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Nonprofit Law/Nonprofit Booster Club Assessments


QUESTION: Harvey, Could you clarify this for us.  I am the treasurer for a booster club that supports a high school drill team.  We are separate from the school with our own EIN, and we are currently pending our 501C3 status with the IRS.  We will file 990EZ based on our income.

We collect 3 assessments through out the school year(actual cost less fundraiser amount). 1)for team attire,camps,and bus fees. 2)for out of state performance costs  3)out of state competition cost.  

Question- Are these assessments program service income to the booster club, and reported on line 3 of the 990EZ?  Or, pass through funds and not reported as income and expense?

Thank you so much!  You are the best!

ANSWER: It appears that your organization has agreed to collect money from families but I don't understand whether your booster organization then passes those funds onto the high school drill team or, in the alternative, makes payments to entities that will be providing goods or services for the drill team.  Let me know and, after you give me that information I will reply further.

By the way, a 501(c)(3) organization may not require drill team members to fundraise (or pay in money in lieu of some sales requirements made by the 501(c)(3) organization. My summary of IRS regulations relating to 501c3 booster organizations is at -- you may be interested to read that as I discuss that, and other related issues there.

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 was not clear.  The booster club collects the remaining funds needed from the student's parents, and then pays the vendor invoice for the trips or clothing.  Thank you for the very valuable information you passed along in your link.  Your site has been most helpful to us!  Thank you..

You are welcome.

Those payments from the families would be included gross income unless the 501(c)(3) organization was merely acting as an agent for the families and was required, under law, to pass the funds through, in full, for the purposes agreed upon. Such requirement would be evidenced by the families legal ability to have a court enforce the agreement of agency (or intermediary).

If the 501(c)(3) organization is acting, for those funds, only as an agent, required by law to pass them on, then there is no income or expense, but only assets and liabilities.

For an example - The Office of the State Controller of Idaho explains in the 3 page part of its "Fiscal Policies Manual, "General Accounting Cash & Cash Equivalents Funds Held as an Agent" that "A fiduciary fund group is used to account for cash and cash equivalents held by the State for other entities or individuals. Assets, such as cash, are recorded when received and offset by a liability representing the State's obligation to return the funds to their owners or other entities."  

If included in gross income, then they would be assessments to go on Part 1, line 3 (Assessments), as long as the families are required by the drill team to pay the funds to your organization. If they are not so required, then the funds would be categorized as Program Service revenue and go into Part 1, line 2.

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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