Nonprofit Law/Booster Club

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QUESTION: Thank you for your time. I am a recent board member of a 501c3 Diving Booster Club. The diving facility is at a City Aquatic Center. Our coaches are paid by the City. All divers pay for lessons to the city. The Booster club raises money through Membership fees, fundraising, sponsorships and dive meets. I have read through many of your booster club posts and the IRS information. I am still unclear about the following:

1. I think I understand that we cannot require membership in the Booster Club for all divers. Is this correct? Our club considers those divers "lessons only" (non-competing). They still have full use of all equipment at the facility.

2. Our board does require membership if a diver begins to compete and wants the benefits of coaches travel fees paid (other wise their percentage of travel expenses would have to come out of a parents pocket), a team shirt, access to purchasing apparel, etc. Can we charge this membership fee?

3. The club requires each "level" of diver to get a sponsor for the team (level 1 $75, Level 2 $200, etc). These funds go into the general account for the above mentioned reasons. We do not have accounts for individual divers. Is this allowed? I don't think it is according to what I have read and just want to clarify.

4. The Board recently adopted the position that each family must "volunteer" 4 hours during the year or pay $150. I this allowed? I don't think it is according to what I have read and want to clarify.

Thank you for your time.

ANSWER: 1. You are correct.

2. As I confirmed in #1 above, your booster organization can not require membership as a prerequisite to a family receiving a grant, therefore, you can not charge a membership fee.

3. They can have their own sponsors but then that funding would not go into the booster organization and such sponsorships are not donations that are deductible as charitable contributions for federal income tax purposes.  As to charitable deductions, see IRS Publication 526 "Charitable Donations"  which is available at http://www.irs.gov/pub/irs-pdf/p526.pdf
on page 6 where the IRS lists as not deductible "Contributions to individuals who are needy or worthy. This includes contributions to a qualified organization if you indicate that your contribution is for a specific person."

It appears that you are now requiring certain fund-raising (sponsorships) by the beneficiaries and that is not allowed for 501(c)(3) booster organizations.

4. No. That is not allowed. My summary of IRS regulations relating to 501c3 booster organizations is at http://goo.gl/RO1ez -- you may be interested to read that.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

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: Thank you such a quick response. 2 follow up questions if possible:

 As to question 2: if a diver chooses to join the Booster club can we have a registration fee?

Question 3: can divers get sponsorships that benefit the entire club if if it is used as a general fundraiser and no specific amount is expected of a diver to acquire? It seems this would be allowed and would be a charitable contribution. Is this a correct assessment ?

ANSWER: Yes.  If joining the group is optional and does not increase one's possibility of receiving benefits, there may be a membership fee (or, as you call it, registration fee).

Anyone can solicit funds that benefit the entire club and that donation is deductible.  Earlier I wrote about a sponsorship of an individual, but now I see that you were asking originally about sponsoring the team.  

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

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: This is a follow up to the previous questions. Our club has made some necessary changes in the areas of membership, sponsorship, fundraising, and volunteering to comply with IRS 501c3 regulations .

My question is, we have 3 "levels" of divers. For those who choose to become members of the booster club, can we charge different membership amounts based on their level? I.e. The lowest level would have the lowest membership fee, the highest would have the highest fee.  Or is there some kind of assessment type fee we can require the higher levels to pay and still be within the boundaries of the law?

Thank you so much for your time.

Answer
The IRS has no regulation relating to different membership levels and different fees based upon the level. Therefore, what you propose would be allowed.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is inteded 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

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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 Harvey108@hotmail.com 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 "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

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.

Education/Credentials

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

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


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