  Section 501 does not apply to state, county or municipal governmental unit except in certain circumstances. See IRS Publication 557 "Tax Exempt Status for Your Organization" on page 16, starting at the bottom of the second column under the heading "Instrumentalities" where we see, "A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). Examples of a qualifying instrumentality might include state schools, universities, or hospitals. However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. A state or municipality itself does not qualify for exemption."

In any case, the issue of the applicability of minimum wage laws and other employment laws applies when people work with an expectation of some compensation.

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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